KfW Research: Desire for self-employment remains very low

• In 2022, self-employment was the preferred form of work for only 23% of 18 to 67-year-olds

• Preference for self-employment is even lower, at 17%, for those with no entrepreneurial experience

• Need for security, high bureaucratic effort and lack of capital discourage entrepreneurial activity

Fewer and fewer people want to be self-employed in Germany. Irrespective of their current personal situation, only 23% of 18 to 67-year-olds opted for self-employment in 2022, while 72% preferred salaried employment. These are the findings of a special analysis of the KfW Entrepreneurship Monitor. With respect to maintaining a broad business base and competition, this trend is alarming.

Men have a significantly higher preference for self-employment (28%) than women, of whom only 18% would currently prefer to start an own business.

Preference for self-employment is even lower among people who have no entrepreneurship experience. Not counting those who were once and continue to be self-employed, only 17% of the working-age population prefers self-employment to salaried employment. However, 30% of those who have no entrepreneurial experience can imagine starting their own business someday (2013: 27 %). Various hurdles explain why the desire for self-employment is rather uncommon and existing entrepreneurial potential fails to be realised. The most important ones are financial risks and bureaucracy, a perception of excessively high risks around income and social protection, and lack of capital.

“Concerns over financial risks, income and social protection, bureaucracy and lack of capital stand in the way of stronger, broader entrepreneurial activity across the population at large”,

said Dr Fritzi Köhler-Geib, Chief Economist of KfW.

“One way of addressing the desire for security would be to make it easier for self-employed people to access social protection systems. With regard to bureaucracy, one approach would be to systematically digitalise administrative procedures”,

added Köhler-Geib.

The current special survey by KfW Research can be found at­ www.kfw.de/fokus

The current KfW Entrepreneurship Monitor can be downloaded from:­ KfW Entrepreneurship Monitor

The dataset:

The KfW Entrepreneurship Monitor is a representative telephone survey of the population on start-up activity in Germany which has been conducted annually since the year 2000. It is based on information provided by 50,000 randomly selected persons domiciled in Germany. The survey covers a broad range of start-up activity from full-time and part-time entrepreneurship through sole traders and business owners to newly founded businesses and takeovers. The KfW Entrepreneurship Monitor provides a comprehensive picture of business founders in Germany – from people who wish to start a business to those who have no interest in self-employment. The survey for the current edition ran from July to December 2023.