The Masked Skills Shortage
The mechanical engineering sector cut 22,000 jobs in 2025. At the same time, the VDI/IW Engineering Monitor reported 99,470 unfilled positions in engineering and IT roles. Both are true. Both at the same time.
At first glance, it looks like the skills shortage has resolved itself. The data tells a different story. The shortage hasn't disappeared. It has only gone quiet.
This report examines the talent situation in German industrial automation, mechanical engineering, and process technology. The central thesis: the skills shortage is structural, not cyclical. The current recession pushes the statistics down, but it does not fix the underlying problem. As soon as order books pick up — and Q4 2025 intake showed the first signals — the gap comes back larger than before.
“Compelling reading — and a well-made case that cyclical labour-market pressures and structural challenges need to be viewed separately.”
The Three Key Findings
First: the engineering skills shortage is demographically driven and therefore independent of the business cycle. The recession masks it; it does not eliminate it.
Second: nearshoring to Eastern Europe is reaching its limits. Costs are rising, the arbitrage is shrinking, and more industries are competing for the same talent pool.
Third: dedicated engineering teams through EoR structures give mid-sized companies an option that used to be reserved for large corporations with their own offices abroad.
The Numbers
Three numbers tell the story. 99,470 open positions in engineering and IT roles across all sectors in Q3 2025. An average vacancy time of 180 days as of January 2025. And an annual loss in value creation of 49 billion euros from the overall skills gap, according to the IW Cologne institute — roughly 1.1% of GDP.
The Diagnosis: Layoffs and Shortages at the Same Time
The headlines are clear: job cuts in mechanical engineering, declining order intake, short-time work. The VDMA reported in February 2026 that employment in the machinery and plant engineering sector stood at 1.001 million at the end of 2025 — a decline of 2.2% year-on-year.
What the headlines miss: despite the cutbacks, the Engineering Monitor still recorded 99,470 open positions in Q3 2025. For every 100 unemployed professionals, there were 194 open positions. In energy and electrical engineering, it was 558. The shortage is not gone. It has shifted.
Why the Shortage Becomes Statistically Invisible
The IW skills gap fell to 487,029 unfillable positions in 2024. Not because more people were available, but because fewer jobs were posted as unemployment rose. For roles requiring a degree, 45.3% of openings still could not be filled.
The mechanism is simple. Companies stop posting — not because they have enough people, but because they give up looking. The gap shrinks on paper. In reality, it waits.
The Salary Trap for Mid-Sized Companies
German mid-sized companies cannot match the engineering salaries at Siemens, Bosch, or the automotive OEMs. A typical Mittelstand firm offers 60,000–70,000 euros for a senior automation engineer; an automotive OEM offers 80,000 and up for comparable profiles. Mid-sized companies don't lose this competition on engineering quality — they lose on pay. An alternative talent pool takes them out of the bidding war entirely.
Chapters
Methodology
The analysis is based on publicly available data from VDI, IW Cologne, VDMA, IAB, Eurostat, and Strategy&, as well as operational experience from Scope Merge.
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