German Jobs Crisis: Layoffs Surge Even as Study Warns of 4.3 Million Worker Shortfall by 2036

In a paradox that captures the complexity of Germany's labour market, the Institute of the German Economy (IW) projects the country's working-age population will shrink by roughly 4.3 million people by 2036. Each year, 1.3 million retirements will be met by only 800,000 new entrants. The demographic shift, the IW warns, threatens the long-term appeal of Germany as a business location.

That warning stands in stark contrast to the immediate reality facing tens of thousands of workers.

Volkswagen, Germany's largest automaker, has unveiled plans to eliminate more than 35,000 positions in the country by 2030. Already 28,000 departures are contractually agreed upon, part of a cost-cutting drive meant to generate net annual savings of over four billion euros. The company aims to reduce factory expenses by one-fifth, with sites in Saxony and Osnabrück hit hardest. Mounting US tariffs, running into billions of euros, are further pressuring the group’s results.

Suppliers are following suit. Stuttgart-based Mahle announced 1,000 job cuts worldwide, concentrating on administration as well as research and development. The measures are expected to yield annual savings of 150 million euros beginning in 2027, half of which will be realised in Germany. A mid three-digit number of domestic positions is affected. Mahle points to a weak market, competition from China and the phase-out of combustion engines; it had already trimmed 600 jobs in Germany and expects its local workforce to stand at roughly 10,000 by the end of 2025.

The engineering firm IAV, half-owned by Volkswagen, is closing its historic headquarters in Berlin-Charlottenburg. By mid-2027 the company will shed 1,250 jobs, with a total of 1,400 positions disappearing across the group. Employee representatives have sharply criticised the plan, which includes a 40-hour working week and no tariff-based wage increases until at least 2028.

The restructuring wave is also spilling into the healthcare sector. In North Rhine-Westphalia, hospital associations and local authorities are sounding the alarm over the federal government’s budget plans. Clinics in the state expect revenues to drop by eight percent in 2027. The NRW Alliance for Hospitals is demanding a permanent inflation adjustment and full financing of tariff increases; without them, they warn of uncontrolled staff cuts in a sector that employs roughly 311,000 people. The opposition targets the statutory health insurance contribution stabilisation law (GKV-Beitragssatzstabilisierungsgesetz) and a planned nursing reform. According to unions, hospital budgets would be slashed by more than five billion euros in 2027. Criticism has also been directed at a proposal to suspend the tariff wage obligation in elderly care until the end of 2030. The Bundestag held its first reading of the GKV law on June 12, 2026.

Germany’s metal and electrical industries in the north are also under severe strain. Machine utilisation rates have dipped to levels not seen since the coronavirus pandemic and the 2008 financial crisis. Nearly one in three companies rate their business situation as unsatisfactory. In Bremen, one in four firms plans to reduce headcount over the next three months, and almost 30 percent are considering relocating production abroad.

Management positions are not immune. In 2025, the number of registered unemployed executives rose 14 percent to an average of 49,000, with the automotive, chemical and mechanical engineering sectors most affected.

Elsewhere, BioNTech will close the Curevac site in Tübingen by December 2026, affecting 750 employees. At the regional railway company SWEG, Verdi has warned of around 200 operational redundancies for bus drivers in Wiesloch and Offenburg. And the Schussenrieder brewery Ott filed for insolvency on June 12, 2026; operations continue under the supervision of a preliminary insolvency administrator.

Amid the surge in corporate restructuring, legal experts stress the strict requirements governing mass layoffs. Employers must reach a reconciliation of interests and a social plan to make dismissals for operational reasons legally sound. Special protections still apply to employees on parental leave; only a full site closure with official approval can override those safeguards.

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