Germany Looks to Loosen Dismissal Protection for Top Earners as Manager Unemployment Jumps 14%

A sharp rise in joblessness among Germany’s most highly paid professionals is prompting the federal government to rewrite the rules on employment protection. The coalition’s leadership committee decided in early July that companies may soon strip certain managers and specialists of their statutory dismissal protection in exchange for a severance payment. The measure would apply only to employees whose annual income exceeds 1.75 times the contribution assessment ceiling for social insurance — a threshold that covers several hundred thousand of the country’s best-paid staff.

The backdrop is a labour market that is turning increasingly hostile for the very workers who once seemed immune to redundancy. Across all sectors, the number of unemployed managers and senior professionals rose 14 percent compared with twelve months ago. The industrial sector, traditionally a stronghold of well-paid engineering and technical jobs, is bearing the brunt. According to estimates from the Institute for Employment Research (IAB), factories and plants are shedding roughly 15,000 positions every month. The losses are concentrated among university graduates with long professional track records.

Workers aged between 50 and 60 face the steepest uphill battle. When they lose a job, they rarely find another at a comparable level. Restructuring and economic uncertainty are eliminating high-paying roles faster than the economy can create them.

Two high-profile cases illustrate the trend. In mid-July, Volkswagen’s chief executive acknowledged that planned cost-cutting could theoretically put another 50,000 jobs at risk worldwide, on top of reductions already scheduled through 2030. In the media sector, Burda dismissed its media chief after just six months in the post and is reviewing several of its holdings.

The pattern is even more pronounced across the border. Switzerland reported that the number of unemployed academics has climbed above 46,000, accounting for 34 percent of all jobless people — a record share. The Swiss banking sector alone registered 4,474 unemployed staff in June 2026, a 24 percent increase year-on-year and an all-time high. UBS has slashed its open positions by 80 percent compared with the summer of 2024. Experts point to technological change, especially artificial intelligence, combined with an oversupply of highly qualified candidates, as the main drivers.

The government’s plan to relax dismissal protection has drawn sharp criticism from labour-law specialists. They raise constitutional objections, arguing that a person’s income alone does not justify a lower level of legal protection.

Meanwhile, the state’s own instruments to cushion the shock are barely registering. The Qualifizierungsgeld (qualification allowance), introduced in April 2024, covers 60 percent of net pay while workers retrain. By the end of 2025, fewer than 400 people had taken it up — a figure critics call disastrous given the scale of the problem.

On the ground, job seekers are fighting back with technology. A growing number use AI tools to fire off hundreds or even thousands of applications in minutes. Many rely on severance packages or voluntary redundancy programmes to build a financial buffer. But labour lawyers warn that accepting such programmes can trigger a waiting period of up to twelve weeks before unemployment benefits kick in.

For those caught in operational dismissals that fall under a social plan, older employees with long tenure and dependents still face a statistically lower risk of being let go. Still, even former top earners now have to prepare for extended job searches or a complete career shift.

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