According to the Federal Statistical Office, the number of employees in the manufacturing industry fell by around 120,000 in August 2025 compared to the same month last year. In addition to declining orders, the German Steel and Metal Processing Association (WSM) cites high labor costs compared to the rest of Europe as one of the main causes. An hour's work in German industry currently costs 43% more than the EU average. According to IW Köln, unit labor costs are also 22% higher than in the 27 EU countries.
Association calls for cost-cutting reforms
"Bold social reforms create headwinds - but better headwinds than doom," warns WSM Managing Director Christian Vietmeyer. The Düsseldorf-based association, the mouthpiece of 13 industry associations and around 5,000 companies, points to a growing trend towards migration: according to an Allensbach study, 94% of energy-intensive companies expect to relocate production abroad. Medium-sized companies in particular are under strong cost pressure, emphasizes WSM President Ulrich Flatken. "Our members can hardly afford to keep their employees at their location. Customers are increasingly demanding production elsewhere," says Flatken, who is also CEO of the Mecanindus Vogelsang Group. The association warns that relocating production and downsizing will lead to a loss of industrial substance and expertise.
Political measures called for
The WSM is calling for social security contributions to be capped and existing systems to be reviewed. According to the association, working life, non-insurance benefits and the cost structure of the healthcare system should be put to the test. "Performance must be worthwhile again," says Executive Committee member Thomas Hüttenhein. The association is also critical of the planned increase in the income thresholds for health and long-term care insurance to an expected €69,750 in 2026.
Concerns about the attractiveness of the location
Without structural relief, there is a threat of further loss of well-paid industrial jobs and thus a weakening of the business location, warns the WSM. "Anyone who votes against social reforms is voting for rising unemployment," summarizes Vietmeyer. Politicians must act now to secure competitiveness and prosperity in Germany.