Germany industrial employment falls to decade low, study finds

Employment in Germany’s industrial sector has fallen to its lowest level in a decade, with companies increasingly choosing not to replace departing workers, according to a study commissioned by the Bertelsmann Foundation.

The sector now has 6.6 million employees, while its share of total employment has dropped to 19% from 22% in 2014, the study by the IW economic institute found.

The decline is not being driven by large-scale layoffs but by weaker hiring activity, the researchers said.

Hiring and job separations had largely moved in parallel until 2019, but a gap has since opened as new recruitment has fallen significantly faster than employment relationships are ending, according to the study.

“Declining hiring is a warning signal for future employment trends,” said Luisa Kunze, a labour market expert at the Bertelsmann Foundation.

“We need a revival in labour demand in industry and more dynamism in the labour market,” she said, adding that stronger hiring would create opportunities for new entrants, facilitate career changes and help the sector renew itself.

German industry has also become less attractive to workers in recent years, the study found.

The wage premium for employees starting a career in industry compared with other sectors fell to 10.4% in 2024 from 20.4% a decade earlier. For long-term employees, the pay advantage declined to 8.7% from 16.5% over the same period.

The wage premium represents the extra percentage of income that workers earn simply by choosing a job in the industrial sector over an equivalent position in a different field.

The authors noted, however, that the risk of losing a job in industry remained lower in 2024 than it had been 10 years earlier.