Germany’s temporary employment sector is among the first to feel the full weight of the country’s ongoing economic downturn. According to a new study by the economic information service Creditreform, the industry has become a clear early indicator of how deeply the current recession is cutting into industrial activity.
Patrik-Ludwig Hantzsch, head of economic research at Creditreform, said the findings show that many industrial firms — key clients of temporary staffing agencies — are already reducing headcounts. “Industry is operating in crisis mode and is trimming staff. The first to go are external employees such as temp workers, while core workforces are affected later,” he explained.
Falling revenues reveal the extent of the slowdown
The numbers tell a bleak story. In the second quarter of 2025, German temp agencies recorded a 7.4 % drop in turnover compared with the same period last year. The decline followed an even sharper 11 % fall in the first quarter, according to Creditreform’s analysis. Such figures make the temp sector a reliable barometer for shifts in Germany’s wider economy.
Insolvencies surge — small firms hit hardest
The crisis is already pushing many smaller agencies to the brink. Last year, 120 companies filed for insolvency, and another 63 followed in the first half of 2025 alone. The sector now shows an exceptionally high insolvency rate, Creditreform warns. For investors and lenders, this is a red flag: many staffing providers are struggling to stay afloat.
Financial data underline the pressure. More than a quarter (28 %) of temp agencies operate with an equity ratio below 10 %, while only half manage to exceed 30 %. Such low reserves leave them vulnerable to even short-term drops in demand or delayed payments from clients.
Temp employment numbers also in decline
Official data from the Federal Employment Agency (Bundesagentur für Arbeit) confirm the broader trend. In June 2024, Germany counted around 675,000 socially insured temp workers, about 70 % of them men — largely because manufacturing and production roles dominate the temp sector. Around 40,000 licensed staffing firms were active nationwide at the time, but that number is now expected to shrink further as market conditions tighten.
A barometer for the wider economy
Economists often see the temporary employment market as a leading indicator of economic change. When factories cut back, temporary contracts are the first to go — a sign that companies are preparing for leaner months ahead. If the trend continues into 2026, experts warn, the losses could spread to core staff and deepen Germany’s industrial slowdown.
