Struggling labor market: number of job openings cut in half over a three-year period

In a recent report by the Institute for Employment Research (IAB), it was revealed that Germany's job market is experiencing a recession, with the job seeker-vacancy ratio on the rise.

The report, which surveyed 9,549 employers across all sectors of the economy, showed that the job seeker-vacancy ratio nationwide stood at an average of 258 in the second quarter of 2025. This is a 72-job seeker increase compared to the same period last year, despite a decrease in job vacancies.

The decrease in job vacancies is significant, with the number of job vacancies falling to 1.06 million, a decrease of 119,300 or around 10% from the previous quarter. This marks a stark contrast to the record high of 2 million job vacancies recorded in the fourth quarter of 2022.

However, the decrease in job vacancies has not led to a significant change in the job seeker-vacancy ratio compared to the previous quarter, according to the IAB's survey. The gap between East and West Germany in the labor market is widening again, with the job seeker-vacancy ratio in East Germany standing at an average of 367 in the second quarter of 2025, higher than in West Germany.

The region in Germany with the highest number of job seekers per 100 job offers was Mecklenburg-Western Pomerania. This trend is concerning, as the job seeker-vacancy ratio is a measure of potential staff shortages in the labor market.

The economic slowdown is affecting the labor market in the first half of 2025, according to the IAB's accompanying commentary. Businesses are seeking workers due to poor order intake, a clear sign of the economic downturn.

Furthermore, unemployment in Germany has exceeded 3 million, a figure that has been on the rise in recent quarters. The number of job vacancies has halved on the labor market over three years, indicating a weaker economic performance.

The IAB report serves as a stark reminder of the challenges facing Germany's job market. As the economy continues to slow down, it is crucial for policymakers to address the rising job seeker-vacancy ratio and the east-west divide in the labor market to prevent further economic hardship.