The shadow economy in Germany will continue its long-term upward trend in 2026. The main causes are weak growth in the official economy and rising unemployment.
According to the latest findings of a forecast by Professor Friedrich Schneider (University of Linz) and the Institute for Applied Economic Research (IAW), the shadow economy will grow to a nominal value of €538 billion. This represents an increase of 5.5 percent over the previous year. Adjusted for inflation, the increase is 2.8 percent. The ratio of the forecast shadow economy to measured gross domestic product (GDP) will increase slightly from 11.4 to 11.6 percent.
Investments and innovations ensure employment growth and a higher demand for well-qualified workers in the country.
On behalf of the Baden-Württemberg Regional Directorate of the Federal Employment Agency, the IAW has conducted a new study examining the effects of investment and innovation on employment trends and employee qualifications in Baden-Württemberg between 2008 and 2023.
The three most important findings of the new IAW study are:
Although the proportion of companies investing will fall from over 60 percent to below 50 percent between 2008 and 2023, it is positive that over half of the companies that do invest are making expansion investments and thus focusing on growth.
Innovative companies are focusing in particular on product and process improvements rather than on new products or markets that promote growth. However, it is positive that the proportion of companies with innovations will rise from just under 40 percent to around 50 percent between 2008 and 2023. Industry is particularly innovative and is more involved than average in research and development.
Investments (especially expansion investments) and innovations (especially product innovations) are ensuring that the demand for skilled workers is increasing.
A recent study by the IAW analyses developments in training and traces changes in the training practices of companies in Baden-Württemberg in recent years. It also examines the reasons why training places remain unfilled.
A recent study by the IAW analyses continuing education in companies in Baden-Württemberg. It not only looks at companies' participation in continuing education, but also examines how continuing education activities differ between genders and between specific qualification levels.
Unemployed people receiving citizen's income: More help to help themselves in their job search.
A relatively large number of unemployed people who receive citizen's income are not looking for work, or at least not continuously. This is shown by a new study conducted by the IAW and the SOKO Institute on behalf of the Bertelsmann Foundation, for which a random sample of approximately 1,000 citizen's income recipients were surveyed. Of these, 57 per cent stated that they had not looked for a job themselves in the past four weeks.
There are many reasons why people do not look for work. Health restrictions, lack of qualifications, childcare problems and lack of financial incentives are widespread among those surveyed.
In addition to the efforts of the benefit recipients themselves, job offers and other support provided by job centres are also examined. The study formulates a series of recommendations for action on how to better provide support and assistance to the unemployed to help them help themselves.
Wealth disparities between eastern and western Germany: potential for further development of state support.
A recent study by the IAW for the Federal Government Commissioner for Eastern Germany examines existing differences in wealth accumulation between eastern and western Germany, as well as in the use of state subsidies for wealth accumulation. The further development of existing subsidy instruments can contribute to reducing wealth inequality between eastern and western Germany.
The current issue of IAW News contains a report on the 10th Bundesbank-IAW Lecture with the President of the Deutsche Bundesbank, Dr. Joachim Nagel. This issue also features research findings on the effects of the minimum wage and the implementation of the participation plan procedure in the field of rehabilitation.
