# ifo Employment Barometer 2026: Manage Cuts Through Attrition Author: Marin Niehues, Niehues Consulting · Published: 2026-10-29 · Leadership & Teams Source: https://www.niehuesconsulting.de/en/blog/ifo-employment-barometer-october-2026/ The ifo Employment Barometer rose to 95.5 points in October 2026, its highest level since June 2024, while manufacturing continues to plan with fewer staff and the automotive industry intends to cut further jobs. Manufacturers of data processing equipment and electronic and optical products want to hire, as do service providers. A mid-sized manufacturer with automotive customers should therefore build its 2027 workforce plan on scenarios with fixed triggers. Our calculation for a company with 300 employees shows that natural attrition plus six reskilling moves into shortage roles absorb 16 of the 18 positions that disappear from the automotive business in the unfavourable scenario, so that redundancies there can remain the exception. **Key facts at a glance** - The ifo Employment Barometer rose to 95.5 points in October 2026, up from 95.1 in September, the ifo Institute reported on 28 October 2026. - In manufacturing the situation worsened slightly compared with September, with the automotive industry in particular planning further job cuts. - Manufacturers of data processing equipment and electronic and optical products plan more new hires, as in every ifo release since July 2026. - Service providers are inclined to create jobs, their balance of plus 3.4 is the highest since May 2025, while trade and construction still plan with fewer staff. - In a manufacturing company with 300 employees, natural attrition plus six reskilling moves cover 16 of the 18 positions that disappear in the unfavourable 2027 scenario, according to our calculation. **The labour market is splitting within manufacturing, because job cuts in the automotive business continue while electronics and data processing are looking for people. A mid-sized company serving both customer groups should therefore plan 2027 in scenarios with triggers and manage reductions through attrition and reskilling, so that it keeps the skilled staff it will need in an upturn.** ## The ifo Employment Barometer rose to 95.5 points in October 2026 Companies in Germany want to cut fewer jobs than in previous months, although a broad expansion is not in sight. The index rose to 95.5 points from 95.1 in September, the [ifo Institute](https://www.ifo.de/en/press-release/2026-10-28/companies-germany-looking-cut-fewer-jobs-october-2026) reported on 28 October 2026. Klaus Wohlrabe, Head of Surveys at ifo, said: "Companies are becoming somewhat more cautious when it comes to cutting jobs. However, the upturn still lacks the strength for a broad expansion of the workforce." In April 2026 the barometer stood at 91.4 points according to the [ifo time series](https://www.ifo.de/sites/default/files/secure/timeseries/empl-e-202610.xlsx), which the ifo Institute described as the lowest level since May 2020. It has risen since then with one interruption in June. The October figure is the highest since June 2024, when it reached 95.8 points, but remains below the 2015 base value of 100 points. The barometer is based on around 9,500 monthly responses from companies on their staffing plans for the next three months ([ifo Institute](https://www.ifo.de/en/survey/ifo-employment-barometer)). It measures intentions, so it shows decisions before official statistics do. **The Employment Barometer in October 2026** - 95.5 | points for the ifo Employment Barometer, after 95.1 in September and 91.4 in April - −9.9 | is the balance for manufacturing, after −18.2 in July - +3.4 | is the balance for service providers, last this high in May 2025 - March 2023 | was the last time manufacturing planned a net increase in staff - 9,500 | company responses every month ## Only service providers plan a net increase in staff in October 2026 In October 2026, service providers are the only one of the four major sectors planning a net increase in staff. The ifo sector figures are balances: a value above zero means that more companies want to add staff than reduce it. Trade sits at the bottom with minus 14.7. Construction has fallen to minus 3.7, its lowest level since February 2025. ::: diagramm In October 2026 only service providers plan a net increase in staff, while trade and manufacturing keep cutting - !Services | 3.37 | +3.4 - Construction | -3.74 | −3.7 - Manufacturing | -9.93 | −9.9 - Trade | -14.7 | −14.7 Source: ifo Institute, ifo Employment Barometer, time series October 2026; balance of staffing plans for the next three months, around 9,500 responses per month The services balance of plus 3.4 is the highest since May 2025, up from minus 7.1 in April 2026. The September release names engineering firms, legal and tax consultants and auditors as hiring ([ifo Institute](https://www.ifo.de/en/press-release/2026-09-28/companies-germany-cutting-fewer-jobs-september-2026), 28 September 2026). This matters for manufacturers, because engineering firms compete for the same profiles in design, electrical engineering and automation that a manufacturer needs for new lines of business. ## Manufacturing's staffing balance has stayed at around minus ten since August Manufacturing has not yet reached the turning point, because after a jump in August its balance has stayed at around minus ten for three months. It stood at minus 18.2 in July, minus 9.7 in August and minus 9.9 in October. According to ifo, the situation worsened slightly in October. The balance was last positive in March 2023. ::: diagramm Manufacturing almost halved its job-cut balance in August and has stayed at around minus ten since - April 2026 | -20.52 | −20.5 - May 2026 | -18.34 | −18.3 - June 2026 | -17.29 | −17.3 - July 2026 | -18.19 | −18.2 - !August 2026 | -9.66 | −9.7 - September 2026 | -9.39 | −9.4 - October 2026 | -9.93 | −9.9 Source: ifo Institute, ifo Employment Barometer, time series October 2026; balance of staffing plans in manufacturing for the next three months Within manufacturing the industries are moving apart. Further jobs are to be cut in particular in the automotive industry, while manufacturers of data processing equipment and electronic and optical products are planning more new hires (ifo, 28 October 2026). The ifo Institute has named this group of manufacturers as an exception with expansion plans in every release since July ([ifo Institute](https://www.ifo.de/en/press-release/2026-08-27/companies-germany-cutting-fewer-jobs-august-2026), 27 August 2026). Industry-level figures are available only on request. A supplier that delivers housings, cable harnesses or precision parts to carmakers and to electronics manufacturers experiences both trends in one plant, so an average figure says little and its workforce plan has to be calculated by customer group and role. ## Mid-sized manufacturers should calculate their 2027 workforce plan in three scenarios A mid-sized manufacturer with automotive customers should therefore calculate three scenarios for 2027 and define a trigger for each. Any executive team can replace the assumptions below with its own figures. **Assumptions of the example calculation** - The company has 300 employees, 120 of them in production for automotive customers (automotive business) and 180 in the rest of the company. - Each year 8 per cent of employees leave through retirement, resignation or expiring fixed-term contracts, spread evenly across the areas. In the automotive business that is around 10 people. - In 2027 the company needs six additional specialists in automation, control engineering and data analysis, because it is winning customers in electronics manufacturing. - Scenario A (cuts continue): demand in the automotive business falls by 15 per cent, i.e. by 18 positions. - Scenario B (sideways): demand falls by 8 per cent, i.e. by around 10 positions. - Scenario C (recovery): demand stays at 120 positions. In scenario B, natural attrition in the automotive business covers the reduction, provided vacancies there are not refilled. In scenario A, eight departures are missing, leaving a surplus of eight people. If the company reskills six of them into the new roles in automation, control engineering and data analysis, the surplus falls to two, who can be absorbed through working-time models or partial retirement. The six shortage roles are then filled internally instead of in a market where, according to ifo, engineering firms and electronics manufacturers are also hiring. ::: diagramm Natural attrition plus six reskilling moves cover 16 of the 18 positions that disappear in the unfavourable scenario - Positions cut in scenario A (−15%) | 18 | 18 positions - !Attrition plus six reskilling moves | 16 | 16 positions - Positions cut in scenario B (−8%) | 10 | 10 positions - Natural attrition in the automotive business (8%) | 10 | 10 positions Source: own calculation by Niehues Consulting, October 2026; assumptions: 120 employees in the automotive business, 8 per cent annual attrition, six reskilling moves into shortage roles The calculation produces a threshold that says more than any single scenario. If demand in the automotive business falls by no more than 16 positions, around 13 per cent, attrition and reskilling manage the reduction without redundancies. In scenario C the task is reversed, because the company has to refill around ten positions and fill the six shortage roles on top, in a market where service providers are already hiring. **Three scenarios for workforce planning in 2027** Criterion | Scenario C: recovery | Scenario B: sideways | Scenario A: cuts continue Trigger | manufacturing balance rises above −5 and incoming orders from the automotive industry grow | manufacturing balance stays between −15 and −5, call-offs stable | ifo manufacturing balance falls below −15 again and automotive customers' call-offs decline for two consecutive months Demand in automotive business | ±0 positions | −10 positions | −18 positions Refilling | all departures refilled | freeze in the automotive business | freeze in the automotive business Shortage roles | reskilling plus external hires | reskilling plus external hires | six reskilling moves from the automotive business Residual measure | none | none | surplus of two people handled through working time or partial retirement The triggers combine the ifo indicator, which shows the direction of the sector, with call-offs from the company's own customers, which show the effect on the plant. We aligned the thresholds with the range of values since April 2026; each company should calibrate them against its own figures. ## Attrition and reskilling are enough as long as cuts stay below a fixed threshold Attrition and reskilling are enough as long as the reduction stays below this threshold, is spread over the year and departures occur where positions are disappearing. If mainly employees with sought-after profiles resign, the surplus remains in roles with less demand. The reliable figure in planning is therefore retirements, which HR knows for 2027 by name. If an automotive customer cuts its call-offs by a fifth at short notice, demand falls within months while departures are spread across the year. The plan then needs a bridge via working time, such as running down working-time accounts, before dismissals. Planning of this kind over three years is described in [Strategic workforce planning for three years](/en/blog/strategic-workforce-planning-three-year/). Because every retirement takes experience with it that scenario C will need again, each departure requires a handover, as described in [Knowledge management: retaining knowledge when people leave](/en/blog/retaining-knowledge-when-people-leave/). Reskilling works when the company describes the shortage roles precisely and selects candidates by suitability. A skilled worker with experience on CNC machines or in maintenance knows equipment and processes that an external applicant still has to learn. Key roles are covered in [Talent management: identifying and filling key roles](/en/blog/key-roles-talent-management/), planning for productivity instead of headcount in [Responding to the skilled labour shortage through organisation](/en/blog/skilled-labour-shortage-organisational-response/). If redundancies are unavoidable, fixed rules apply in Germany. Under section 17 of the Dismissal Protection Act (KSchG), a business with 300 employees must notify the Federal Employment Agency in advance if it dismisses more than 25 employees within 30 calendar days ([section 17 KSchG](https://www.gesetze-im-internet.de/kschg/__17.html)). A reduction of this size can also be an operational change requiring negotiations with the works council, as described in [Operational change in reorganisations](/en/blog/operational-change-social-plan-germany/). This overview does not constitute legal advice. Involving the works council at the scenario stage allows rules for training and redeployment to be agreed before a trigger is reached. ## Executive teams in mid-sized companies should plan scenarios, departures and reskilling now Executive teams can derive six steps from the barometer: 1. Agree scenarios and triggers: by mid-December 2026, management, controlling and HR define three scenarios with headcount per area and triggers. Success means the 2027 workforce plan is adopted with the budget. 2. Record departures by area: by the end of November 2026, HR compiles retirements, expiring contracts and the resignation rate of the last three years per area. From January it tracks expected against actual departures every quarter. 3. Require approval for refilling vacancies: from January 2027, management and the head of department decide on every vacancy in the automotive business before it is advertised. The metric is the refill rate per area and month. 4. Describe shortage roles and start reskilling: by the end of March 2027, technical management and HR development define the roles in automation, control engineering and data analysis and select candidates from the automotive business. The metrics are the share of shortage roles filled internally and the time to fill them. 5. Involve the works council early: management presents the scenarios in December 2026 and agrees rules for training, redeployment and working time by the end of March 2027, before any trigger for scenario A is reached. 6. Review monthly: after every ifo release, management checks the manufacturing balance, automotive call-offs and orders from electronics manufacturing. The metric is the deviation from the planned scenario in positions. ## Niehues Consulting combines organisation design with scenario-based workforce planning [Niehues Consulting](/en/) 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 scenario-based workforce planning it asks three questions. In Understand: which areas are growing, which are shrinking and which roles are missing? In Build: which roles, decision paths and triggers does the plan require? In Introduce: are managers enabled and is reskilling embedded in the workflow? 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 which scenarios your company should calculate for 2027 and which roles you can fill internally: [book a consultation](/en/#kontakt). **What executives can take from the ifo Employment Barometer for October 2026** The ifo Employment Barometer is rising to 95.5 points while automotive and electronics plan in opposite directions and service providers compete for profiles that manufacturers also need. A mid-sized company with automotive customers therefore plans 2027 in scenarios with triggers. In our example with 300 employees, attrition and reskilling absorb a reduction of up to 16 positions, so redundancies only become an issue if the automotive business shrinks by more than 13 per cent. **Sources** - [ifo Institute: Companies in Germany Looking to Cut Fewer Jobs (October 2026)](https://www.ifo.de/en/press-release/2026-10-28/companies-germany-looking-cut-fewer-jobs-october-2026), press release, 28 October 2026 - [ifo Institute: ifo Employment Barometer, time series since January 2002](https://www.ifo.de/sites/default/files/secure/timeseries/empl-e-202610.xlsx), October 2026 edition - [ifo Institute: Companies in Germany Cutting Fewer Jobs (September 2026)](https://www.ifo.de/en/press-release/2026-09-28/companies-germany-cutting-fewer-jobs-september-2026), 28 September 2026 - [ifo Institute: Companies in Germany Cutting Fewer Jobs (August 2026)](https://www.ifo.de/en/press-release/2026-08-27/companies-germany-cutting-fewer-jobs-august-2026), 27 August 2026 - [ifo Institute: Job Cuts Intensify in Germany (April 2026)](https://www.ifo.de/en/facts/2026-04-29/job-cuts-intensify-germany-april-2026), 29 April 2026 - [ifo Institute: ifo Employment Barometer, survey description](https://www.ifo.de/en/survey/ifo-employment-barometer) - [Dismissal Protection Act (KSchG), section 17 notification requirement](https://www.gesetze-im-internet.de/kschg/__17.html) - Example calculation and scenarios: own calculation by Niehues Consulting using the assumptions stated in the article ::: faq Frequently asked questions ### When did the ifo Institute publish the Employment Barometer for October 2026? The ifo Institute published the Employment Barometer for October 2026 on 28 October 2026. The index rose to 95.5 points from 95.1 points in September. ### Which sectors want to hire in October 2026? Service providers lean towards hiring, with a balance of plus 3.4. Within manufacturing, makers of data processing equipment and electronic and optical products plan more new hires. ### When did manufacturing last plan to add staff? According to the ifo Institute, manufacturing last planned to expand its workforce at the start of 2023. Its balance in the time series was last positive in March 2023. ### What does the Employment Barometer mean for mid-sized manufacturers in Germany? Mid-sized manufacturers in Germany should calculate their 2027 workforce plans by customer group and role, because automotive and electronics are planning in opposite directions. Scenarios with fixed triggers show from what decline attrition and reskilling are no longer sufficient. ### When are attrition and reskilling no longer enough for a reduction in staff? Attrition and reskilling are no longer enough when the reduction is larger than departures plus reskilling moves in the affected area. In our example with 120 employees in the automotive business, the threshold is 16 positions, around 13 per cent a year. ### When does a company have to notify the Federal Employment Agency of dismissals? Under section 17 of the Dismissal Protection Act, a business with 60 to 499 employees must notify dismissals if it dismisses 10 per cent of its workforce or more than 25 employees within 30 calendar days. This overview does not constitute legal advice.