The economic impact of the COVID-19 pandemic on the cultural sector in Germany

Erasmus University Rotterdam - Cultural Economics and Entrepreneurship - Study the business of art

Caoimbhe Molly Crowe 


Topic: Cultural heritage development and sustainability: challenges and opportunities

Title: The economic impact of the COVID-19 pandemic on the cultural sector in Germany 


In this paper, I want to investigate the advantages and disadvantages the cultural sector had to face during the COVID-19 pandemic in Germany. How did the COVID-19 pandemic impact the cultural economic system in Germany during 2020 and 2021? What opportunities arose from these unprecedented challenges caused by this global health crisis? How did the German government respond, and how the cultural workers dealt with new methods for their practice? Has the pandemic created a safe environment for the creative industry to grow? Firstly, I want to illustrate some of the opportunities these circumstances arose for cultural workers during this unprecedented situation. Secondly, I investigate the advantages and disadvantages of this circumstance arising for creative industries to adapt to during 2020 and 2021, by exploring those in comparison in cases from a substantial business to city management to small, and local businesses. To understand the German economic system applied to the cultural sector I will deliver a short overview of the economic structure for cultural workers in the creative sector and the definition of such a function, according to the Künstlersozialkasse (artist social fund). Finally, I want to conclude with some future approaches that may deliver new perspectives for cultural workers in the creative industries.

Adaption, flexibility, and survival of the cultural sector

During the COVID-19 pandemic, the cultural sector was facing new challenges due to the Lockdown restrictions that led to closed doors for museums and educational, and heritage institutions. A direct and heavy impact related to this shutdown was a global decrease in tourism. Tourism activities decreased up to 50-70%. Issues associated with these circumstances are that exhibitions, productions, and events have been canceled. Accompanied by a dramatic decrease in income through museum tickets, shops and cafes was expected and lasted until the end of 2021. This directly led to freelancers being let go or having to deal with the constant postponement of their project-related work. Many cultural organizations and cultural workers were facing a loss of income of 75-80%, as some museums were minimally impacted. The source of income for museums is in part from private and governmental sources. Substantial institutions only partially rely on ticket sales and such.

But the spillover effects of these institutions impacted several cultural workers, and freelancers working in the cultural sector that had to respond to this sudden loss of income as they were let go. Many had to give up their businesses and were forced to be innovative in creating a new source of income.

The corona pandemic is hitting the cultural and creative industries particularly hard. The federal German government has extended a new culture rescue package. In addition, there are economic aid programs worth billions and other support services from which cultural workers also benefit. (Bundesregierung, 2023)

On an institutional level, substantial galleries and art dealers could count on subsidies from the German government. According to the Bundesverband Deutscher Galerien und Kunsthändler (federal association of German galleries and art dealers e.v.), they speak of a pandemic-related income backlog of 40%. (bvdg, 2022)

According to their study, this income backlog was used as an argument to gain access to subsidies worth 2 billion euros. But can we speak of a backlog when art galleries such König Galerie were experiencing one of their most successful years and were able to expand their business to MISA.ART?

Some concerns arose with unequal opportunities for cultural organizations of different scopes. The public speaks of an unfair distribution of Corona aid. There are serious allegations against gallery owners: Around 30 million euros from the Neustart Kultur aid program are said to have flowed unjustly to galleries - without it being checked whether the payments were necessary. This was the result of research by Deutschlandfunk Kultur. (SWR2, 2022) The gallery owners defend themselves against the allegations that the money flowed primarily to the artists. As businesses were forced to shut down funds were needed for innovation in the creative industries. To keep artisans, cultural workers, and freelancers in production, these funds were relocated toward print, photography, and digital projects. This opened new opportunities for cultural workers to expand their services with specific access to their audience.

The Berlin gallery owner and art mediator Johan König is one of the four children of Kasper König, the influential exhibition curator and director of the Museum Ludwig in Cologne. In the case of MISA.ART we can see art history in the making. König opened an art market in a virtual presence and created a platform for digital creators to showcase and distribute their digital artworks in an NFT crypto world. The disadvantages of crypto art have been shed into a critical light as Europe today, due to the war with Putin is facing a scarcity of gas. König relies on renewable energy to create a sustainable future for digital artworks.

Previously to this digital era, customer access was only possible via the gallery or almost still is, and that is changing rapidly. Artists can only access their customers through an art dealer or institution. Therefore, the success of an artist solely relies on their network.

According to König, so far art access has been taking place only in the showrooms, thus, König expanding this market to the virtual space. His digital strategy included a wide range of methods to engage with their audience, such as outputs on social media, live streams on Instagram, direct art talks with artists and publishers on Clubhouse app, podcasts on several streaming platforms, print publications, and virtual events in the metaverse with partners such as Decentraland. These unprecedented virtual exhibitions set a new playing field for cultural workers all over the globe.

A small city responds to the negative impact of the decrease in tourism and the subsequent die-out of downtown

On an urban region level, the city government had to respond to numerous small businesses shut down and a die-out of the downtown. With the “Ladenliebe” initiative, the historical city of Aachen, which is known for its UNESCO-listed cathedral, is making it possible to rent vacant premises for new ideas, business start-ups, and the realization of one’s own vision in the city center of Aachen (Germany) at a greatly reduced price via a funding program from the state of North Rhine-Westphalia. The aim is that new concept offers, and business ideas can be tested and established risk-free for a period of up to two years for a sustainable and colorful Aachen city center. From concept stores to creating economic and cultural uses, retail and gastronomy offers to your own specialist shop for sheet wool art design, everything is basically possible for the time being. In response to the up to 80% decrease in tourism, the aim is to make Aachen's city center more attractive by reviving the vacancy rate and thus also to support the existing trade. (Stadt Aachen, 2023)

Cultural workers can access spaces throughout the city at a small price of 20% of the former rent price, the other 80% has been substituted by the city of Aachen. Initiatives such as Meffis, which is a culturally free space were able to arise. In my opinion, this sounds great, but does this not also directly support the real estate industry, that in the past 10 years pushed housing prices so high that local residents had to leave the inner city? It was a success for cultural workers as many workspaces, showrooms, and craft shops were able to appear.

The German governmental policies for the cultural worker

To understand what rescue packages and aids were available for the creative sector, we need to understand what kind of employment is categorized under the umbrella of the creative sector in Germany.

Since 2008 there has been the following uniform definition for the cultural and creative industries in Germany: According to the wording of the Arbeitskreis Kultur- und Kreativwirtschaft in der Wirtschaftsministerkonferenz (Conference of Economics Ministers) from 2008, the creative industries consist of those "cultural and creative companies, which are predominantly commercially oriented and deal with the creation, production, distribution and/or media dissemination of cultural/creative goods and services". A second part of the definition reads: "The economically connecting core of every cultural and creative economic activity is the creative act of artistic, literary, cultural, musical, architectural or creative content, works, products, productions, and services."

This German definition is compatible both with the delimitation of the European Commission and with the British concept of "creative industries", which is used worldwide as a reference model. The industry comprises eleven submarkets: architecture, fine arts, design, film, literature, music, press, radio, software/games, theater/dance, and advertising. (Wirtschaftsministerkonferenz, 2016)

According to the Grundgesetz (constitution) in Germany, everyone must pay into the four pillars of social insurance which include: health insurance, nursing care insurance, accident insurance, pension insurance, and unemployment insurance.

For Freelancers or self-employed cultural workers, this is - if you are lucky- supported by the Künstlersozialkasse (artist social fund). The KSK is a division of the Unfallversicherung Bund und Bahn (federal and railway accident insurance). Implementing the Künstlersozialversicherungsgesetz KSVG (Artists' Social Insurance Act) ensures that self-employed artists and journalists enjoy similar protection in statutory social insurance as employees. The KSVG included as a legal basis for the first time on January 1, 1983, self-employed artists and publicists in the statutory health and pension insurance. The introduction of the KSK goes back to Dieter Lattmann and Herbert Ehrenberg.

To receive the support of the KSK, cultural workers need to meet the following requirements: According to Section 1 of the KSVG, the prerequisite for compulsory insurance is that artistic or journalistic activity is carried out for profit and not only temporarily. An artist is anyone who creates, practices, or teaches music, performing arts, or visual arts. A publicist is anyone who works as a writer, journalist, or in a similar way to a writer or journalist. Anyone who teaches journalism also falls under the protection of the KSVG. The artistic or journalistic activity must be carried out independently and profitably. Any sustainable, long-term activity designed to generate income is gainful. The artistic or journalistic activity is only self-employed if it does not represent dependent employment within the framework of an employment relationship.

Anyone who employs more than one employee who is subject to social security contributions in connection with their artistic/journalistic activity is not insured under the KSVG, unless the employment is for vocational training or is marginal within the meaning of § 8 Viertes Buch Sozialgesetzbuch SGB IV (Fourth Book of the Social Code). Employment is marginal if the monthly fee does not exceed EUR 520.00. (Künstlersozialkasse, 2023)

The KSK has a set list of job titles and categories to decide whether a creative is edible for this insurance. Due to the corona pandemic, insured persons and companies liable to pay contributions to the artists' social security system are experiencing a loss of income. Therefore, the artists' social security fund has taken various measures to facilitate payment. (Künstlersozialkasse, 2023)

The German federal government responded with new measures for cultural workers such as various tax reliefs available to support those affected by the crisis. These include, for example, liquidity support, deferral of tax payments, adjustment, and reimbursement of advance payments, and the suspension of enforcement measures. To support substantial and one-person businesses several bailout programs such as Neustart Kultur, Sonderfonds für Kulturveranstaltungen, Überbrückungshilfe I, II, and III artist grants, and simplified access to basic security benefits. (Bundesregierung, 2023)

Innovations for the future of a changing art market for small businesses

Many creative workers had to be innovative with their approach and practice to stay in touch with their network. Information asymmetry has become less as entrepreneurs such as Johan König and young professionals are pushing for transparency in their market prices. As in the case of MISA.ART we learn that creators gain decentralized access to their network in case they are willing to step into the virtual world. Many autodidact creatives have been showcasing their work online prior to the pandemic. Social media changed the art market so much that an artist does not have to solely rely on an art mediator to sell their product. The pandemic has pushed this change rapidly. But what does this mean for small businesses and cultural workers that depend on physical showcase rooms? The above-mentioned financial aid programs were one solution for the cultural sector. Artists such as I were able to access government grants to expand their practice and create engaging decentralized projects that do not need to rely on an uncertain and not accessible physical space. Projects such as #LetterAR were able to exist as the momentum created a space to reach out to digital specialists that changed the way my artists practice to an interdisciplinary exchange of knowledge. In this case, maintaining a safe economic system for the cultural sector was necessary for an innovative project to arise. 

But does the German system offer space for all creative workers to grow? For many cultural workers, this did not apply. Relying on Credit from the KFW or programs such as Überbrückungshilfe I, II, and III was forcing an artist to become an autodidacts accountant and tax consultant. In many cases cultural workers lived in a hand-to-mouth circumstance, income broke down within a short time, prosperity was uncertain, and the decision to take on liability was too risky. The simplified access to security benefits has not always resulted in a change of perspective toward a successful future career. Aside from that, a change from a self-employed business model to a digital approach was not possible as that long-term decision-making would have included a systematic restructuring in training and education in digital approaches and services of established cultural workers, for the entire sector to be able to compete in this transformed market. 


We can learn that the German government was flexible and able to respond to this health crisis many cultural workers from a substantial to a small scope, by opening several funds and changing regulations to ease the pressure for many workers in the cultural sector. As money had to flow fast, it is in some cases questionable whether the funds were needed and may have benefitted in other areas. At this point we can hope for more transparency of the lobbyist deals with the government and transparency to address information asymmetry in the art market. Clear is that the money flows directly or indirectly to the cultural workers who in some cases did not have to stop their production immediately. I would suggest that funds for innovation and education should have been given space too because not all businesses can compete with new technology as their business model solely relies on a close nib personal and physical relationship with their audience.


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