German Businesses Face Rising Illness Costs and Structural Criticism in 2026

German companies are grappling with escalating costs tied to employee illness while prominent business leaders criticize the country's economic and policy framework. In 2024, businesses in Germany paid a record 81.2 billion euros for continued wage payments during employee sickness, more than doubling over the past 15 years. This figure includes 72.5 billion euros in gross wages and an estimated 13.1 billion euros in employer social security contributions, according to data from the Federal Ministry of Labor and the German Economic Institute (IW).

Amid these growing expenses, Markus Miele, managing partner of leading appliance manufacturer Miele, sharply criticized Germany's business environment. He warned, "That cannot work in the long term," highlighting slow government action on bureaucracy, infrastructure, education, taxes, and labor market reforms. Miele pointed to a long-term decline in Germany's productivity per hour and surging social contributions nearing 50%, emphasizing the need to modernize swiftly to maintain competitiveness.

Despite the challenges, Miele reported stable performance for his company in the first half of 2026, with no new cost-cutting programs planned. Miele employs 23,000 people and generated about 5.2 billion euros in revenue in 2025 from 19 global locations. The firm is exploring expansion into the U.S., where it has produced ovens locally for two years and sees substantial growth potential, with the U.S. now its second-largest market after Germany.

Miele's critique underscores broader concerns over Germany's economic sustainability amid rising business burdens and calls for accelerated reforms. The ongoing industrial restructuring at Miele is expected to continue through 2027, reflecting adaptation efforts in a challenging economic climate.