This is a worrying signal for the German economy but also for the Polish one, which is strongly tied to its western trading partner. According to preliminary estimates by the Federal Statistical Office (Destatis), the number of people employed in Germany in the first quarter of 2026 amounted to around 45.6 million. This is a result pointing to the continuation of a downward trend that had already begun to emerge in the second half of the previous year.
Taking seasonal fluctuations into account, employment fell by 0.1 percent compared with the previous quarter, a decline of 61,000 people. Without seasonal adjustment, the loss was considerably larger-486,000 people, that is 1.1 percent. Compared with the analogous period of 2025, the number of those in work fell by 157,000.
This seemingly small decline takes on deeper significance when one looks at the broader context. As recently as 2022, the German economy was experiencing a postwar employment boom following the COVID-19 pandemic. In the second quarter of that year, the year-on-year increase amounted to as much as 679,000 people. After that, however, the momentum began to weaken, until in the third quarter of 2025 the first year-on-year decline since 2021 was recorded. The year 2026 thus began in an atmosphere of clear deceleration, and the decline at the start of the year was more than 100,000 people larger than the average for the years 2023-2025.
The most worrying aspect is the structural character of these changes. The services sector, which for years was the engine of employment growth, still showed slight positive momentum in the first quarter of 2026-an increase of 45,000 people (0.1 percent). However, outside services the situation was different, and the loss reached 202,000 jobs, that is 1.8 percent. Within the services sector itself a clear stratification is already visible. Public services, education and healthcare continued their long-running growth, with 181,000 people added here (1.5 percent). Somewhat smaller, but still positive, changes were recorded in other services (including organisations and associations) and in finance and insurance. Meanwhile, IT and communications lost 24,000 jobs (1.5 percent), and service enterprises, including temporary-employment agencies, as many as 72,000 (1.2 percent). Trade, transport and hospitality recorded a decline of 81,000 (0.8 percent).
An even clearer regression affected industry and construction. In manufacturing (excluding construction), employment shrank by 171,000 people (2.1 percent), in construction by 27,000 (1.1 percent), and in agriculture, forestry and fishing by 4,000 (0.7 percent). These data confirm that the German economy is grappling with deep problems in sectors traditionally associated with export strength and investment. The energy crisis, rising costs, the slowdown in global demand for investment goods and geopolitical uncertainty-all of this strikes at production and construction, which are unable to compensate for the losses in services.
In parallel, the structure of employment itself is changing. The positive trend in regular employment contracts came to an end in the fourth quarter of 2025. In the first quarter of 2026, according to data from the Federal Employment Agency, both the number of salaried employees fell (by 120,000, 0.3 percent, to 42 million) and the number of the self-employed together with assisting family members (by 37,000, 1 percent, to 3.6 million). The reduction in marginal employment, that is casual work and mini-jobs, is also continuing.
It is worth noting, however, a certain paradox. Despite the decline in the number of those employed, the total labour input, that is the aggregate hours worked in the economy, remained at the level of the previous year, that is 15.7 billion hours. The average number of hours worked by one person rose by 0.3 percent, reaching 344.2 hours. This suggests that the existing workforce is working more, which may be the effect both of pressure on productivity and of attempts to compensate for staff shortages. At the same time it points to the limited flexibility of the labour market: firms prefer to burden their current employees with additional hours rather than risk new hires under conditions of uncertainty.
Against the backdrop of Germany, the situation in the European Union looks different. According to Eurostat of 15 May 2026, employment in the EU-27 rose in the first quarter by 0.6 percent, and in the euro area by 0.5 percent year on year. Germany, traditionally the locomotive of the European economy, this time falls short of the EU average. This heralds potential challenges not only for Berlin but for the entire bloc, especially in the context of common economic and energy policies.
Analysing these figures, it is hard to avoid reflection on the deeper causes. The German economy is entering a phase in which the demographic constraints on the supply of labour meet a cyclical slowdown in demand. The ageing of society, shortages of qualified personnel in key sectors and growing competition from other economies require not only short-term interventions but a strategic rethinking of the development model. The public sector and healthcare are growing, but they are unable to replace the losses in industry and business services. At the same time, the increase in the average working time signals that the reserves lie rather in efficiency than in simply increasing the number of those employed.
The first quarter of 2026 may therefore be not so much an anomaly as the beginning of a new chapter in the history of the German labour market. A chapter in which what becomes key is not only the preservation of existing jobs but above all structural transformation-towards higher productivity, innovation and a better matching of qualifications to the needs of a changing economy. Without bold reforms in education, labour migration and industrial policy, the current tendencies may become entrenched, weakening Germany's position in Europe and in the world.
