German chemical industry freezes wages to save jobs amid deepening crisis

The German chemical industry is facing a deepening crisis, with falling production and sales expected to worsen in 2026. Against this backdrop, wage negotiations have led to a rare agreement: salaries for university-educated staff will stay frozen next year to protect jobs. Employers and unions describe the deal as a 'painful compromise' in an increasingly difficult economic climate.

The latest data shows the sector's struggles in 2025. Production fell by 2.5% compared to 2024, while sales dropped by 3%. Forecasts for 2026 predict another 1% decline in output and a 2.5–3.5% fall in sales. Factories are running well below capacity, with utilisation at just 71.7% in the second quarter of 2025. High energy costs, US tariffs, and trade disputes have added to the pressure, alongside broader challenges like decarbonisation and digital transformation.

The wage agreement between the employers' association (BAVC) and the VAA union keeps minimum salaries unchanged for 2025. From the second year of employment, staff with a diploma or master's will earn at least €74,050, while doctoral graduates will receive €86,075. First-year salaries, however, will remain open to individual negotiation. The VAA accepted no pay rise to help secure long-term jobs, acknowledging the severity of the industry's troubles.

A new working group will also explore ways to support managers during the sector's transformation. The aim is to create a framework for 'Leadership in Transformation' and improve conditions for employees not covered by collective agreements. Minimum wages for 2026 will be decided in early summer next year, based on updated economic figures.

The deal reflects the harsh realities facing Germany's chemical industry. With production and sales set to shrink further, both sides have prioritised job security over pay rises. The coming year will test whether these measures can stabilise a sector under strain from economic, regulatory, and global pressures.