The labor market situation of recent years shows: High employment and low unemployment are possible with the right policies and in a flourishing economy.
About the topic
The German labor market has been in a state of flux in recent years: Due to structural change and digitization, jobs have been lost in some sectors, for example in mining or industry, but at the same time many new jobs have been created in the digital world of work. However, despite recent successes, millions of people are still looking for a job, although skilled workers are becoming scarce as a result of demographic change. Going forward, therefore, the goal remains to increase labor force participation, promote occupational mobility, make it easier for people to get into jobs, and keep the shortage of skilled workers at bay for the economy.
Meanwhile, the demands on employees are changing rapidly. Digitalization and internationalization are shaping the labor economics. Aging and heterogeneous workforces pose difficult tasks for HR policy. Companies are well equipped if they succeed in balancing the different requirements.
Employees' earnings, i.e. wages and salaries, can be freely negotiated with their employers - in some cases, the leeway is limited by collective agreements. Wage policy also determines how many skilled workers employers can retain. Overall, wages have risen steadily over the past few years, which has led to an increase in prosperity.
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The EU Minimum Wage Directive recommends that EU Member States achieve a collective bargaining coverage of 80 per cent to ensure adequate minimum wages.
Collective bargaining coverage and functional income distribution in international comparison
The study examines whether a high level of collective bargaining coverage influences the functional income distribution between companies and employees.
IW-Report No. 29 19. June 2026 Ruth Maria Schüler / Stefanie Seele
Abolition of the Additional Earnings Limit
The ageing population in Germany is increasing pressure on the social insurance systems and will (in the future) exacerbate the shortage of skilled labour.
Research Unit: Labour Economics and Collective Bargaining Policy
The labor market situation of recent years shows: High employment and low unemployment are possible with the right policies and in a flourishing economy.
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Paula Risius / Dirk Werner / Philip Herzer / Fritz Orange / Regina Flake / Franziska Arndt / Yasin Küçükyavuz / Edgar Schmitz
In-company vocational training is a key factor in securing skilled labour. The first step in investing in future employees is to approach and recruit new apprentices. For many companies, filling the apprenticeship positions they offer is a challenge.
Contribution
31. August 2026
Samina Sultan in the Financial Times
Letter: Expanded EU carbon border tax is not a reaction to US tariffs
In his op-ed (August 12) Andrew Puzder, the US ambassador to the EU, accused the EU of double standards. He argued that criticising US tariffs on steel and aluminium derivatives while simultaneously imposing Carbon Border Adjustment Mechanism charges on the same products, is hypocritical.
European Minimum Wage Directive and Strengthening Collective Bargaining Coverage
Hagen Lesch / Lennart Eckle / Sandra Vogel
The EU Minimum Wage Directive recommends that EU Member States achieve a collective bargaining coverage of 80 per cent to ensure adequate minimum wages.
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Europe faces a dual challenge: eliminating lingering dependencies on energy imports while simultaneously accelerating the transformation towards climate neutrality.
Collective bargaining coverage and functional income distribution in international comparison
Christoph Schröder
The study examines whether a high level of collective bargaining coverage influences the functional income distribution between companies and employees.
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Driven especially by the policies of US President Donald Trump, rising global economic fragmentation and geopolitical disorder have lent renewed strategic importance to the prospective free trade agreement (FTA) between the European Union (EU) and the Gulf Cooperation Council (GCC).
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Jan Büchel / Jan Felix Engler / Nicolai Krüger*
The use of AI in Germany’s public sector not only offers potential for efficiency gains but, in view of the sector’s shortage of skilled staff, is also urgently needed.
Free and Fair Trade Club to build Middle Power Weight
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This paper proposes that the EU should build a cooperation platform together with the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership).
Free and Fair Trade Club – Deeper Cooperation Between the EU and the CPTPP
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The European Union and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership should build a lasting cooperation platform, which could be named the Free and Fair Trade Club, in order to achieve various geostrategic aims.
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