Germany Faces Mixed Landscape in Skilled Labor Shortage and Self-Employment Challenges in 2026

Germany is witnessing a nuanced transformation in its labor market as the skilled labor shortage eases to its lowest level in five years, while self-employed individuals continue to face substantial challenges including bureaucratic hurdles and a lack of political support.

According to a recent ifo Institute survey from February 2026, only 22.7% of German companies currently report difficulties in finding qualified personnel, a significant decline from 25.8% last October. Klaus Wohlrabe, head of the survey, noted that the improvement is partly due to a weak economy and ongoing technological shifts such as artificial intelligence. Notably, sectors like transport and logistics have experienced a sharp drop in shortage reports from 42.7% to 30.6%. However, certain industries continue to struggle: 58.4% of legal and tax advisory firms and 56.6% of temporary employment agencies report persistent shortages. The construction sector remains impacted with about 30% of businesses experiencing deficits, while retail has improved slightly with 21.6% facing staffing issues.

Despite this encouraging trend in skilled labor availability, the self-employed demographic in Germany paints a contrasting picture. Around four million people are self-employed, constituting 90% of German businesses. They raise significant concerns about being overlooked by government policies, which largely cater to traditional employees. Catharina Bruns highlighted that self-employed workers, including freelancers, deal with high bureaucratic barriers and lack equal political representation. Dr. Andreas Lutz of the Association of Founders and Self-Employed Germany criticized the government’s neglect of solo entrepreneurs and small businesses, underscoring the absence of a coherent support strategy.

Compounding these issues are complications with the German Pension Insurance, which applies stringent checks on self-employment status, deterring companies from engaging freelancers due to potential retroactive social security liabilities. One-third of self-employed individuals do not have any pension provision, and controversial proposals to impose mandatory public pension contributions risk making self-employment less attractive. The ongoing decrease in self-employment over the past 13 years adds urgency to calls for fostering entrepreneurship programs to alleviate labor shortages and modernize the workforce.

In summary, while German companies generally find it easier to fill skilled positions, significant structural and policy challenges remain, especially for the self-employed sector, which could influence future labor market dynamics and economic growth.