Industry shrinks as services grow
On Monday, 19 October, the Ifo institute published a study comparing employment on 31 December 2018 with 31 December 2025. It counted 496,000 fewer people working in German industrial companies at the end of 2025, a fall of 7.1 percent. Over the same period, services added just over 2.2 million jobs, mostly in health and social care and in public administration. The figures cover only employees liable for social insurance contributions, drawn from Federal Employment Agency statistics, so self-employed people, civil servants and mini-job holders are left out. The Dresden branch of the Ifo institute released the findings, and its deputy head Joachim Ragnitz linked the losses to weaker competitiveness, especially against China.
Autos, metals and machinery carry most of the losses
The car industry and its suppliers cut 123,500 jobs, a 13 percent decline. Makers of metal products shed 115,600 posts, and mechanical engineering lost 64,500. Ragnitz calculated that these three sectors account for about 60 percent of the industrial reduction. Temporary agency work lost a further 243,000 employees, many of them in manufacturing, and including those the study puts industry's total loss at around 628,000 jobs. The Federal Statistical Office reported that car industry employment is at its lowest since 2005. Ragnitz described the trend as a deepening change in the structure of the economy.
“Germany is experiencing an intensified structural change: precisely the sectors that have carried our prosperity until now are shrinking.”
Volkswagen plans to cut 50,000 jobs in the coming years, on top of savings plans already agreed, while Bosch, ZF, Schaeffler and Continental are also set to shed thousands of posts.
- Automotive and suppliers
- 123500 jobs
- Metal products
- 115600 jobs
- Mechanical engineering
- 64500 jobs
Data from the article text
Services and the public sector grow
Health care added 391,000 jobs, and social work including nursing homes added 357,000, which the study attributes mainly to an ageing population. Public administration gained 329,000 employees covered by social insurance, partly because posts vacated by retiring civil servants were refilled with salaried staff. Within private services, IT firms grew the fastest. Ragnitz also warned about the consequences for growth.
“The new jobs mostly arise not where Germany is particularly productive and innovative. That could slow our growth potential in future.”
- Health care
- 391000 jobs
- Social work incl. nursing homes
- 357000 jobs
- Public administration
- 329000 jobs
Data from the article text
Regional differences
Industrial job losses hit every German state except Hamburg. The decline was 8.4 percent in the east and 6.8 percent in the west, so the eastern fall was slightly steeper. Brandenburg was the only eastern state where car manufacturing added jobs, thanks to the Tesla factory in Grünheide. Employment fell overall in Thuringia and Saxony-Anhalt.
- East Germany
- -8.4 %
- West Germany
- -6.8 %
Data from the article text
Outlook and hiring caution
Economists expect the economy to regain some momentum. The federal government and the International Monetary Fund have both raised their forecasts for Germany, now expecting GDP to grow 1.3 percent this year, its strongest rate since 2022. Unemployment stood at 6.4 percent in September, slightly above a year earlier, and the labour market has lost momentum for months. Jutta Rump, an expert at the Institut für Beschäftigung und Employability in Ludwigshafen, pointed to a complex mix of pressures on companies. Firms are unsure which skills they will need as digitalisation and artificial intelligence reshape work, and that uncertainty is holding back hiring.
“We have very strong pressure on business models, which are in some cases being significantly redefined.”