Advisory Board: What Germany is currently squandering

Everyone is talking about reforms, but little is actually happening. Especially with regard to the labour market, Germany and Europe are squandering a great deal of potential for prosperity and resilience. The Advisory Board of the Foundation for Family Businesses recommends: Some aspects of yesterday’s world should be left behind, whilst others should indeed be strengthened.

Berlin, 11 May 2026. Given the rise of artificial intelligence (AI), Germany will need to reorganise its labour market and relax certain aspects of employment protection. The European Union (EU) and its member states must finally give substance to the long-guaranteed free movement of labour and leverage productivity reserves through a genuine readiness for mobility, modelled on the US.

This is what Professors Clemens Fuest and Gabriel Felbermayr argue in the new annual bulletin of the Advisory Board of the Foundation for Family Businesses, which was presented today in Berlin. Both call for investing in people’s skills and reducing the risks associated with personal change – so that labour can be deployed in the regions and sectors where it is most productive.

Felbermayr references studies suggesting that a realistic improvement in labour mobility within the EU would result in a 1.8 percent increase in real gross domestic product per capita. AI could also yield significant productivity gains for companies, which would ultimately mean greater prosperity for all. However, Fuest warns against overly high expectations for GDP growth. At the same time, he considers it unlikely that AI will lead to mass unemployment. Rather, there will be a shift in the nature of jobs and professions. Fuest believes that it is up to the government to create a more flexible labour market and to invest in research and data centres.

Light-touch legislation and support for family businesses

In their bulletin entitled “A New Perspective on Work”, the members of the Advisory Board call not only for radical change, but also for a return to the traditional strengths of the Federal Republic of Germany.

Constitutional law expert Udo Di Fabio points out that freedom of association and collective bargaining autonomy brought prosperity to the country and personal development opportunities to its citizens. He argues that the weakening of this self-regulation prompted the government to intervene – resulting in an ever-increasing number of laws and an overburdened social welfare system. This, he says, robs the labour market of its elasticity and employees of their mobility. Di Fabio pleads for “light-touch legislation”, that is, a smart and consistent rebalancing of protective concerns and scope for development.

As an expert on family businesses, Professor Kay Windthorst draws attention to the strong unifying power of this type of company, which has a long tradition in Germany and is particularly prevalent in rural areas. With their loyalty to their locations, their responsibility towards their regions and their value-based, long-term approach, family businesses could provide guidance and counteract anti-democratic tendencies. He therefore advocates strengthening this type of enterprise, improving infrastructure in rural areas, further developing cooperative education and training and refraining from levying any further capital taxes.

Photos © Family Business Foundation / Marco Urban, 2026