Saxony's industrial sector faces further job cuts

About a quarter (23 percent) of companies in Saxony’s economy expect to cut staff. This is one of the findings of the latest economic survey conducted by the Chambers of Industry and Commerce (IHK) in the Free State of Saxony. “Companies continue to respond to the weak economy by exercising caution in hiring and postponing plans to expand their workforce,” the IHK reported. Only 11 percent of companies plan to add jobs. This suggests further job cuts in the coming months.

Business sentiment remains subdued

“After a significant setback in the spring, the Saxon economy stabilized somewhat in the fall of 2026. However, the Free State is still far from a sustained economic recovery,” the report stated. Both the current business situation and companies’ expectations have improved compared to the spring. Nevertheless, business sentiment remains decidedly subdued. There are currently no signs of a self-sustaining upswing.

No Noticeable Upturn in Sight

“As long as high costs, weak demand, and unfavorable framework conditions continue to weigh on economic development, investment, employment, and growth prospects in the Free State will remain subdued,” the chambers explained. A noticeable upturn would require more reliable framework conditions as well as sustainable relief for businesses in terms of location costs.

Caution Regarding Investments

This caution is also evident in investment plans. According to the survey, only 16 percent of businesses plan to increase their investment spending, while 27 percent intend to reduce their budgets. Companies are particularly hesitant when it comes to long-term location investments. “Replacement purchases clearly dominate investment motives, while capacity expansions are being planned less and less frequently,” the report continued.

High Labor Costs as a Business Risk

When asked about business risks, 68 percent of companies cited high labor costs. Energy prices follow closely behind (65 percent). Fuel prices, which have risen sharply since the spring, also remain one of the biggest risks at 61 percent. The shortage of skilled workers, on the other hand, is losing significance and is now considered a major business risk by just over one-third of companies.

A total of 1,582 companies with more than 80,000 employees from the manufacturing, construction, retail, services, transportation, and hospitality and tourism sectors participated in the economic survey from August 31 to September 28.