Baby boomers retiring: By 2036, there will be a shortage of over four million workers.

By 2036, far more people will reach retirement age than young people will enter the workforce. Ultimately, there will be a shortage of more than four million workers, according to a new study by the German Economic Institute (IW).

Demographic pressure on the labor market will increase significantly in the coming years. The baby boomers are retiring – and this will hit the German labor market harder than expected. The baby boomer generation comprises those born between 1954 and 1969.

By 2036, the last baby boomer generation will reach retirement age. During this period, the labor market will lose approximately 4,3 million workers . This is shown by new figures from the IW population forecast . Just two years ago, the IW projected a shortage of only three million workers.

Half a million is missing every year 

The reason for the new, more negative assessment: The population is declining earlier than expected. Approximately half a million workers are needed each year . The baby boom generation, born between 1954 and 1969, comprises almost 20 million people. Around five million of them are already over 67 years old. All the others will retire by 2036. On average, about 1,3 million people leave the labor market each year.

At the same time, only around 800.000 people are entering the workforce. This results in a shortage of approximately 500.000 workers each year. Overall, the number of people in the working-age population will decline by about seven percent to around 51 million by 2036. In 2024, the IW (German Economic Institute) still assumed that Germany would grow to 85 million inhabitants by 2040. Now, the opposite is true: in 2025, the population declined for the first time in many years – by 100.000 people. By 2040, it is expected to fall below 82 million. The main reason: significantly more people are dying than are being born. Most recently, this deficit was 350.000 per year. Previously, immigration compensated for this decline . However, considerably fewer people are now immigrating to Germany.

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The time window is getting smaller.

"Germany is not facing demographic change , but is already in the midst of it ," says IW expert Holger Schäfer. "In just a few years, the economy will lack the workforce to generate prosperity and sustain the welfare state in its current form." To counteract this , he sees two clear approaches: More people should work longer . Furthermore, Germany should make it easier for skilled workers from abroad to work here.

IW Population Forecast > Download the study for free here! DHB now also available digitally! Simply click here and register for the digital German Crafts Journal (DHB)!