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09 03 2017
Start-ups and International Conglomerates Favour Berlin

A growing number of mostly young entrepreneurs have been drawn to Berlin as a good place to turn their business ideas into reality. Their reasons include the city's high livability paired with comparatively low costs of living, a vibrant cultural spectrum, and a cosmopolitan ambience. The inflow has gradually turned Berlin into the leading start-up hub in Europe over the past years. An average of 40,000 new businesses are founded here each year. Berlin appeals especially to start-ups from the creative industries and the high-tech sector. Every 20 hours, another technology-related start-up is formed, according to Berlin Partner, the city's economic development sponsor. This is explained not least by the fact that office rents and occupancy costs are considerably lower in Berlin than in other German cities, to say nothing of other European capitals. Quite a number of surveys identify Berlin as one of the best places anywhere for starting a new business, not least because the city appears to have the greatest growth potential worldwide. It is home to some of the fastest-selling start-ups such as Zalando. Generally speaking, it has been a mutually beneficial arrangement, as the start-up scene has evolved into one of the key drivers of Berlin's labour market.

Berlin Attracts Young High-Skilled Talent from all over the World

As late as the mid-zero years, Berlin's economy was caught up in the throes of a profound structural shift that had caused massive redundancies ever since the Berlin Wall came down in 1989. It was not until 2005 that the city's economic output rebounded, but it has been growing ever since. Today, Berlin's economic growth outpaces that of most other German states as well as that of Germany as a whole.

Indeed, according to the Berlin-Brandenburg Statistics Office, Berlin has been the growth leader in Germany for almost five consecutive years now. The city state's outperformance is reflected in its rising employment rate, with start-ups contributing massively to the job growth. According to a survey by the Institute for Strategic Development (IFSE), the workforce employed in Berlin's start-up sector – narrowly defined as less than five years old, scalable business model, dependent on the internet – had grown to 13,200 by 2015 (2012: 6,700). Experts believe that the start-up sector could become one of the city's main sources of employment if the upward trend continues. Another interesting aspect that makes Berlin unique is that 33.7 percent of the employees in the start-up sector are not German nationals, which is the highest expat share in the industry anywhere in Germany.

A Symbiosis of Science and Business as Basis for Success

Another factor that has worked in Berlin's favour is the gravitational pull of its large research and higher education community, as its tremendous scientific potential entices global players and large corporates to move their research departments here rather than to the traditional high-tech hubs of southern Germany. Again, the cooperation has proven mutually beneficial, and the success story is reflected in all sorts of stats. Not least, it is a success that benefits countless families dependent on the city's new career opportunities. The brisk job growth has caused the city's once notoriously high unemployment rate to take a nosedive. For the first time since the country's reunification in 1990, Berlin's jobless rate is expected to drop below the mark of ten percent this year. That would be half of what it was in 2005, when unemployment peaked at 19 percent. In October 2016, the jobless figure was down to 172,000, or 40 percent less than it was ten years ago.