German Machinery and Plant Engineering Sector Faces Stable Employment Amidst Economic Headwinds
Introduction
Germany’s machinery and plant engineering sector is bracing for a challenging 2025, with employment figures remaining largely stable but potentially facing some cuts in the near term. Ralph Wiechers, chief economist of the industry association VDMA, acknowledges the uncertainty surrounding the permanence of these cuts and the possibility of future hiring to compensate.
Employment Trends in 2024
Despite a slowdown in orders and production, the sector’s employment numbers declined by a mere 0.7% or 6,800 jobs in 2024. The VDMA (Verband Deutscher Maschinen- und Anlagenbau) reports that 1.02 million individuals were employed at companies with at least 50 employees as of the end of 2024, maintaining the industry’s position as Germany’s largest industrial employer.
VDMA’s Perspective
The VDMA believes that companies will make every effort to retain their core workforce due to the ongoing shortage of skilled labor. A majority (60%) of businesses anticipate maintaining their workforce size in the first half of 2025 despite the challenging environment.
However, the VDMA urges the incoming federal government to implement labor market reforms to improve the overall situation. The association advocates for a modern working time law that sets weekly rather than daily maximum working hours and significant reductions in bureaucracy, particularly in labor law.
Challenges and Outlook
The machinery and plant engineering sector is facing several challenges in 2025, including:
- Economic slowdown: The global economy is projected to slow down in 2025, which could impact orders and production levels within the sector.
- Supply chain disruptions: The ongoing COVID-19 pandemic and geopolitical tensions are continuing to disrupt global supply chains, making it difficult for companies to obtain necessary materials and components.
- Rising costs: Labor, energy, and raw materials costs have all increased significantly in recent months, putting pressure on companies’ profit margins.
- Skilled labor shortage: The sector continues to face a shortage of skilled workers, particularly in engineering and technical fields.
Despite these challenges, the VDMA remains optimistic about the long-term prospects for the machinery and plant engineering sector. The industry is known for its innovative products and services, which play a vital role in supporting economic growth and technological advancement.
VDMA’s Recommendations
To address the challenges facing the sector, the VDMA recommends that the incoming government take the following actions:
- Invest in infrastructure: Infrastructure projects stimulate economic growth and create demand for machinery and equipment.
- Promote innovation: Support research and development in fields related to the machinery and plant engineering industry.
- Reform labor market: Implement measures to increase labor participation and address the skilled labor shortage.
- Reduce bureaucracy: Simplify and streamline regulations in areas such as labor law and environmental protection.
By implementing these recommendations, the government can help create a conducive environment for the machinery and plant engineering sector to continue to thrive in a challenging economic climate.
