ifo Employment Barometer 2026: Manage Cuts Through Attrition

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.

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 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, 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). It measures intentions, so it shows decisions before official statistics do.

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.

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, 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.

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, 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.

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.

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.

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. 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.

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, planning for productivity instead of headcount in Responding to the skilled labour shortage through organisation.

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). A reduction of this size can also be an operational change requiring negotiations with the works council, as described in Operational change in reorganisations. 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 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.