According to a forecast by the Institute for Labor Market and Vocational Research (IAB), unemployment in Germany will increase in the east and decrease slightly in the west in 2026.
Overall, there will be more or less stagnation, said the research institute of the Federal Employment Agency in Nuremberg.
“A faster recovery in consumption and investment would support regional labor markets,” said IAB researcher Rüdiger Wapler. However, new trade conflicts or geopolitical tensions could have a dampening effect. Structural change continues to present the regions with different challenges.
No trend reversal
Although there have been positive developments in some federal states, there is no trend reversal in sight, according to the regional forecast published on Friday. Overall, unemployment will fall by 0.4 percent in western Germany next year, while it will increase by 1.0 percent in eastern Germany.
The IAB researchers expect the largest increases in unemployment figures in Berlin with an increase of 2.0 percent, in Saxony with an increase of 1.5 percent and in Brandenburg with an increase of 1.2 percent. However, declines are forecast in Hesse (minus 1.9 percent), North Rhine-Westphalia (minus 1.3 percent) and Saarland (minus 0.8 percent).
Leader Bavaria
With an expected unemployment rate of 4.0 percent, Bavaria remains the country with the lowest rate. The highest values are still expected in the city states of Bremen (11.7 percent) and Berlin (10.4 percent). The rate remains unchanged in half of the federal states, with Berlin recording the greatest increase with an increase of 0.2 percentage points.
When it comes to employment subject to social security contributions, the IAB expects a slight increase of 0.2 percent in the west, but a slight decrease of 0.1 percent in the east. Hamburg is likely to be ahead nationwide with an employment increase of 0.9 percent, followed by Brandenburg with 0.5 percent. The largest declines are expected in Thuringia (minus 0.9 percent) and Saxony (minus 0.3 percent).