Employment Crisis in Germany: Lowest Level of 2020

The Employment Situation in Germany is Worrying

The economic recession in Germany is causing companies to be cautious in new hiring as the year comes to an end, while layoffs continue unabated.

Decline in Ifo Employment Barometer

According to the results of the Employment Barometer for December published by the German Economic Research Institute (Ifo), the barometer fell from 92.5 points in November to 91.9 points in December, reaching its lowest level since May 2020.

Companies' Cautious Behavior

Ifo's statement noted, "Companies in Germany are adopting a more cautious approach to hiring new personnel, and most are also laying off employees." A decreasing trend in personnel numbers is observed in nearly all sectors, especially clothing manufacturers, who are the most cautious group regarding new hires.

Sectoral Analysis

The service sector is similarly cautious about new hires, with the barometer in this area showing another decline. In the retail sector, companies plan to employ less new staff in the upcoming year. The situation in the construction sector is mixed; some positive and negative expectations are balancing each other out.

Assessment from Klaus Wohlrabe of Ifo

Klaus Wohlrabe, Head of the Ifo Center for Macroeconomics and Research, stated, "Gradual layoffs occurred in the industrial sector until 2025. Weak economic conditions continue to slow down the labor market."

Three Years of Ongoing Employment Decline

In the country, insufficient orders and economic stagnation increasingly negatively impact the industry. The rates of layoffs in the automotive, industrial, technology, telecommunications, and finance sectors have become more pronounced. Tough economic conditions, weak demand for many products, and intense competition from China are pushing German companies to restructure.

The efforts of companies to maintain profitability through layoffs are causing great concern among Germans.