OCDE - OECD Employment Outlook 2026 Germany

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OECD EMPLOYMENT OUTLOOK 2026: GERMANY © OECD 2026

These country notes provide an overview of the labour market situation in each country based on data from OECD Employment Outlook 2026. This edition has a special focus on geographic disparities in job s and incomes. Labour markets remain resilient but show further signs of weakening The OECD labour market remains resilient, with employment and labour force participation rates at record highs (72.1 and 76.7% in Q1 2026 on average across countries, respectively) a nd unemployment low by historical standards (4.9% in May 2026). However, there are increasing signs of weakening, including rising unemployment in many countries, slowing employment growth, and easing labour shortages. Due to the new surge in energy prices, real wages are expected to fall in many countries. • The German unemployment rate stood at 3.8% in May 2026, well below the OECD average. However, it has increased from 3.7% in May 2025 and 3.4% in May 2024. At the same ti me, Germany has seen an upward trend in labour force participation. In Q1 2026, it stood at 80.5%, up from 80.3% in Q1 2025 and 79.9% in Q1 2024. Developments in the employment rate wer e more muted. In Q1 2026, the employment rate was standing at 77.3%, similar to where they stood in Q1 2025, but up marginally from 77.2% in Q1 2024. • Germany is where labour market tightness has decreased the most across the OECD by Q1 of 2026, falling to 0.3 vacancies per unemployed person below pre‑crisis level in Q4 2019. However, due to several structural reasons (e.g. including population ageing, the digital transformation, the move toward carbon neutrality), labour market tightness remains relatively high com pared to the

2026, falling to 0.3 vacancies per unemployed person below pre‑crisis level in Q4 2019. However, due to several structural reasons (e.g. including population ageing, the digital transformation, the move toward carbon neutrality), labour market tightness remains relatively high com pared to the early 2010s, when it was more than 0.6 vacancies per unemployed person below Q4 2019. • Labour hoarding in Germany, measured as the share of firms expecting their output to decr ease without decreases in their workforce, stood at 11.8% in Q1 2026, down from 13.9% in Q1 2025, yet still noticeably up from the pre-pandemic level, when it stood at 10.6% Q4 2019. This persistence is notable despite the simultaneous decline in German labour market tightness. • In Germany, real wages have increased by 1.2% between Q1 2026 and Q1 2025, compa red to a more marked increase of 2.2% on average across the OECD. With modest increases over r ecent years, German real wages are now 0.9% above the Q1 2021 level (before the inflati on surge episode), while real wages have risen to 1.2% above the Q1 2021 level on av erage across the OECD. Despite the recent inflationary pressure due to the surging of energy prices, German real wages are projected to increase by around 1% in 2026 and 2027, assuming that that the disruptions from the conflict in the Middle East are sizeable but limited to a relatively short period of time. Germany2 

OECD EMPLOYMENT OUTLOOK 2026: GERMANY © OECD 2026

Real wage growth is slowing down while real wages remain below Q1 2021 levels in one-third of OECD countries Change in real hourly wages, Q1 2026 or latest

Note: “OECD” is the median of 37 OECD countries (not including Colombia).

Real wage growth is slowing down while real wages remain below Q1 2021 levels in one-third of OECD countries Change in real hourly wages, Q1 2026 or latest

Note: “OECD” is the median of 37 OECD countries (not including Colombia).

Source: Chapter 1 in OECD Employment Outlook 2026: Geographic Disparities in Jobs and Incomes, https://doi.org/10.1787/7e710f54-en.

People’s employment prospects are shaped by where they live Regional disparities in labour market outcomes are large across the OECD. In over half of OECD countries, employment rates across small regions vary by more than 20 percentage points (p.p.). These disparities do not simply reflect differences in who lives where, but also in the economic o pportunities that regions have to offer, and they translate directly into disparities in living standards. • In Germany, the gap between regions in the top and bottom quintiles of employment rates stands at 12.4 p.p., slightly greater than average disparities of 11.4 p.p. across OECD c ountries where data are available (with a range from 3.2 p.p. in Costa Rica to 24.8 p.p. in Italy). These regional disparities are particularly persistent in Germany, where regional gaps in employment rat es have not narrowed significantly since the early 2010s, unlike in most other OECD countries. • People’s chances of finding work are strongly shaped by where they live. In 2023, the unemployment rate in the worst-performing Kreis, Gelsenkirchen, stood at 16.1%, multiples higher than that of the best-performing one, Pfaffenhofen an der Ilm (2.1%). • Strong and weak labour markets tend to group together geographically. Kreise with high unemployment are found in the east, which are still bearing the structural legacy of reun ification, and in the Ruhr area, scarred by decades of decline in the coal and steel industries. Those wi th low unemployment are concentrated in the south of the country. Therefore, workers seeking better

unemployment are found in the east, which are still bearing the structural legacy of reun ification, and in the Ruhr area, scarred by decades of decline in the coal and steel industries. Those wi th low unemployment are concentrated in the south of the country. Therefore, workers seeking better employment opportunities would often need to relocate over long distances. 3

OECD EMPLOYMENT OUTLOOK 2026: GERMANY © OECD 2026

Structural transformation reshapes local labour markets unevenly Globalisation and digital technologies continue to reshape local labour markets across OECD countries, but the effects differ substantially across regions. Areas highly exposed to import competition from lowwage countries often face persistent manufacturing job losses, while regions exposed to d igital technologies tend to experience stronger growth in non-routine and higher-skilled employ ment. • In Germany, Kreis Dingolfing-Landau is the most exposed to import competition from low-wage countries, particularly due to the high concentration of the automobile industry and its supply chain, while Kreis Vorpommern-Rügen sees the country’s lowest exposure. • Like elsewhere, exposure to regional low-wage competition is associated with decr eases in manufacturing employment in Germany, but regional employment growth in non-manufacturing sectors offsets these declines from the start. Particularly in the 2010s, these offsetting effects led to robust overall employment growth linked to exposure to low-wage competition. • At the national level, imports from China largely displaced German imports fr om other low-wage countries rather than competing directly with domestic producers, muting the adverse manufacturing effects. Increased imports from low-wage countries went together with increased exports, suggesting that overall international trade led to the creation of more m anufacturing jobs than it destroyed. • As elsewhere, the adjustment in regional manufacturing employment as a response to s tructural change in Germany is brought about largely by flows into and out of employment (workers entering or leaving employment), while regional and industry mobility play only a minor role. The decline in manufacturing employment due to low wage import competition mainly results in workers moving out of work rather than flows to other industries or regions

change in Germany is brought about largely by flows into and out of employment (workers entering or leaving employment), while regional and industry mobility play only a minor role. The decline in manufacturing employment due to low wage import competition mainly results in workers moving out of work rather than flows to other industries or regions Effect of a standard-deviation increase in regional trade exposure on manufacturing employment as a share of initial manufacturing employment, decomposed into the contribution of net worker flows

Note: A one standard-deviation increase in regional trade exposure corresponds approximately to moving from a region with average exposure to one around the 80th to 90th percentile.

Source: Chapter 3 in OECD Employment Outlook 2026: Geographic Disparities in Jobs and Incomes,

https://doi.org/10.1787/7e710f54-en.4 

OECD EMPLOYMENT OUTLOOK 2026: GERMANY © OECD 2026

The increase in non-manufacturing employment associated with low wage import competition tends to offset job losses in manufacturing Effect of a standard-deviation increase in regional trade exposure on non-manufacturing employment as a share of initial non-manufacturing employment, decomposed into the contribution of net worker flows

Note: A one standard-deviation increase in regional trade exposure corresponds approximately to moving from a region with average exposure to one around the 80th to 90th percentile.

Source: Chapter 3 in OECD Employment Outlook 2026: Geographic Disparities in Jobs and Incomes,

https://doi.org/10.1787/7e710f54-en. Non-compete clauses are widespread beyond high-skill occupations Non-compete clauses – contract terms that prevent workers from moving to a competitor or starting a competing business – and related contractual restrictions are widespread across OECD labour markets. they covered about 30% of workers in 2025, and are increasingly used beyond highly spec ialised jobs. While firms may use such clauses to protect trade secrets or investments, evidence sugg ests they can reduce job mobility, weaken wage growth, slow knowledge diffusion and undermine productivity growth.

they covered about 30% of workers in 2025, and are increasingly used beyond highly spec ialised jobs. While firms may use such clauses to protect trade secrets or investments, evidence sugg ests they can reduce job mobility, weaken wage growth, slow knowledge diffusion and undermine productivity growth. • According to employers, between 24% and 35% of private-sector employees in Germany are currently bound by a non-compete agreement compared to an average of 20% to 30% across the OECD countries. Firms in Germany report an upward trend, suggesting growing relian ce on contractual restrictions in the German labour market. • In Germany, as in several other OECD countries, non-compete clauses have spread into parts of the labour market where the traditional justification, such as protecting sensitive informati on or high-value investments, appears weak. For example, between 9% and 25% of workers with no access to confidential information nonetheless declare having signed a non-compete agreement as well as between 10% and 24% of low-pay workers. • In addition, about 30% of surveyed firms in Germany report knowledge of either no-poachi ng, wage-fixing, or both occurring within their industry compared to 48% on average across the surveyed countries. 5

OECD EMPLOYMENT OUTLOOK 2026: GERMANY © OECD 2026

Share of employees bound by non-compete clauses as reported by employers

Source: Chapter 5 in OECD Employment Outlook 2026: Geographic Disparities in Jobs and Incomes, https://doi.org/10.1787/7e710f54-en.

Contact Jonas FLUCHTMANN ( jonas.fluchtmann@oecd.org) Stéphane CARCILLO ( stephane.carcillo@oecd.org)6 

OECD EMPLOYMENT OUTLOOK 2026: GERMANY © OECD 2026

This work is issued under the responsibility of the SecretaryGeneral of the OECD, and does not necessarily reflect the official views of OECD Member countries.

OECD EMPLOYMENT OUTLOOK 2026: GERMANY © OECD 2026

This work is issued under the responsibility of the SecretaryGeneral of the OECD, and does not necessarily reflect the official views of OECD Member countries. This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. Note by the Republic of Türkiye The information in this document with reference to “Cyprus” relate s to the southern part of the Island. There is no single authority representing both Turkish and Greek Cypriot people on the Island. Türkiye recognises the Turkish Republic of Northern Cyprus (TRNC). Until a lasting and equitable so lution is found within the context of the United Nations, Türkiye shall preserve its position concerning the “Cyprus issue”. Note by all the European Union Member States of the OECD and the European Union The Republic of Cyprus is recognised by all members of th e United Nations with the exception of Türkiye. The information in this document relates to the area under the effective control of the Government of the Republic of Cyprus.

The full book is available in English: OECD (2026), OECD Employment Outlook 2026: Geographic Disparities in Jobs and Incomes, OECD Publishing, Paris, https://doi.org/10.1787/7e710f54-en.

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OECD 2026

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