According to the Federal Statistical Office (Destatis), the number of employed persons fell by just 5,000 to approximately 46 million. This marks the first decline in nearly 20 years, excluding the pandemic year of 2020. Forecasts from the Institute for Employment Research (IAB) indicate that the number of employed will drop by 20,000 in 2026. An article in the Frankfurter Allgemeine Zeitung (FAZ) underscores that the market is shrinking, particularly in the private sector, with the exception of public administration. These trends stem from economic, demographic, and political factors, including fiscal packages and population shifts.
According to a Destatis press release from January 2026, the number of employed persons in 2025 stood at approximately 46 million, representing a decline of 0.0% (5,000 persons) compared to 2024. This contrasts with previous years: in 2024, employment reached a record level since 1990, rising by 52,000 (+0.1%); in 2023, by 306,000 (+0.7%); and in 2022, by 588,000 (+1.3%). The decline in 2020 (-325,000, -0.7%) was caused by the COVID-19 pandemic.
The service sector employed 75.9% of all workers in 2025 (34.9 million), with an increase of 164,000 (+0.5%). The largest gains were recorded in public administration, education, and health (+205,000, +1.7%), primarily in healthcare. Finance and insurance grew by 16,000 (+1.5%), and other services by 26,000 (+0.8%). Declines occurred in business services (-64,000, -1.0%) and communications (-10,000, -0.6%), as well as trade, transport, and hospitality (-15,000, -0.1%). Manufacturing (excluding construction) lost 143,000 jobs (-1.8%), falling to 7.9 million.
The number of salaried employees rose by 33,000 (+0.1%) to 42.3 million, while the number of self-employed (including assisting family members) fell by 38,000 (-1.0%) to 3.7 million. The labor force potential grew by 156,000 (+0.3%) to 47.5 million, driven by immigration and higher workforce participation among older persons and women.
The IAB forecasts that the labor market will benefit from fiscal packages but will be held back by demographic shifts. In 2026, insured employment will grow by another 40,000 to 35.02 million, but the total number of employed will decline by 20,000.
Manufacturing will lose 70,000 jobs in 2026, according to the IAB, due to industrial transformation and weak foreign trade. The largest employment gains are occurring in public administration, education, and health: +210,000 in 2025 and +130,000 in 2026, driven by the expansion of childcare and an aging population. The IAB stresses the need to reduce unemployment and secure skilled workers amid the current economic downturn.
Strong immigration previously enabled employment growth even as unemployment rose (+600,000 since 2019), but that effect has faded. Weak economic conditions in Germany are driving a decline, though public-sector employment is preventing a deeper labor market crisis. Forecasts for 2026 point to GDP growth of +0.6%, driven primarily by government spending on defense and infrastructure, but exports (metals, electrical equipment) show no recovery — only 14% of exporting firms assess the situation positively, and 10% expect improvement.
