An illustration of Greater Munich Area as example

Germany achieved a mixed 23rd place in the 2024 IMD World Digital Competitive Rankings – far behind digital leading nations such as Singapore, Switzerland, Denmark, Sweden and the Netherlands. This ranking measures the ability and willingness of 67 global economies to adopt and explore digital technologies as a key driver of economic change in business, government and society in general. The ranking helps governments and businesses understand where they should focus their resources and what the best practices might be when starting or building on digital transformation

As Bitkom’s national Smart City Index shows, Germany’s cities are becoming increasingly digital and efficient. The “Smart City Index” evaluates 82 major German cities with more than 100,000 inhabitants each year based on 162 parameters. 

The result of the smartest cities ranking in 2025 is:

Place #1: Munich
Place #2: Hamburg
Place #3: Cologne 

As the capital, Berlin did not make it into the Top 20 in Germany. Bitkom is calling for the implementation and financing of the „Smart City“ step-by-step plan in order to promote the digitization of cities in a targeted manner. The association is also in favor of permanent funding for smart cities as part of municipal infrastructure. Overall, the “Smart City Index” can be considered a valid instrument for measuring the progress of urban digitization in Germany.

With regard to highest quality of life in Germany, the PROGNOS Institute has published the following representative city ranking for 2024 – here are the Top 10 German cities:

1. Ulm  
2. Munich 
3. Ingolstadt 
4. Erlangen 
5. Regensburg 
6. Leipzig 
7. Berlin 
8. Osnabrück 
9. Stuttgart 
10. Chemnitz 

According to the representative global 2025 survey of REMOTE Consultancies, Germany ranks among the Top 5 Countries in “Work-Life-Balance”:

Global Work Balance Index 2025: Top 5

As a result of this survey, Germany is (still) one of the leading countries in terms of work-life balance, making individuals striving for a harmonious balance between professional and private life. The same applies to employers, who wanted to provide clear incentives for higher workforce productivity and greater management efficiency by flexibilizing essential working concepts – for winning or retaining skilled talents. Innovative working models such as working from home, smart working or new-work-developments have changed the work-life balance (WLB) of every company in many respects. The individual implementation of WLB-measures and activities helped companies to being perceived as more attractive and modern employers, than others.

Now – why so many survey results on such (supposedly) different topics?  

Due to the tense economic situation in Germany, more and more companies are bringing their employees back into the office, while at the same time there is hardly any talk of the 4-day week any longer. Instead, German Chancellor Friedrich Merz is calling for Germans to work “more and, above all, more efficiently”.

Based on the survey results and many years of professional experience in placement-projects, let me briefly summarize “how” the measures taken by employers have an impact – using the greater Munich area (GMA) as an example region.

First of all, 3 key facts are important to better understand Munich’s unique landscape: 

1. Munich (1.5 million inhabitants + third largest city in DE) and the Greater Munich Area (GMA – plus another 1.4 million around Munich) are known as an innovative & particularly high-performing business location, that has enjoyed great popularity for decades. The wave of people moving to GMA has significantly increased in the last 5-10 years, also due to its nice location close to alps and Austria/Switzerland/Italy. In consequence of this evolution – the Munich Area has led to the highest cost of living and very high salary structures in Germany. Given this geo-centric location, average salaries in the Munich area are approx. 10-30% above the respective industry average.
2. The enormously high price and salary structure of Munich & GMA has now led to a situation where, due to inflation, many employees want to – or simply have to – move geographically due to housing shortages and greater work flexibility. Specifically: relocation from the city of Munich to the surrounding area of Munich – or deliberately: the other way around. An ongoing mega-trend in the Munich area that will continue for employers and employees alike in coming years. From an employer’s perspective, this re-shuffling of employees will lead to additional fluctuation between the city of Munich and the surrounding area of Munich. As a result for employers in GMA, there will also be an indirect pressure for attractive work-life transformation concepts, which is likely to present „attractive employers“ with very different issues inside the city of Munich, and it´s surrounding area.
3. The surrounding Greater Munich Area (GMA) in particular has grown exponentially in terms of inhabitants and new employers in the last decade. On the other hand, bigger employers spread their office population to multiple sites or moved into other places. Consequently, large office complexes and big commercial properties in the city of Munich  became vacant – and investors for new properties have become cautious for new commercial buildings, despite the ongoing Munich boom. Manufacturing industry has largely left Munich’s real estate map in favor of more favorable business locations. Research & Development facilities for med- to small-sized activities are to be rated high. 

Well – let´s just highlight the consequences of smart working concepts, which can be seen in Munich area in a highly vivid way:

1. Different smart working concepts of the last 3 years are being scaled back to the “new normal”. Typically, the concepts originate from the pandemic or have already been adapted several times. Our experience with employers and leadership candidates tells us that, in terms of scale, around 2/3 of all WLB-concepts are being or have already been scaled back by management. Employers opposed the fact that new working time models in 2024 tended to lead to a deterioration in labor productivity. AI and more efficient leadership methods have also not yet led to higher labor productivity, at least not yet.
2. Due to the often poor public transport services in the Munich area, traffic jams on the roads are likely to continue to increase enormously. In many cases, travel times by car have simply doubled since 2022 – specifically from Tuesday to Thursday. Unreliable rail and bus connections are likely to continue, if commuters or travellers need to travel to Munich  – or need to use public transport outside of the city. Means – necessary daily commuting for the working population in GMA became a significant impact on job satisfaction and work efficiency. Due to the extremely high housing costs in Munich, this often leads to a congestion-induced change of employer if more affordable accommodation in Munich “closer to the employer” cannot be found within a certain period of time. Many HR departments at Munich-based companies are too familiar with this specific issue from exit interviews – and as a fact – even more flexibility on WLB-concepts are not able to minimize trivial commuting time.
3. At bigger companies in Munich and GMA, we often see a renewal of existing company agreements with regard to general 4O+1HO, 3O+2HO worktime-regulations. Medium-sized companies often have more individualized concepts with different work functions, depending on the company’s individuality and role within the company, can go far beyond the regulations of large companies. We see in general huge impacts into Sales-functions and how to drive company success in leadership teams, but we do not identify a general trend, except that many parameters of a „new WLB-concept“ might be overwritten by other topics, in comparison tot he original WLB-ideas of employers.
4. Personal interviews with employers and employees in greater Munich area tells us, that  smart working concepts and “how” these concepts are actually implemented in companies have often overtaken traditional salary expectations as the top priority when choosing a preferred company of choice. Of course, this takes place on a very high salary structure in GMA, which often triggers geographical changes between the Munich city and the surrounding area. But we see often, that salaries in Munich´s  surrounding area are often more difficult to negotiate, in direct comparison to Munich city. However it has to be stated, that some candidates also overplay this game and want to convert city salaries into 1:1 GMA salaries. Well – supply and demand of critically skilled people will continue not only across GMA, for sure.
5. Munich area continues to enjoy growing popularity among innovative companies, especially biotech/pharma, IT/digitization, automotive, defense and financial services. The above-mentioned aspects are unlikely to be mitigated, at least from an employer’s perspective. We are also seeing worrying personnel developments in the Munich area. Unemployment is rising significantly to 4.9 % in 2024 – admittedly from an extremely low unemployment rate of 3.8 % in 2022. The unusual high number of biz-closures comes from over 4,000 (!) restaurant insolvencies in GMA during last 2 years. Often industrial manufacturing is sneaking out from the expensive Munich or GMA pavement – continuing trend over many years. Still – official 2024 unemployement rates are at 3.7 % in Bavaria and 6.0 % in overall Germany. Means – the Greater Munich Area seemed to be a special island of glowing, but with a pretty unique dynamic for employers and employees in this particular region.

As said before – for many jobseekers interested in greater Munich area, WLB-concepts have become equal or more important for preferred employer selection, than salary levels. It must be clearly said, that often geographic living basics and public/car transport connections „overwrite“ any targeted WLB-impact of a specific employer. Same in GMA – means 30-80 km around Munich City including airport – where transportation goes primarily into the Munich city center, but not connecting city-districts or suburbs around Munich. To be frank – S-Bahn connections have been kept quite the same, like it´s public opening in 1972 for Olympic Games in Munich. Inside of Munich, the Metro-and Tram-connectivities became THE key transport for the public, followed by bikes/scooters or walking on foot. In pragmatic words: when there are railway (S-Bahn Stammstrecke) or road constructions (A99; Stadtring) scheduled for years in GMA, there will be significant impacts for affected employers as „side-effect“ (from less time at work – to – leaving the employer due to double/impossible commuting-time). Plus – if public tranportation does not work or simply takes too long, most employees take cars or bikes. While Munich city drives the „smart & green city“ evolution at the same time, many key roads into Munich city were reduced to 30 km/h speed, or re-constructed for more bikes/scooters. Voilá – this completes the traffic gridlock of Munich. 

Especially during the pandemic, many employers hired labor based on „most flexible“ WLB-conditions. Now – with employers tuning-back WLB-concepts to less flexibility and more presence days in the office, many employees are on the mission to find a new job in a more suitable GMA-location – or – find a new flat (which is even more a challenge) for smoother commuting times. Based on long-term experience in the Munich room, finding a „new job“ is easier and faster, than to find a new flat/house. Even if Munich is drunk in hundreds of construction sites for years – it deserves an ending of „Baustelle“. 

Back to the future vision of „smart cities“, evolutions have to lead to smarter solutions for employers and employees. The situation in Munich City and Munich´s surrounding is certainly not easy – due to the massive cost of living and compromised traffic & transport. Similar effects could be seen in other German cities like Hamburg, Stuttgart, Leipzig, Berlin. As Executive Search company in this region, we do see a strong need for aligning ALL these concepts, so innovative employers could build on reliable smart city strategies – and – employees could build on professional & smart employers in the Munich area. For winning necessary trained personnel, the surrounding factors need to play a much less significant role at GMA until 2030 – so employers could build necessary employer brand strategies and win the skilled talents it deserves.

Article written by Marc Steuer, CFR Global Executive Search Germany
Photo source: Pixabay