Dr. Sebastian Link

More than one in five affected companies (22 percent) plans to cut jobs due to the upcoming minimum wage increase. It will be raised to EUR 13.90 effective January 1, 2026. In addition, more than a quarter of them (28 percent) expect to invest less, according to a recent study by the ifo Institute. Every second company affected (50 percent) plans to increase prices. Other consequences cited by respondents were lower profits and a poorer competitive position.

The share of companies using short-time work remained roughly stable in February at 17.9%. In November 2024, that figure was 16.9%*. That is the finding from the ifo Business Survey. “Industry is responding to the continuing economic slowdown with a mix of short-time work and job cuts. However, the main focus is on shedding jobs. This indicates that companies do not view the current situation as just a temporary crisis,” says ifo researcher Sebastian Link. 

Short-time work in German industry has risen slightly in recent months and this trend is expected to continue. They found that 14.3% of participating companies in the industrial sector were making use of short-time work in August, compared to 12.5% in May. 23% expect to do so in the next three months, compared with 18.8% in May – although, since 2022, expectations have invariably exceeded the actual levels. Compared to the long-term average, short-time work is at a slightly elevated level. The increase is comparatively small in view of the poor economic situation in industry. “This is, however, not a positive sign. Rather, it shows that many affected companies consider the crisis to be very serious. This is why, despite labor shortages, they seem inclined to cut jobs or relocate rather than bridge the gap with the help of short-time work,” says ifo expert Sebastian Link.

German manufacturing companies responded to the economic slowdown in winter with significantly more short-time work. Although it is likely to remain high in the coming months, it is not expected to worsen any further. In the second quarter, 18.8% of manufacturing companies responded that they were planning to introduce short-time work in the next three months.

The number of short-time workers in Germany has fallen despite the economic slowdown. In August, 110,000 people were on short-time work, down from 150,000* in May, according to estimates by the ifo Institute based on the ifo Business Survey and figures from the German Federal Employment Agency. “Germany’s weak economy has had little effect so far. One reason for this may be that the regulations facilitating access to short-time allowances expired at the end of June,” says ifo labor market researcher Sebastian Link. As a share of the workforce, the figure fell from 0.4 to 0.3 percent.

The number of short-time workers in Germany has risen slightly. It stood at 144,000 people in May, marginally higher than February’s 140,000*, according to estimates by the ifo Institute based on the ifo Business Survey and figures from the German Federal Employment Agency. “Short-time work isn’t playing a significant role in the current phase of economic weakness,” says ifo labor market researcher Sebastian Link. As a share of the workforce, the figure remained at 0.4%.

The number of short-time workers in Germany rose by just under 9 percent to 220,000 in February.  In January, the figure was 203.000. This is the highest number since last June, according to estimates by the ifo Institute based on the ifo Business Survey and figures from the German Federal Employment Agency. “Developments in short-time work reflect the current mild winter recession,” says ifo labor market researcher Sebastian Link. As a share of the workforce, the figure climbed from 0.6 percent to 0.7 percent.

The number of short-time workers in Germany rose slightly in January. There are currently 205,000 people on short-time work, up from 186,000 in December, according to estimates by the ifo Institute based on its Business Surveys and figures from the German Federal Employment Agency. This corresponds to 0.6 percent of the workforce. “Short-time work remains at a low level, which is fairly typical for a very mild winter recession,” says ifo researcher Sebastian Link.

The number of short-time workers in Germany remained almost unchanged in December. There are currently 186,000 people on short-time work, down slightly from 188,000 (seasonally adjusted) in November, according to estimates by the ifo Institute based on figures from the German Federal Employment Agency. This corresponds to 0.6 percent of the workforce. “The fact that short-time work remains at a low level seems to indicate that the expected winter recession will be very mild,” says ifo researcher Sebastian Link. 

For the first time since January, the number of short-time workers in Germany is increasing. Between August and November, it rose from 76,000 to 187,000, according to an ifo Institute estimate. These figures are based on ifo surveys as well as on data from the German Federal Employment Agency. The rise was most evident in manufacturing, where the number of short-time workers increased from 59,000 to 151,000. 

The increase in the German minimum wage on October 1 is causing many companies to raise their prices, finds the ifo Business Survey. The increase affects companies across almost all sectors of the economy. Of the participating companies, 30.7 percent employ staff for less than EUR 12 per hour; 58.3 percent are planning to respond with higher prices. “This will likely exacerbate inflation, which is already high,” says ifo labor market expert Sebastian Link. As of October 1, the German government is increasing the minimum wage from EUR 10.45 to EUR 12 per hour.