One third of companies in Germany to cut jobs in 2026

According to a report published by the German Economic Institute (IW), one in three companies operating in Germany plan to cut jobs in 2026. The outlook is particularly poor in manufacturing.

Job cuts looming in Germany, says IW report

38 percent of companies operating in Germany plan to cut jobs in the coming year and only 18 percent plan to develop new positions. The figures are according to a report, which surveyed nearly 2.000 companies, recently published by the IW in Cologne.

33 percent of respondents said they plan to invest less in their company and 32 percent said they plan to produce less in 2026. Companies’ forecasts for how productive they expected to be varied across Germany. 

Only in Bavaria and northern Germany did companies say they expected to be more productive next year, companies in Baden-Württemberg, North Rhine-Westphalia, the southwest and northeast all expect productivity to decline.

“Cutting jobs instead of economic turnaround: Companies are suffering under grand geopolitical stress,” said IW macroeconomist Michael Grömling. “Without government reforms it will become increasingly unlikely that the government’s [500-billion-euro] investment programme will deliver the hoped-for and necessary outcomes.”

2026 outlook particularly pessimistic in manufacturing

Those working in manufacturing and industrial sectors had the most pessimistic outlook for 2026. 41 percent of manufacturing and industry companies surveyed said they planned to cut jobs next year, and only one in seven expect to create new positions. “[This] indicates a difficult year ahead for German industry,” the IW explained.

Jobs in German industry, particularly in car manufacturing, have been on the decline for a number of years and on the steep decline since the beginning of 2025. Now in tough competition with Asian car manufacturers and subject to President Donald Trump’s high tariffs, Volkswagen, Mercedes and Continental have all cut jobs this year.

According to a study by EY, based on numbers from the Federal Statistical Office (Destatis), between the second quarter of 2024 and the second quarter of 2025, 51.500 employees working in the German car industry lost their jobs, about 6,7 percent of the sector’s total workforce.