Something is happening on the German labor market: Unemployment, which has been rising steadily for more than three years, appears to be easing thanks to a more favorable economy. When it comes to employment, however, the Institute for Labor Market and Occupational Research sees a negative development: too many baby boomers are retiring and not enough young staff are coming. “The job market is shrinking,” says IAB researcher Enzo Weber.
The Federal Statistical Office published an evaluation that shows that the situation would be even more dramatic without employees from abroad. More than a quarter (27 percent) of all employees in 2025 had roots abroad, as the Federal Office reports based on data from the microcensus.
Immigrants are essential
In many professions in this country, people with a history of immigration are already in the majority: according to the Wiesbaden authorities, this applied to more than half of the cooks last year (56 percent). The majority of employees also worked in food production (55 percent), floor laying (54 percent), scaffolding (51 percent) and meat processing (51 percent).
The proportion of employees with a migrant background is also significantly above the overall economic average in other so-called bottleneck occupations in which skilled workers are scarce: professional drivers (41 percent), in hotel service (40 percent) and in nursing and geriatric care (33 percent). According to the Federal Office's definition, a person has an immigration history if they or both parents have immigrated to Germany since 1950.
Compared to employment, the economy has strengthened somewhat. However, according to the IAB, the high level of uncertainty and structural problems, especially in industry, continue to have a negative impact. Many industries there are undergoing a profound transformation - for example the automotive industry, which is particularly important in Germany and has to make the transition from combustion engines to electromobility.
Federal agency presents September statistics
The IAB labor market barometer is a monthly leading indicator of the future situation on the labor market. All German employment agencies will be asked about their expectations for the next three months. The actual situation on the labor market in September will be announced by the CEO of the Nuremberg Federal Employment Agency, Andrea Nahles, in her monthly statistics this Wednesday.
The Munich Ifo Institute also sees light at the end of the tunnel in its employment barometer. Companies in Germany are putting the brakes on job cuts. The employment barometer has risen for the third month in a row and is now at 95.1 points. It last reached this value in August last year. The last time it was higher was in July 2024. “The labor market is stabilizing,” said Klaus Wohlrabe, head of the Ifo surveys. “But a real recovery is not yet in sight,” he restricts. “Jobs continue to be cut in industry and commerce.”
Service sector is building
According to the Ifo Institute, the service sector currently stands out positively: the proportion of companies that want to create jobs is higher than the proportion of companies that want to cut jobs. According to Ifo, those looking for additional employees include engineering offices as well as legal and tax consultancies and auditors. The temporary employment agencies also gained some hope again.
Industry is much less bad than it was two months ago
The situation in construction is still slightly negative, with little change recently. In the manufacturing sector the balance is clearly negative at minus 9.4, but just two months ago it was minus 18.2. The last time the industry value was better than it is now was in March 2024. According to Ifo, hiring is planned primarily in the food industry and among manufacturers of data processing equipment, electronic and optical products.
The balance is worst at minus 12.8 in trading. Here too, this is one of the best values in recent years. Apart from the stagnating trade, there were slight improvements in all areas in the Ifo study. This also results in a slight improvement of 0.3 points for the overall index. The level of 95.1 is calculated in comparison to 2015. Its average is defined as 100. The threshold of 100 has no meaning beyond that.
