What's the outlook for the German job market in 2025?

Finding a job in Germany as a foreign national is no easy task, and it can be especially difficult for those with little or no German-language skills.

Adding fuel to the fire lately is a stream of negative news about the state of the German economy, which seems to be slowing down significantly as the country reckons with a wave of deindustrialisation.

But all of this comes with a touch of bitter irony for jobseekers, because there is also constant news about the shortage of skilled workers in key industries here.

So what’s the job forecast in Germany for 2025?

Germany’s struggling economy is starting to impact the job market

At the end of October, a study suggested that 140,000 jobs in the German automotive industry could be cut over the next 10 years.

At that time, The Local spoke to Dr. Enzo Weber, Head of Forecasts and Macroeconomics at the Institute for Employment Research (IAB), who said that while certain jobs (especially in the auto industry would be lost) the German job market was still going strong.

A couple of months later, Weber suggests that poor economic conditions have begun to affect the job market.

“Overall employment is still stable but some sectors are reducing jobs,” Weber told The Local in an email. “Above all, losses are seen in manufacturing with more than 10,000 (lost jobs) per month.”

In an article published by Der Spiegel that Weber co-wrote with economist Monika Schnitzer, they argue that nothing short of radical economic policy changes can save German industry (and therefore also German jobs).

“German industry is facing the greatest challenge in post-war history,” Weber and Schnitzer wrote. 

They added that industry in the future will be decarbonised and AI-driven: “Both require our economy to completely reinvent itself.”

Weber’s assessment is aligned with that of the German Economic Institute (IW). An IW survey from November found that nearly four out of 10 companies in Germany plan to cut jobs in 2025.

Which companies are announcing job cuts?

At the moment the biggest layoffs in Germany are being announced by large players in the automotive industry – from Volkswagen and Ford to Bosch, Valeo and Michelin.

Volkswagen (VW) has dominated the headlines since it announced plans to close three factories in Germany and lay off thousands of employees in the coming years. VW’s cost-cutting plans were met with immediate and widespread strikes. But regardless of the outcome of union negotiations, the eventual loss of thousands, if not tens of thousands of jobs looks inevitable.

Mercedes-Benz has also announced a huge restructuring plan, which reportedly threatens around 15,000 jobs at the company and its subsidiaries by 2027.

While the big numbers of job losses at multi-national companies sound scary, it should be noted that not all of these jobs are located in Germany and that layoffs will likely be spread over the next few years to come.

That said, downsizing by the car giants also has knock-on effects for many smaller companies in Germany that manufacture specific parts for autos.

For example, Brose, which makes chips used in cars, plans to cut 700 jobs at locations in Coburg, Bamberg and Würzburg by the end of 2025.

The Association of Bavarian Metal and Electrical Employers (vbmw) also expressed concerns this week. Production in the entire industry is likely to fall by around five percent in the coming year, according to BR24.

Beyond the car makers and all of their related partners, Thyssenkrupp (global technology group) announced big job cuts recently, as did Deutsche Bahn's freight transport subsidiary, DB Cargo, and the software group SAP.

Which industries will be hiring in 2025?

As Weber previously told The Local, job losses at the big manufacturers may ultimately be replaced by jobs with similar skill demands being added in new industries – such as in green infrastructure and tech manufacturing. But this is not to say that it will be an easy transition for everyone.

In the meantime, Weber says that some industries in Germany are still adding jobs.

“Demand is still strong in sectors such as health, elderly care, education, and transportation,” he told The Local.

A recent study by the German Chamber of Industry and Commerce (DIHK) confirms this – of 23,000 companies included, 43 percent said they have been unable to fill all their vacancies.

It’s a great time to be a construction worker in Germany, in terms of job availability, or a civil engineer.

Companies in the service sector are also desperate for more workers, according to the study, and academics in STEM subjects are badly needed at German universities.

READ ALSO: Which Bavaria-based companies regularly hire English speakers?

AI impact remains mysterious

Artificial Intelligence will likely have an even greater impact on the job market in 2025, but whether that means more job losses or more new jobs created is a question that German companies can’t seem to agree on.

Per recent reporting by Heise online, a survey of IT companies by digital association Bitkom revealed a number of seemingly discordant stats: 15 percent of companies said they expect IT industry jobs to be cut due to AI, but on the other hand 38 percent of companies expected to hire additional workers for AI applications.

Also, about a fifth of companies suggest AI may be able to take over some jobs that cannot be filled.

READ ALSO: SURVEY - Almost 1 in 4 German employees worried that AI will take jobs

Which policy changes will aid foreign workers in 2025?

In an effort to attract skilled workers from abroad, Germany has implemented a few recent policy changes intended to make moving to the country and finding a job a bit easier. Most of which can be expected to remain through 2025.

On the employer side, for example, are integration grants available through the Employment Agency, which can cover half of a foreign worker’s salary for up to 12 months, if the employer puts them through a language course.

Meanwhile the introduction of the points-based ‘opportunity card’ visa, the lowering of the salary threshold for an EU Blue Card, and the easing of citizenship requirements have also made it easier for skilled workers to move to and settle in Germany.

Whether or not those efforts are enough, however, remains to be seen.

READ ALSO: 'Language classes at work' - How Germany could attract skilled foreign workers