By Bahattin Gonultas and Emir Yildirim
BERLIN (AA) - German companies are unwilling to hire new workers at the end of the year due to the economic slowdown, while layoffs continue, according to a recent report.
Munich-based ifo Institute’s Employment Barometer dropped to its lowest since May 2020 at 91.9 points in this month, down from 92.5 in November.
“Companies in Germany are more cautious again about hiring new staff, and most of them are cutting jobs,” the research institute said on Friday.
Almost all sectors continued to see layoffs at the same time. The lack of orders and the ongoing stagnation in the economy are increasingly affecting the industrial sector, while workers are constantly laid off.
The trend in the German industrial sector has been going on for about three years now, and almost no firm is able to evade it.
Clothing firms in particular are keen to reduce their workforces, while service providers continue to be cautious over new hires. The retail sector is also similarly planning to employ fewer workers in 2026.
The construction sector plans to maintain its workforce unchanged, as the negative and positive expectations cancelled out each other in the ifo’s Employment Barometer.
“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.”
To deal with weak demand for many products and rising competition from China, large companies must resort to restructuring, hiring freezes, or layoffs.
Rising energy prices and falling external demand are two of the most significant challenges facing German businesses. New layoffs in the auto, industrial, engineering, technology, telecommunications, finance, and other sectors emerge on a daily basis.
The German economy expanded 0.3% in the first quarter of the year, contracted 0.2% in the second quarter, and narrowly avoided a technical recession in the third quarter with a growth rate of 0%.
High energy costs, weak global orders, and high tariffs all had an impact on the economy, while China's production of many products previously purchased from Germany, as well as chip storage, caused auto industry slowdowns, which also impacted the economy.
The government promised to overcome the stagnation with a sharp increase in infrastructure and defense spending, but the positive results are taking much longer than expected.
On October 8, the German government revised its official growth forecast for this year from 0% to 0.2%, with a recovery of 1.3% next year and 1.4% in 2027, driven by public spending.