German Regions See Employment Swings of Up to 15 Percent as Labor Shortage Worsens
13.06.2026 - 05:13:35 | boerse-global.de
The gap between Germany's strongest and weakest labor markets could widen dramatically over the next decade, according to a study released June 12 by the Bankenverband and IW Consult. While some areas expect employment to grow by 10 percent, others face declines exceeding 15 percent — especially in large parts of eastern Germany, the Saarland and Rhineland-Palatinate. Growth zones include southern Germany, Weser-Ems, Schleswig-Holstein, and Berlin along with its surrounding region. The industrial sector continues to lose ground, while information and communications technology and healthcare are expanding.
The regional divergence sits inside a much larger national problem. A separate analysis from the Institut der deutschen Wirtschaft (IW), published the same day, projects that Germany will be short 4.3 million workers by 2036 — 1.3 million more than estimated in 2024. The institute revised its forecast upward after a new population projection indicated a sharper decline in residents.
Demographics are the main driver. The number of baby boomers still in the workforce currently stands at 14.1 million, but that figure will plunge to 7.6 million by 2030. Over the same period, only about 9.8 million young people will enter the labor market by 2036. Germany's total population is set to shrink 2.9 percent to 81.1 million by 2045. The potential labor force will drop from 55 million in 2025 to 51.2 million in 2036, and further to 50.4 million by 2045. Researchers also point to a shift in migration patterns and the lingering economic weakness as contributing factors.
Could artificial intelligence fill part of the gap? A June 12 ifo survey of firms found that 54.5 percent already use AI. Among them, 19.2 percent consider it easy or very easy to replace university graduates with AI. Roughly 15 percent see potential to substitute experienced employees. The numbers vary sharply by sector: in retail, 28.6 percent of businesses think replacing academics is feasible, while in construction only 9.3 percent agree. Still, 55.4 percent of all companies said such substitution would be difficult or impossible.
The economic backdrop adds urgency. The IfW confirmed on June 11 a growth forecast of 0.8 percent for 2026, but warned that the Iran conflict and high oil prices could derail the recovery. The DIW cut its own forecast to just 0.5 percent and sees a risk of recession during the summer.
Policymakers are under pressure to act. The IW recommends better recruitment of foreign skilled workers, stronger work incentives, and longer per-capita working hours. On June 10, representatives from politics, employers and trade unions met at the chancellery for a reform summit focused on social insurance, tax reform and cutting red tape. Employers are pushing for flexible working hours, while social associations warn against benefit cuts. The federal government aims to pass reform packages by mid-July.
