How Can Germany Have Job Cuts and Skilled-Worker Shortages at the Same Time?

Germany can lose jobs and still need workers.

That sounds contradictory.

It is not.

In September 2026, Volkswagen approved one of the largest transformations in its history. The group’s restructuring plans now involve a further 50,000 job reductions worldwide, bringing the total agreed reductions to around 100,000.

At almost the same time, Germany’s Federal Employment Agency reported that 157 occupational categories continue to experience skilled-worker shortages.

Meanwhile, Germany had more than 3.06 million registered unemployed people in August 2026.

How can all three things be true?

Because Germany’s workforce problem is increasingly a matching problem.

The economy may have available workers.

It does not necessarily have the workers with the right:

skills + qualification + location + experience + availability

for the vacancies employers need to fill.

Germany does not have one labour market

National employment statistics are useful.

But employers do not recruit from one uniform German labour pool.

A software company in Berlin, a logistics operator in Hesse, a nursing provider in Bavaria and an industrial manufacturer in Baden-Württemberg may be experiencing completely different hiring conditions.

The Federal Employment Agency explicitly identifies this mismatch.

In 2025, approximately 402,000 registered skilled, specialist and expert-level vacancies existed on average.

Around half of registered vacancies were in shortage occupations.

Yet only approximately one in five unemployed skilled workers was looking for employment in one of those shortage occupations.

That is the central issue.

The people available and the jobs available do not automatically match.

Why restructuring does not eliminate the Fachkräftemangel

Imagine 2,000 industrial jobs disappear.

At the same time:

• hospitals need nurses,
• logistics companies need drivers,
• construction firms need tradespeople,
• childcare providers need educators.

Germany has simultaneously:

lost jobs

and

failed to fill jobs.

A production employee cannot automatically begin work the next morning as a nurse or CE-qualified professional driver.

Occupations require different:

• qualifications,
• licences,
• certifications,
• technical skills,
• language levels,
• experience.

That is why aggregate unemployment tells employers only part of the story.

Volkswagen illustrates structural change

Volkswagen’s restructuring is not simply a story about headcount.

It reflects wider changes affecting German industry:

• global overcapacity,
• international competition,
• pressure in China,
• technology change,
• changing vehicle demand,
• cost pressure,
• restructuring of production networks.

The restructuring approved in September includes a further 50,000 job reductions globally and leaves significant questions around the future utilisation of several German production locations.

But the skills represented by those employees do not simply disappear from Germany’s labour market.

That creates an opportunity.

The first question should be: which skills are transferable?

A job title can hide a large amount of useful capability.

An employee in automotive manufacturing may have competencies involving:

• mechatronics,
• electrical systems,
• CNC machining,
• automation,
• robotics,
• quality management,
• maintenance,
• production planning,
• warehousing,
• logistics,
• occupational safety.

Another employer may desperately need some of those same skills.

The problem is that labour markets frequently categorise people by their previous job rather than their underlying capability.

That is where reskilling and skills mapping become important.

More unemployed people does not mean more available skilled workers

The ifo Institute captured this distinction clearly in its July 2026 survey.

Although overall economic conditions remain weak, 23.2% of German companies still reported a shortage of qualified workers, up from 21.1% in April.

Manufacturing stood at 18.7%.

Construction was substantially higher at 32.6%.

The ifo analysis emphasised that more unemployed people do not automatically create more available skilled workers because qualifications must match vacancy requirements.

KfW Research reports a similar pattern.

At the beginning of Q2 2026, approximately 21% of German companies said skilled-worker shortages were restricting their business activity.

The shortage had eased because of economic weakness, but remained especially relevant in construction, services and among SMEs.

This is partly cyclical:and partly structural

Two different forces are operating simultaneously.

Cyclical weakness

During a weaker economy:

• companies reduce hiring,
• investment slows,
• factories reduce capacity,
• some employers cut jobs.

That lowers overall labour demand.

Structural shortage

Germany’s demographic structure continues to change regardless of the business cycle.

The country has fewer young people replacing workers approaching retirement.

By 2040, approximately 13.3 million economically active people will have crossed retirement age.

That means a weak economy can temporarily reduce the intensity of the Fachkräftemangel.

It does not necessarily remove its underlying demographic cause.

And when economic growth returns, shortages can intensify quickly.

The solution starts with better internal workforce mapping

Before an employer concludes:

“We cannot find workers.”

it should know what skills already exist inside the organisation.

Traditional HR data often contains:

• employee name,
• department,
• job title,
• salary,
• reporting manager.

That is not enough for workforce transformation.

A proper skills inventory should also capture:

• machines operated,
• licences,
• certifications,
• software,
• languages,
• technical procedures,
• previous occupations,
• training history,
• supervisory capability,
• transferable competencies.

This allows businesses to identify people who could move into adjacent roles.

Reskilling should not mean starting from zero

Good reskilling identifies the gap between what someone already knows and what the new role requires.

Consider an industrial employee with experience in:

• mechanical systems,
• technical drawings,
• safety,
• maintenance,
• production processes.

The person may not be qualified for the new occupation today.

But the training requirement may be far smaller than developing a completely new employee.

This creates a more efficient workforce transition.

Training institutions also need to become more modular

Traditional long-duration programmes will remain essential.

But economic restructuring also creates demand for shorter bridge programmes.

These can help employees move between adjacent occupations by adding missing competencies instead of repeating knowledge they already possess.

Training institutes can ask:

What does this worker already know?

What does the target occupation require?

What exactly sits between the two?

That is a stronger reskilling model than treating every participant as a beginner.

International recruitment should complement the domestic workforce

If workers are available domestically and can realistically be reskilled, employers should consider that option.

International recruitment should not bypass available domestic talent.

But the opposite extreme is also ineffective.

Employers should not assume every open position can be filled by somebody who happens to be unemployed in Germany.

For occupations with genuine structural shortages, international recruitment remains necessary.

The Federal Employment Agency reports that since 2024 Germany’s employment growth has been driven exclusively by foreign workers.

The strongest approach is therefore:

Redeploy → Reskill → Train → Recruit internationally

Germany needs better matching, not simplistic narratives

Two popular narratives dominate discussion about the German labour market.

Narrative 1: Germany desperately needs millions of foreign workers.

Narrative 2: Germany has three million unemployed people, so it does not need immigration.

Neither describes the labour market accurately.

Germany needs a more precise conversation:

• Which occupation?
• Which qualification level?
• Which region?
• Which skills?
• Which timeframe?
• Which language?
• Which domestic workers can transition?
• Where does a genuine external shortage remain?

Workforce planning becomes much more effective once the discussion moves from headcount to capability.

What employers should do

For each critical occupation, ask:

Can we retain?

Would improved conditions, development or succession planning keep existing employees?

Can we redeploy?

Is someone internally already close to the required skill profile?

Can we reskill?

Could focused training bridge the gap?

Can we train?

Would Ausbildung create a longer-term pipeline?

Do we still have a shortage?

If so, international recruitment becomes a logical next workforce channel.

Germany’s labour-market paradox is actually a workforce opportunity

Restructuring will continue.

Technology will continue changing occupations.

Some jobs will disappear.

Others will grow.

Germany’s challenge is to move talent from where skills are becoming less necessary towards areas where they remain scarce.

And where the domestic workforce cannot generate sufficient numbers, Germany will still need targeted international talent.

The future of workforce planning is therefore not simply hiring.

It is:

mapping + redeployment + reskilling + training + targeted mobility.

How DEIN Talents supports employers

DEIN Talents focuses on the international component of this workforce ecosystem.

We work with employers to identify genuine recruitment gaps and build talent pipelines from India where domestic recruitment and workforce development cannot fully cover demand.

The starting point is always the role:not simply the availability of candidates abroad.

Frequently Asked Questions

Why does Germany have a skilled-worker shortage when unemployment is high?

Because unemployed workers and vacancies often do not match by occupation, qualification or region. The Federal Employment Agency describes this as a significant labour-market mismatch.

How many shortage occupations does Germany have?

The latest Federal Employment Agency analysis identifies 157 occupational categories with skilled-worker shortages.

Are German companies still cutting jobs?

Yes. Economic weakness and structural transformation are resulting in reductions in parts of the economy, particularly manufacturing. Volkswagen approved a major restructuring package in September 2026.

Can reskilling solve Germany’s labour shortage?

It can address part of the mismatch, particularly where workers have transferable skills. However, occupations requiring specific qualifications or experiencing demographic shortages may still require additional recruitment.

Does Germany still need international workers?

Yes. The Federal Employment Agency says employment growth since 2024 has been driven exclusively by foreign workers, while demographic change continues reducing domestic labour supply.

Sources

• Bundesagentur für Arbeit: shortage occupations and migration
• Bundesagentur für Arbeit: labour market in August 2026
• ifo Institute: skilled-worker shortage survey
• KfW Research: skilled-worker shortages Q2 2026
• Destatis: retirement-age workforce projection
• Reuters: Volkswagen transformation plan, 3 September 2026