Sectoral shifts in employment growth
Published: October 27, 2025Last updated: November 3, 2025
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Employment in Europe is currently growing at a pace below the long-term average. A look at the sectors reveals two contrasts: The ICT sector, once a driving force, is losing momentum after years of strong growth. Productivity gains from artificial intelligence and a weaker economic environment are slowing its expansion. In contrast, government-related services, such as healthcare, education, and administration, are proving resilient and continue to grow. This article classifies these developments and highlights the trends in both sectors.
Labor market loses momentum
Overall employment growth in European countries is currently subdued. In Switzerland, the increase in the second quarter of 2025 was just 0.6% compared to the same quarter of the previous year — well below the long-term average of 1.3%. Germany stagnated, while France even recorded a decline in the number of employees at ‑0.3%.
Italy, on the other hand, remains robust in the face of economic uncertainties and continues to record solid employment growth. The United Kingdom also grew, albeit slightly below the long-term average.
ICT in a slump
The latest data marks a clear turning point: the ICT sector was a key growth driver for years, but the momentum of the technology sectors in several European economies has now slowed noticeably. In Switzerland, employment decreased by 1.4% in the second quarter of 2025 compared to the same quarter of the previous year — this corresponds to just under 3,000 people. The decline is also striking in France, while the slowdown in Germany is less pronounced. Although Italy and the United Kingdom still recorded increases — by 1.5% (around 10,000 people) and 0.4% (around 6,000 people) respectively — these also remained below the long-term averages.
Broad weakness in Switzerland’s ICT sector — despite different historical trends
Information and Communication Technology (ICT) comprises several sub-sectors, employing just over 200,000 people in Switzerland. The current slowdown is evident in all areas, as the previous year’s comparative data for Switzerland demonstrates. However, a longer-term comparison reveals differences: publishing, audiovisual media, broadcasting, and telecommunications have been declining for years, while IT services — such as software development, data processing, hosting, and IT design — have achieved a significant average annual employment growth of nearly 4%.
AI’s impact slows down momentum in the ICT sector
One key reason for the current slowdown may be the productivity gains of generative AI. Studies show that developers with AI assistance complete routine tasks over 50% faster. Junior positions are particularly affected: a Stanford study reports a decline of up to 13% in AI-related jobs among 22 to 25-year-olds. In the short term, this reduces the need for new hires as companies create more output with the same team size. This is also reflected in declining job postings and easing recruitment bottlenecks within ICT.
AI is primarily replacing “book knowledge”, while implicit experience — practical tips and hands-on expertise — remains more difficult to replace. According to the IMF, generative AI could replace activities in some roles, but complement them in others. The actual disruption lies less in permanent job losses and more in the shifting mix of tasks and qualification profiles.
Routine activities such as programming and testing are becoming increasingly automated, while demand is rising for advanced roles, including:
- IT architects and cloud specialists
- Machine learning operations experts
- Cybersecurity professionals
- Data governance and compliance specialists
This productivity surge also coincides with a phase of economic uncertainty. As a result, many companies are postponing investments in digital projects, further dampening job growth in ICT — though without calling into question the long-term need for digital skills.
In addition, employment growth in the ICT sector has been well above average in recent years. Following these strong increases, a certain normalization effect is now setting in, which also explains the current slowdown.
State-related sectors remain stable growth drivers
By contrast, employment growth in government-related industries was robust, even if there is a certain degree of heterogeneity internationally. In Switzerland, Germany, and the UK, employment growth in healthcare and education remains strong — in some cases even exceeding the long-term average. The trend is much weaker in France and Italy, where employment in these sectors has historically, as well as most recently, increased only modestly.
Structural drivers of growth in government-related sectors
Health, education and public administration have been recording above-average growth for years — and this trend is continuing. There are three reasons for this structural growth:
- Demographics: An aging population and the retirement of the baby boomer generation are permanently increasing demand for care and support.
- Political measures: Government initiatives strengthen employment growth in these sectors, which are politically attractive as they visibly improve security of supply and social welfare. For example, the Kita Quality Act in Germany has led to more jobs in early childhood education through an increase in funding and minimum standards. In France, the “Ségur de la santé” increases the attractiveness of nursing and clinical professions with wage increases and investment. Lastly, in Switzerland, the strengthening of universities of applied sciences and the increasing academization have expanded higher education capacity and, in turn, created additional positions at universities and universities of applied sciences.
- Baumol’s cost disease: The economist William Baumol (1922–2017) showed that many activities cannot be done faster or with fewer staff — such as teaching, caregiving, or administrative decision-making. While software teams become significantly more productive per capita thanks to technology, the “output per person” in schools, care, and administration remains largely stable. Yet wages must keep pace with the broader economy, causing the costs per unit of output to rise faster than in areas that can be automated to a greater extent. Over time, this shifts resources and employment increasingly towards government-related services.
Broad-based growth in government-related areas in Switzerland
In Switzerland, employment growth in government-related sectors is both strong and broad-based. From public administration and education to healthcare, care homes, and social services — all sub-sectors in Switzerland have recorded decisive growth both in the past and presently. Driven by demographics, social preferences, and political conditions, employment growth in these areas remains stable and high.
Cyclical versus crisis-resistant sectors
The contrast between the two sectors is stark. The ICT sector reacts sensitively to economic fluctuations, and investments in software, cloud solutions, and cybersecurity are often deferred in phases of economic uncertainty. This is also directly reflected in employment.
Government-related sectors, however, are proving to be more resilient. Health, education, and public administration are basic services and, therefore, less subject to economic fluctuations. In some cases, they even have an anti-cyclical effect: demographic change and political initiatives increase the demand for workers even in economically weak periods.
A stable long-term outlook
The latest development does not fundamentally change the long-term outlook. Government-related sectors remain on a stable and broad-based growth path — with demand in the care sector, education, and public administration continuing to rise. In the ICT sector, demand for skilled workers will also remain high, but will increasingly shift towards specialized, more highly qualified profiles. Employment growth is therefore no longer likely to be broad-based, but selective in areas where technological developments such as the cloud, AI, or cybersecurity require additional skills.
Conclusion
After years of strong growth, the ICT labor market is cooling. On the one hand, this shows the first signs of AI’s impact. On the other hand, it also reflects the cyclical nature of ICT. In contrast, healthcare, education, and administration continue to grow robustly — supported by demographic change, the Baumol effect, and political initiatives. The long-term growth prospects in ICT and government-related sectors remain intact. While the technology sector will focus on specialized and higher-skilled roles, healthcare, education, and administration will ensure a steady increase in workforce demand. Those who invest in the right skills now will benefit in the next chapter of the labor market.
Wüest Partner estimates future employment for every municipality in Switzerland up to 2055 — differentiated according to nine industry groups. The model combines short-term labor market signals with long-term structural trends and community-specific factors. It thus provides a unique basis in Switzerland for location planning, market potential analyses, and strategic decisions by investors, developers, and the public sector.