Generous Payouts and Fiery Strikes: How German Firms Are Managing a Wave of Job Cuts

From €250,000 severance at Mahle to 46% job cuts at Siempelkamp, German firms navigate painful restructuring as unions push back with strikes and demands for social plans.

German companies are navigating a painful industrial restructuring—but the routes they take differ sharply. While some offer severance packages that can reach €250,000, others face walkouts and calls for social plans as workers push back against job losses.

At the automotive supplier Mahle, a comprehensive social collective agreement with IG Metall now governs the closure of its plant in Neustadt an der Donau. Production is set to end in the first quarter of 2027. Under the deal, individual severance payments can go as high as €250,000. On top of that, a bonus pool of €3.25 million is reserved for union members, a hardship fund has been established, and a transfer company will help employees transition, offering roughly 80 percent of their net salary.

Workers aged 60 and above can also enter phased retirement. Despite the agreement, Mahle’s management criticised the recent strikes, calling them counterproductive for the company’s competitiveness.

In the chemicals sector, Evonik is cutting jobs with a clear focus on management and leadership roles. The aim is to reduce internal bureaucracy. The company has set aside around €100 million specifically for severance payments, with the restructuring already underway.

A far more drastic reduction is taking place at Siempelkamp Size Reduction Solutions (Pallmann) in Zweibrücken. Of the 282 jobs there, 129 are to be eliminated—about 46 percent. The company plans to abandon its own manufacturing and will in future only handle assembly and spare parts production. Management points to a deficit in the new machinery business, the loss of the Russian market, and intense competition from China. The lease for the plant has been extended until at least December 2029, but the works council and IG Metall believe a smaller job cut is possible.

Swedish furniture giant IKEA is also acting decisively in Dortmund. In Ellinghausen, 233 positions will disappear across two units. IKEA IT Germany GmbH is to be closed by the end of October 2026, eliminating 63 jobs. At the same time, IKEA Purchasing Services Germany GmbH will reduce its workforce by 170 positions, leaving only 100 employees. These measures are part of a global cut of 850 roles within the Inter IKEA Group, announced in May 2026.

While some companies have presented social plans, elsewhere tensions remain high. At the DS Smith factory in Mannheim—one of five sites the packaging manufacturer intends to close—workers walked off the job in May, demanding a social collective agreement. The retail sector is also simmering. In late May, strikes hit Kaufland, H&M, and IKEA in Baden-Württemberg. Unions are demanding a monthly pay rise of €300 over a twelve-month contract.

Across the border, the Austrian Economic Chamber (WKO) plans to cut about 200 of its 800 positions at its Vienna headquarters by the end of 2027. The works council has criticised the lack of a social plan and insufficient involvement of employees. The cuts are to be achieved partly through dismissals and partly by leaving posts unfilled.

For workers facing operational redundancies in Germany, quick action is vital. A claim for protection against dismissal must be filed with the labour court within three weeks of receiving the notice. There is no automatic legal entitlement to severance, though in practice settlements are common—averaging around half a month’s salary per year of service.

The selection of employees for redundancy follows strict “social selection” criteria: age, length of service, maintenance obligations, and severe disability status all play a central role. Recent court rulings underscore the importance of deadlines. The Baden-Württemberg Regional Labour Court decided that the two-week deadline for extraordinary dismissals must be strictly observed, even if proceedings are also running at the Integration Office. The exception applies only when no recognised severe disability is present.