German Companies Continue Job Cuts Amid Weak Labor Market, ifo Survey

German companies are once again becoming more cautious about hiring, with the majority cutting jobs amid ongoing economic weakness, according to the latest survey by the ifo Institute. The ifo Employment Barometer fell to 91.9 points in December, down from 92.5 points in November, marking its lowest level since May 2020, during the height of the coronavirus crisis.

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“In 2025, we experienced gradual job cuts, especially in industry,” said Klaus Wohlrabe, Head of Surveys at ifo. “The weak economy is continuing to slow down the labor market.”

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The survey shows that job reductions are widespread across the industrial sector, with almost all industries continuing to reduce staff. Clothing manufacturers, in particular, are planning further cuts. The situation remains subdued among service providers as well, where companies are still reluctant to hire new employees. The employment barometer for this sector declined again, indicating persistent caution.

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A similar trend is evident in the retail sector. According to ifo, companies in trade are planning to operate with fewer employees in the coming year, reflecting restrained expectations for business activity. In contrast, the construction sector presents a more balanced picture. Positive and negative expectations are currently offsetting each other, and companies in the main construction industry are planning to keep their workforce unchanged rather than expand or reduce staff.

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Some sectors, however, are showing signs of optimism. The tourism industry and management consultancies have a more positive outlook for the year ahead. According to the survey, companies in these areas are planning to hire additional staff in the new year. Overall, the results of the ifo survey indicate that Germany’s labor market remains under pressure, with weak economic conditions continuing to limit hiring across large parts of the economy, even as a few sectors anticipate modest growth in employment.

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