Germany’s manufacturing sector shed 177,000 jobs in 2025, shrinking to 6.5 million socially insured posts, the Federal Employment Agency reported Wednesday. The automotive and machinery industries took the heaviest hits – 52,000 positions vanished in the vehicle and parts sector, while machine builders lost 28,000. Against that backdrop, the cabinet approved a sweeping overhaul of labor-market rules aimed at making the employment system more flexible and cutting bureaucracy.
The centerpiece of the Modernization of Labor Promotion Act is a “job-to-job trial” period. Employees can now legally test a new role for up to four weeks without jeopardizing their existing status; in exceptional cases, the window extends to six weeks. The law also digitizes interactions with the Federal Employment Agency: “Digital First” means applications must primarily be submitted online, and video counseling will be expanded.
A major change for unemployment benefit recipients: the previous requirement to be reachable daily at a postal address will be scrapped. From January 2028, short-time work benefits (Kurzarbeitergeld) can only be applied for and processed electronically. The government aims to pass the bill by November 2026, describing it as a step toward a more citizen-friendly and efficient administration.
Alongside the modernization law, the Labor Ministry unveiled a separate concept on Thursday to slash red tape – promising annual savings of roughly €1 billion for companies. Combined with earlier measures since November 2025, the total relief package now reaches €10.4 billion.
The largest chunk comes from easing occupational safety rules. In small and medium-sized enterprises, up to 123,000 safety officers can be dropped, saving the economy around €720 million per year. Additional simplifications include: routine inspection of small electrical appliances such as kettles and charging cables in offices will be waived where risk is low (though commercial kitchens remain classified as high-risk wet rooms); truck driving bans will be standardized and will only apply on national public holidays, eliminating regional restrictions; electric cars will no longer require a green environmental badge; and merger-control turnover thresholds are being lifted to boost market dynamics.
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By the end of 2026, the government plans further steps, including abolishing the mandatory receipt requirement and introducing a “Building Type E” law to simplify construction standards.
On the global stage, the International Labour Organization adopted Convention No. 193 on June 12, setting the first legally binding minimum standards for decent work in the platform economy – covering algorithm transparency and rules on employment status. Meanwhile, the German Federal Chamber of Architects warned Tuesday of the economic consequences of extreme heat, estimating that heat stress could cost the world $7.1 trillion by 2050. It called for long-term, guaranteed funding for heat-protection measures to safeguard Germany as a business location.
