Labor market: number of employed people at record – but outlook for 2025 cloudy

Despite the economic crisis, the number of employees in Germany reached a new high in 2024. On an annual average, around 46.1 million people with a place of work in this country were employed, as the Federal Statistical Office announced. “That was more people in employment than ever since German unification in 1990.” However, employment only grew in service sectors, while it fell in construction and manufacturing. Experts expect more unemployed people in the new year.

According to an initial estimate by Wiesbaden statisticians, the average number of employed people in 2024 rose by 72,000 people or 0.2 percent compared to the previous year. The reason was the immigration of foreign workers and an increased labor force participation of the domestic population. The authority explained that this outweighs the dampening effects of demographic change.

With the exception of the Corona year 2020, the number of employed people has grown steadily since 2006. However, the increase has lost significant momentum since mid-2022. The decisive factor for the increase last year was the number of employees, which grew by an annual average of 146,000 to 42.3 million, while there were once again fewer self-employed people.

The economic crisis is already leaving its mark

However, the economic crisis is already making itself felt. In 2024, employment only increased in service sectors, where a good three quarters of the workforce work. The number of employees there grew by 153,000 to 34.8 million people compared to the previous year – including in the areas of public service providers, education, health as well as in banks and insurance companies.

However, employment fell in industry and construction. In the manufacturing sector (excluding construction), the number of employed people fell by 50,000 to 8.1 million people in 2024. The crisis in new construction also led to job losses. “In the construction industry, the upward trend that had been ongoing since 2009 and was only interrupted in 2015 came to an end with a decline of 28,000 employees (-1.1%) to 2.6 million,” said the statisticians.

Poor prospects for 2025

Headwinds are likely to increase in the new year. Because the economy remains weak: the Bundesbank expects only mini-growth of 0.2 percent in 2025, after the German economy is expected to have shrunk slightly for the second year in a row in 2024.

The employment agencies expect unemployment to grow. The labor market barometer of the Nuremberg Institute for Labor Market and Occupational Research (IAB) fell in December for the fourth time in a row to its lowest level since the corona pandemic. “The employment agencies expect that unemployment will continue to rise at the beginning of the new year,” said IAB researcher Enzo Weber recently.

Only a few sectors expect job growth

A study by the German Economic Institute (IW) among 49 industry associations also shows little optimism. 20 of the 49 business associations expect a decline in production in their area in 2025; 13 expect the values ​​to remain the same, 16 expect more production.

In addition, 25 associations expect job cuts in their industries in 2025, while only 7 associations expect more employees. These include the pharmaceutical industry as well as aircraft and spacecraft construction and service providers such as shipping companies. There are likely to be fewer jobs in the iron and steel industry, in mechanical engineering, in the automotive industry or in construction.