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IW-Trends No. 3 1. September 2025 Martin Beznoska The Efficiency of Public Employment in Germany’s States, Counties and Municipalities

Over the past ten years, the number of people employed in the public sector in Germany has risen significantly – by 24 percent at the municipal and county level and by almost 12 percent at the state level.

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The Efficiency of Public Employment in Germany’s States, Counties and Municipalities
IW-Trends No. 3 1. September 2025 Martin Beznoska

The Efficiency of Public Employment in Germany’s States, Counties and Municipalities

Martin Beznoska German Economic Institute (IW) German Economic Institute (IW)

Over the past ten years, the number of people employed in the public sector in Germany has risen significantly – by 24 percent at the municipal and county level and by almost 12 percent at the state level.

Despite this growth in employee numbers, there are continued reports of staff shortages, with the discussion focusing mainly on additional employment in specific fields rather than on the efficient deployment of personnel overall. Using an econometric benchmark model, this study analyses whether the increase in personnel at the county and municipality level is justifiable, taking into account changes in regional structural factors such as demographics, the number of welfare claimants and infrastructure. The results reveal considerable differences between regions: some local authorities have managed with moderate staffing increases despite challenging conditions, while others have seen an above average expansion of their workforce. For example, if public sector employment at the state, county and municipal levels is compared between Germany’s sixteen states, the eastern state of Saxony-Anhalt is shown to have increased employment at a rate well below what could have been expected, though the level remains high. The northernmost state of Schleswig-Holstein, on the other hand, manifests the most inefficient employment trend with an inexplicable upward deviation from the value expected. Overall, there is a potential saving of around 60,000 full-time equivalents if all states were to follow a trend similar to Saxony-Anhalt’s.

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The Efficiency of Public Employment in Germany’s States, Counties and Municipalities
IW-Trends No. 3 1. September 2025 Martin Beznoska

The Efficiency of Public Employment in Germany’s States, Counties and Municipalities

Martin Beznoska German Economic Institute (IW) German Economic Institute (IW)

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Reform of Personal Income Tax
IW-Policy Paper No. 5 30. June 2026 Martin Beznoska / Tobias Hentze

Reform of Personal Income Tax

Reforming personal income tax has been on the political agenda for years. Although bracket creep has largely been offset over the past ten years, the income tax schedule itself has not been structurally reformed.

Martin Beznoska / Tobias Hentze IW

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IW-Report No. 61 24. November 2025 Björn Kauder

Public spending in international comparison: Where does Germany stand in comparison to its neighboring regions?

Germany faces numerous political challenges. How these tasks are prioritized is reflected in spending policy. It is not without reason that the budget is often referred to as “politics cast in numbers.”

Björn Kauder IW

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