Ageing population threatens German labour market with 4.3 million worker gap

Germany could face a significantly larger labour shortage than previously estimated as its population continues to age, according to the employer-aligned Institute of the German Economy (IW).

The Rheinische Post newspaper reported on Saturday, citing an IW study it had reviewed, that Germany's labour market could face a shortfall of around 4.3 million workers by 2036.

Two years ago, the institute estimated the gap between new entrants to the labour market and those leaving it at about three million workers.

The revised forecast is based on new demographic data regarding population trends in Germany.

According to the latest projections, Germany's population is expected to decline to around 81.1 million by 2045, representing a 2.9 percent decrease from the current level.

The institute's 2024 projections had assumed moderate population growth through 2040.

The report attributed the change to a sharp decline in immigration, coupled with Germany's diminishing attractiveness as a destination due to persistent economic weakness and growing labour market challenges.

"By 2036, only 9.8 million people will reach working age. Based on population projections, this will result in a gap of 4.3 million people," the institute said.

According to the study, the potential labour force is expected to shrink by 6.9 percent, from 55 million people in 2025 to 51.2 million by 2036.

Over the longer term, the potential workforce is projected to decline by 8.3 percent to 50.4 million by 2045.

WAM