According to a new study released by the Ifo branch in Dresden, German industry has lost nearly half a million social security-mandated jobs since 2019. Specifically, by the end of 2025, there were 496,000 fewer people employed compared to the beginning of 2019, representing a decrease of 7.1%.
In sharp contrast, the service sector has experienced massive growth, creating over 2.2 million new positions, particularly in healthcare and social services, as well as public administration.
Joachim Ragnitz, the Deputy Head of the Ifo branch in Dresden, stated that Germany is undergoing a severe structural shift. He noted that the industries which have traditionally been the backbone of the nation’s prosperity are the very ones currently shrinking. Ragnitz warned that because new jobs are not consistently emerging in sectors where Germany is most productive and innovative, the country’s future growth potential could be hindered.
Ragnitz attributed the shrinkage across almost all industrial sectors to declining competitiveness, especially when measured against China. The challenges are most acute in traditional German core industries, such as automotive manufacturing and mechanical engineering. The automotive industry and its suppliers shed 123,500 jobs, a reduction of 13%. Furthermore, producers of metal goods eliminated 115,600 positions, and mechanical engineering saw a drop of 64,500. These three sectors accounted for approximately 60% of the total manufacturing decline. Adding 243,000 lost roles in temporary work-many of which were in manufacturing-pushed the total industrial job loss to around 628,000.
Conversely, service providers saw significant increases. In healthcare, 391,000 new jobs were created, and the social services sector, including nursing homes, added 357,000 positions. This sustained growth is largely attributed to the aging population. Public administration saw growth of 329,000 social security-mandated positions, partially because existing civil service roles were backfilled with employees. Among private service providers, IT firms were the strongest growers.
While those with vocational training saw a decline of 252,000, professional academics benefited from the rise in jobs, which reached 1.8 million.
The industrial contraction is affecting all the federal states, with the exception of Hamburg. The decline is slightly sharper in the East, at -8.4%, compared to -6.8% in the West. In Eastern Germany, new jobs in the automotive industry were only found in Brandenburg, thanks to the Tesla factory in Grünheide. Employment overall declined in both Thuringia and Saxony-Anhalt.
