• Share of businesses impacted by skilled worker shortages has more than halved since 2022
• Decline is mainly due to ongoing economic weakness
• Skills shortages are most pronounced in construction and the services sector

Skilled labour remains in short supply in Germany, but the shortage is much less pronounced than three years ago. At the beginning of the second quarter of 2026, 21 per cent of businesses in Germany reported that their business activity was constrained by skills shortages. Four years ago, that figure was more than twice as high. Workforce shortages are most pronounced in manufacturing and continue to heavily constrain many services sectors as well as small and medium-sized enterprises (SMEs).

The decline follows a clear pattern. Shortages are easing noticeably in areas where the economy is languishing. Only 14 per cent of manufacturing enterprises now report shortages, down from a record 44.5 per cent in the third quarter of 2022. Many companies are grappling with weak demand, high energy costs and international competitive pressure, so they have scaled back their hiring. Skills shortages are therefore easing, although the structural supply of skilled labour has hardly improved.

The picture is different in areas where demand for services remains high or is even growing despite the lull. In the services sector, 25 per cent of businesses are affected by skilled worker shortages, which is significantly more than average. The situation remains tense for law firms and tax consultancies, in the transport and hospitality sectors, for architecture and engineering firms, and for facility management and gardening services. Just under one third of businesses in the main construction industry report constraints as a result of skills shortages. However, public investment in roads, railways, canals, pipelines and cable networks in particular are stabilising demand for construction services.

Labour shortages are a particular problem for SMEs. In April 2026, skills shortages were a constraint on the business activity of 22 per cent of small and medium-sized enterprises, whereas this figure was a significantly lower 19.3 per cent for large enterprises. The gap is even wider in manufacturing, with 18.3 per cent of SMEs but only eight per cent of large enterprises reporting shortages. As they compete for skilled labour, many SMEs are unable to offer the attractive employment packages of large enterprises.

“The skills shortages in German enterprises have eased somewhat. Unfortunately, this is mostly due to the ongoing economic weakness,”

said Dr Dirk Schumacher, Chief Economist of KfW.

“Skilled labour shortages will presumably worsen again when the economic situation improves. It is therefore important not to ease up on measures to address them. Young people should be attracted to shortage occupations. Lifelong continuing education, lifting the workforce participation rate of women and older people, and skilled migration are further important ways to ease the strain on the labour market in the long term.”

You can find the KfW-ifo Skilled Labour Barometer at: KfW-ifo Skilled Labour Barometer | KfW

KfW supports SMEs with a number of promotional programmes on behalf of the Federal Government. More information is available at We are strengthening the SME sector (German page).