The numbers coming out of Germany, Poland, and across the eurozone reveal a stark reality.
Over a third of German companies plan to cut jobs this year.
According to the German Economic Institute, 38% of companies operating in Germany are preparing workforce reductions in 2026. In manufacturing and industrial sectors, that figure jumps to 41%.
Germany isn’t an outlier. It’s a bellwether.
The Numbers
The eurozone’s labor market is projected to grow by just 0.6% this year, down from 0.7% in 2025.
Poland, an economic powerhouse within the EU, expects unemployment to climb from 5.1% to 5.5%.
Two major forces are colliding: an industrial slowdown across Europe and the rapid adoption of AI-driven automation.
AI Moved From Experiment to Implementation
37% of business leaders expect to replace human workers with AI by the close of 2026. That’s according to recent research tracking AI adoption across industries.
Companies have moved past experimentation.
The share of firms using AI in at least one business function jumped from 20% in 2017 to 78% in 2024. Generative AI adoption alone surged from 33% to 71% between 2023 and 2024.
Nearly 30% of EU workers already use AI tools daily.
European banks plan to cut 200,000 jobs by 2030 as they replace workers with AI systems—approximately 10% of the workforce in an industry that has traditionally provided stable, well-paying employment.
54% of banking jobs have high potential for AI automation.
The Automotive Industry Shows How Fast Things Can Change
Germany’s automotive sector lost 51,500 employees between Q2 2024 and Q2 2025. That’s about 6.7% of the sector’s total workforce disappearing in a single year.
The cuts aren’t stopping. Continental’s automotive division is cutting 3,000 jobs in research and development by the end of 2026. Porsche plans to cut 1,900 jobs by 2029, following 2,000 previous cuts through contract non-renewals. Mercedes-Benz is offering voluntary severance packages to save €1 billion in personnel costs by 2027.
These are industry leaders restructuring for a future that requires fewer human workers.
Since January 1st, 2025, over 5,296 companies have announced mass layoffs. DHL is cutting around 8,000 jobs in Germany to save over €1 billion. Ericsson proposed 1,600 job cuts in Sweden.
The pattern is consistent across sectors and geographies.
The Collapse of Worker Leverage
Worker confidence has declined over the past year. The leverage employees gained during the pandemic era, particularly around remote work arrangements, is evaporating.
Entry-level opportunities are tightening. Employers increasingly use automated systems in recruitment and candidate screening. Recent graduates face a fundamentally different market.
The European Union anticipates 12 million jobs to be either eliminated or fundamentally transformed by AI technologies over the next three years.
Over 14 million jobs worldwide have already been lost directly due to AI-driven technologies as of early 2025.
71% of European firms are reconsidering job responsibilities due to AI implementation. Over a quarter have reduced hiring or cut roles as a direct result of AI deployment.
The Skills Gap Persists Despite the Slowdown
Despite the overall slowdown and mounting job cuts, significant shortages persist in specific sectors. Retail, healthcare, logistics, engineering, and other highly specialized roles still face talent shortages.
The mismatch reveals the core problem: the jobs being eliminated don’t align with the jobs that remain unfilled.
Goldman Sachs forecasts a weak job market outlook because ongoing productivity acceleration raises the bar for GDP growth needed to create jobs. The eurozone’s unemployment rate sits at historically low levels (6.3% in November 2025), yet firms are cautious about hiring.
Employment growth across the EU will slow in the coming years, with fewer vacancies and reduced labor market dynamism as AI use spreads.
The Path Forward
The transition is accelerating. In Asia, automation and AI are expected to displace 21% of current jobs by 2026, with manufacturing being the most affected sector. Europe is following a similar trajectory.
The gap between AI deployment and regulatory frameworks continues to widen. Policymakers’ response to workforce displacement will shape outcomes for millions of workers. Meanwhile, healthcare and education—sectors slower to automate—are now implementing AI systems that will reshape traditionally human-centric work.
Technological transitions historically eliminate certain roles while creating others. The critical question: will the new jobs match the volume and quality of those being eliminated?
The Reality Facing European Workers
European labor markets are experiencing a fundamental shift. The combination of industrial slowdown and AI-driven automation is creating unprecedented conditions. Companies moved from AI experimentation to full-scale implementation in less than two years.
The eurozone’s labor market will create 163,000 fewer jobs this year than last year—163,000 opportunities that won’t exist for people entering or re-entering the workforce. Workers who held leverage during the pandemic era are losing it. Entry-level opportunities are contracting. Established industries are restructuring at unprecedented speed.
In Germany’s manufacturing sector, 41% of companies plan cuts. Poland’s unemployment is rising despite economic strength. European banks are eliminating 200,000 positions.
These are data points in a broader pattern: industrial decline meeting technological acceleration. The workers caught in between face a market fundamentally different from anything previous generations encountered.
The next 18 months will determine the European job market for the rest of the decade. What’s becoming clear is that the pace of displacement is outrunning both policy responses and job creation. The infrastructure to support this transition—retraining programs, safety nets, new employment models—remains largely theoretical while the layoffs are concrete.
AI is reshaping European labor markets. The question isn’t whether jobs will be created to replace those lost. The question is whether European economies can create them fast enough.