German Employment Q2 2026: Knowledge Work Is Shrinking Too

The number of people in employment in Germany fell to around 45.7 million in the second quarter of 2026, 212,000 fewer than a year earlier. For the first time since the coronavirus crisis, services are also losing a noticeable number of workers, information and communication 1.5 per cent and business services 0.8 per cent, while according to EY the DAX groups posted record profit with 1.2 per cent fewer employees. The automotive industry accounts for almost all of the job cuts in the DAX, while the official figures neither confirm nor rule out AI as a cause of the decline in knowledge work. In our assessment, executive teams at knowledge-intensive service firms should plan productivity per head and role profiles for 2027 now, because the relief from AI arises in different roles from the departures. In our calculation for a service firm with 300 employees, departures offset the relief on average, yet administration and back office end up with eight positions too many while client management is six short.

Employment in Germany falls by 212,000 people in the second quarter of 2026

Employment in Germany fell by 212,000 people or 0.5 per cent year on year in the second quarter of 2026, faster than the decline of 190,000 in the first quarter. The Federal Statistical Office (Destatis) reported this in its press release of 18 August 2026 (in German). After seasonal adjustment, employment of around 45.7 million was 53,000 below the previous quarter. It has fallen by 0.1 per cent in every quarter since the second quarter of 2025 on a seasonally adjusted basis, while according to Eurostat employment in the EU and the euro area grew by an average of 0.5 per cent within a year.

Average hours worked per person in employment remained unchanged at 314.7 hours according to the Institute for Employment Research (IAB), so total hours worked fell in line with employment to 14.4 billion hours. On average, the economy is therefore adjusting capacity through headcount and hardly through working time.

Information and communication loses 1.5 per cent while public services grow

Among the service sectors, information and communication shrank by 1.5 per cent, a steeper relative decline than any other, while public services, education and health grew by 1.5 per cent or 187,000 people. Overall, employment in the service sectors fell by 27,000, which Destatis describes as the first noticeable decline since the coronavirus crisis.

Taking information and communication, business services and financial and insurance services together as knowledge-intensive services, these sectors lost around 75,000 people in employment within a year. This grouping is our own and imprecise, because according to Destatis business services also include the placement and supply of temporary workers. By our back-calculation from the Destatis figures, information and communication has around 1.6 million people in employment, so 24,000 fewer is a clear signal. Only the production sector excluding construction is shrinking faster, at minus 159,000 or 2.0 per cent, yet what is new is that the decline has reached areas where work is done mainly at a screen.

According to EY, the DAX groups achieve record profit with 41,000 fewer employees

According to EY, the DAX groups earned more in the second quarter of 2026 than in any previous second quarter while employing 1.2 per cent fewer people. Operating profit (EBIT) rose by 16 per cent to 52.6 billion euros according to the EY analysis of 14 August 2026 (in German). Revenue rose by 4.6 per cent to around 463 billion euros. On 30 June 2026 the groups had around 3.49 million employees, 41,000 fewer than a year earlier. Of the 37 companies that report headcount, 21 added jobs and 16 cut them.

Per employee, EBIT therefore rose by around 17 per cent to about 15,100 euros per quarter and revenue by around 6 per cent to about 132,700 euros, by our calculation from the rounded EY values. The headcounts of the groups are global, whereas Destatis counts people whose place of work is in Germany, so the two sources complement each other and cannot be added together.

EY attributes the jump in profit to sectors with exceptional demand, including defence, the beneficiaries of the AI and data centre boom and the financial sector with EBIT of 13.5 billion euros. The higher profit per head therefore shows mainly where demand has risen. As a measure of what AI achieves at the groups' desks it is of little use.

The automotive industry accounts for almost all job cuts in the DAX

Of the 41,000 jobs lost in the DAX within a year, EY attributes 40,000 to the automotive companies, whose workforce shrank by 5.2 per cent. By our calculation from the rounded figures, the remaining groups together employ about as many people as a year earlier. Part of the decline is also no dismissal, because EY explains the 21 per cent fall at Continental with a spin-off.

The DAX figures therefore offer only weak support for the thesis that large companies are achieving record results with fewer people in knowledge work, because they show cuts during a sector crisis and a profit increase from exceptional demand. The analysis nevertheless contains a qualitative signal for knowledge work. Alongside cost-cutting programmes, Henrik Ahlers, Chairman of the Management Board at EY, names a second trend: in his words, the advance of artificial intelligence is changing the employment structure in administrative functions in particular, which makes companies very cautious and reluctant when hiring.

Official statistics leave open whether AI is causing the decline in knowledge work

Destatis makes no link to AI in its release, so the decline in information and communication may equally follow from the weak economy, from savings programmes at clients or from automation. In business services, the temporary agency work included points in our view to a cyclical share, because agency work depends on demand from manufacturing.

In our assessment, AI is a plausible partial cause that these data can neither confirm nor rule out. In its favour is that the decline occurs where work consists of text, code and data. EY's report of cautious hiring in administrative functions fits this picture. Against a purely AI-based explanation stands the fact that the production sector is shrinking faster than any service sector. Which tasks AI changes is described in AI and jobs, what studies measure on productivity gains in AI productivity gains.

A service firm with 300 employees should calculate relief and departures by role

A service firm with 300 employees should set the expected relief for each role group against the departures in that group, because a balance on average hides surpluses and gaps in individual roles. The cause is secondary here: whether a client calls off fewer hours or a tool halves the time needed to prepare proposals, in both cases the firm needs fewer hours in certain roles for the same output. Any executive team can replace the assumptions of the example with its own values.

In the middle scenario, 32 full-time positions are freed up, 16 each in administration and back office and in specialist roles, which is 10.7 per cent of capacity or 2.56 million euros a year. At the same time 30 employees leave, 8 from administration and back office, 16 from specialist roles and 6 from client management, so that on balance two positions are left over.

Under a blanket hiring freeze, administration and back office keep eight more people than the firm needs there, while six positions on which revenue depends remain vacant in client management. If management plans by role group, six employees move from administration and back office into client management, for example from project assistance into account management. The firm then advertises none of the 30 vacated positions externally in 2027.

In this example, the threshold up to which departures absorb the relief is 30 positions or a 10 per cent time saving across all roles. In the high scenario 51 positions are freed up, so the firm has to increase its order volume by around 8 per cent or direct the freed-up hours into new services before it considers cuts.

Executive teams should set role profiles and productivity per head for 2027

Executive teams at knowledge-intensive service firms can derive an approach from the figures that ties the 2027 workforce plan to measured productivity and role profiles:

1. Record role groups: by the end of September 2026, HR assigns every position to a role group and describes the three tasks with the highest time share, as described in Role clarity: job profiles that settle accountability. Success means a profile with time shares exists for every position.
2. Measure time savings: by the end of October 2026, heads of department reorganise two administrative or back-office workflows and trial AI tools there, for example in proposal preparation and invoice checking. They measure hours per case before and after. Starting points are described in Lean management in knowledge work and Reducing overhead without losing performance.
3. Adopt the 2027 workforce plan in three scenarios: by the end of November 2026, management and controlling set the scenarios with positions per role group. The steering metric is revenue or gross profit per full-time position, as derived in Workforce cost and performance.
4. Approve refills by role group: from October 2026, management decides on every vacancy in administration and back office before it is advertised. The metric is the refill rate per role group.
5. Prepare role changes: by the end of 2026, HR development and heads of department describe the target roles in client management and project delivery and select candidates from administration and back office. The metric is the share of positions filled internally. Planning over three years is described in Strategic workforce planning for three years.
6. Involve the works council before the trial: under section 87(1) no. 6 of the Works Constitution Act (BetrVG), the works council has a right of co-determination on technical equipment intended to monitor the behaviour or performance of employees. Management therefore presents tools and scenarios before the trial begins, as described in Works council and AI introduction. This overview does not constitute legal advice.

Niehues Consulting combines organisation design with AI management and workforce planning

Niehues Consulting supports executive teams and heads of department in building organisations that deliver reliably. Organisation design creates structures, roles and decision paths for day-to-day business and for transformation. In delivery management, a delivery manager or product owner steers the programme until the change has arrived in operations. Where AI enters the workflows, a business case and a prototype are added, followed by introduction in the business units.

The approach follows the Niehues Delivery Model with its phases Understand, Build and Introduce. Before workforce planning by role group it asks three questions. In Understand: in which roles does AI save measurable time and where do departures occur? In Build: which role profiles, transfer paths and approvals does the plan require? In Introduce: are managers enabled and are the tools embedded in the workflows? Founder Marin Niehues, a management consultant from the delivery side, builds organisations that deliver. His projects range from venture-backed scale-ups to DAX 40 groups, with assignments in more than 20 countries on six continents. In the free 30-minute initial consultation you assess together where your firm stands in the three scenarios and which roles you can fill internally in 2027: book a consultation.