German Companies Plan Largest Job Cuts Since Pandemic Amid Geopolitical and Economic Turmoil

German companies are preparing to undertake the biggest wave of job cuts since the onset of the COVID-19 pandemic, according to the latest data from the Ifo Institute. The employment barometer, a key indicator of labor market health, fell to 91.3 points in April 2026, its lowest level since May 2020, reflecting worsening business sentiments and widespread uncertainty.

The decline is primarily attributed to geopolitical tensions centered around the ongoing conflict in the Middle East, particularly the Iran crisis, which has severely disrupted vital trade routes. This disruption has caused sharp increases in energy prices, hitting multiple industries hard and leading to an overall tightening of the labor market. Klaus Wohlrabe, head of Ifo surveys, noted that these geopolitical uncertainties are prompting companies to plan more job cuts than hires across nearly all sectors, including industry, wholesale and retail trade, logistics, and services.

The industrial and logistics sectors have been particularly affected by rising fuel costs and the challenging global environment. The service sector’s employment indicator plummeted to its lowest point since the pandemic began, with tourism similarly experiencing staffing reductions.

In addition, the Ifo business climate index dropped to 84.4 points in April from 86.3 points in March, marking the lowest level since May 2020. Ifo President Clemens Fuest described the impact of the Iran crisis as "hard" on the German economy, underscoring the severity of current market conditions.

Looking ahead, experts from the Institute for Employment Research express a pessimistic outlook, suggesting that a substantive improvement in the labor market will only be conceivable once global uncertainties ease. The situation reflects broader economic strain caused by geopolitical instability and soaring energy costs, signaling a challenging period for the German workforce.