Pressure is mounting on the CDU, CSU, and SPD in Berlin as the metal industry fears further massive job losses and demands rapid reforms. Gesamtmetall points to the loss of 320,000 jobs since 2019 and estimates that another 300,000 positions lack sufficient work due to low capacity utilization. At the same time, the governing coalition is at odds over taxes, social security contributions, working hours, and energy costs, prompting companies to postpone investments or consider locations abroad.
Why the metal industry is warning of further job cuts
Oliver Zander, Director General of Gesamtmetall, describes the industry’s situation as exceptionally critical. Capacity utilization stands at just 79 percent, whereas 85 percent is considered normal. Consequently, the association estimates a surplus of 300,000 jobs.
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Zander also uses unusually strong language: “We are facing a crisis the likes of which Germany has not seen since the Second World War.” He also points to the loss of more than 15,000 jobs in April alone.
Job cuts spreading across the entire industrial sector
However, the warning applies to more than just individual companies. In the metal industry, suppliers, local municipalities, and social security funds all rely on well-paid industrial jobs. Consequently, when these jobs vanish, purchasing power, trade tax revenue, and the contribution base all decline simultaneously.
Other data also point to a weak situation. The ifo Employment Barometer fell to 92.3 points in June. Plans to cut staff continue to predominate in the industrial sector, while any sustained recovery in the labor market remains elusive.
Social security contributions driving costs even higher
Gesamtmetall, however, does not view collectively bargained wages as the primary problem. Zander criticizes, above all, rising social security contributions, as these are borne jointly by employers and employees. According to a projection by IGES, total social security contributions could reach around 50 percent by 2035.
The financing of healthcare costs for recipients of basic income support is a particularly contentious issue. Zander cites a figure of twelve billion euros annually for this purpose—funds that, in his view, should come from the federal budget. He also warns against raising contribution assessment ceilings, noting that such a move could affect around one million employees in the sector by 2027.
Coalition to decide on business location costs
The coalition committee is therefore set to deliberate on issues including long-term care, health insurance, pensions, tax reform, and the labor market. The Union (CDU/CSU) is demanding greater flexibility regarding working hours, whereas the SPD emphasizes high standards of worker protection. Regarding income tax, the two sides are also at odds over potential relief measures and how to fund them.
Meanwhile, the size of the state continues to grow. According to Destatis, around 5.5 million people were employed in the public sector in mid-2025—an increase of 95,100 compared to the previous year. While the metal industry is shedding jobs, employment and costs in the public sector continue to rise.
Further Relocations Loom Without Reforms
For businesses, predictability is what ultimately matters. High energy prices, lengthy permitting processes, and rising social security contributions are dampening investment in Germany. Consequently, the dispute within the governing coalition is becoming a litmus test for the country’s future as a business location.
The metal industry is calling for lower labor costs, less red tape, and greater flexibility. Without such reforms, the gap between Germany and lower-cost countries will continue to widen. In that event, companies will relocate not only production but also R&D and future investments.
Author: Blackout News
Sources: Fokus (30.06.26) – Gesamtmetall (30.06.26) – Ifo Institut (26.06.26) – Handelsblatt (25.06.26)