diff --git a/src/vs/workbench/browser/parts/activitybar/activitybarPart.ts b/src/vs/workbench/browser/parts/activitybar/activitybarPart.ts
index 25fbcfe09be..6a902ebf8c5 100644
--- a/src/vs/workbench/browser/parts/activitybar/activitybarPart.ts
+++ b/src/vs/workbench/browser/parts/activitybar/activitybarPart.ts
@@ -38,7 +38,7 @@ export class ActivitybarPart extends Part implements IActivityService {
 	private activityActionItems: { [actionId: string]: IActionItem; };
 	private compositeIdToActions: { [compositeId: string]: ActivityAction; };
 	private panelActions: ActivityAction[];
-	private showPanelAction: TogglePanelAction;
+	private togglePanelAction: TogglePanelAction;
 
 	constructor(
 		id: string,
@@ -95,6 +95,12 @@ export class ActivitybarPart extends Part implements IActivityService {
 	public showActivity(compositeId: string, badge: IBadge, clazz?: string): void {
 		const action = this.compositeIdToActions[compositeId];
 		if (action) {
+			if (action instanceof PanelActivityAction && this.partService.isPanelHidden()) {
+				// while the panel badges are hidden we show the badge on the parent action which is visible
+				this.togglePanelAction.setBadge(badge);
+				return;
+			}
+
 			action.setBadge(badge);
 			if (clazz) {
 				action.class = clazz;
@@ -148,8 +154,8 @@ export class ActivitybarPart extends Part implements IActivityService {
 
 		const allPanels = (<PanelRegistry>Registry.as(PanelExtensions.Panels)).getPanels();
 
-		this.showPanelAction = this.instantiationService.createInstance(TogglePanelAction, TogglePanelAction.ID, TogglePanelAction.LABEL);
-		this.activityActionItems[this.showPanelAction.id] = new ActivityActionItem(this.showPanelAction, TogglePanelAction.LABEL, this.getKeybindingLabel(TogglePanelAction.ID));
+		this.togglePanelAction = this.instantiationService.createInstance(TogglePanelAction, TogglePanelAction.ID, TogglePanelAction.LABEL);
+		this.activityActionItems[this.togglePanelAction.id] = new ActivityActionItem(this.togglePanelAction, TogglePanelAction.LABEL, this.getKeybindingLabel(TogglePanelAction.ID));
 		this.panelActions = allPanels.sort((p1, p2) => p1.order - p2.order).map(panel => this.toAction(panel));
 
 		// Add both viewlet and panel actions to the switcher
@@ -158,12 +164,25 @@ export class ActivitybarPart extends Part implements IActivityService {
 
 	private updatePanelSwitcher(): void {
 		this.panelSwitcherBar.clear();
-		const actions:ActivityAction[] = [this.showPanelAction];
+		const actions: ActivityAction[] = [this.togglePanelAction];
 		if (!this.partService.isPanelHidden()) {
 			actions.push(...this.panelActions);
 		}
 
 		this.panelSwitcherBar.push(actions, { label: true, icon: true });
+
+		// TODO@Isidor fix this aweful badge(r) hacks
+		if (!this.partService.isPanelHidden()) {
+			if (!this.panelActions[0].getBadge()) {
+				this.panelActions[0].setBadge(this.togglePanelAction.getBadge());
+			} else {
+				this.panelActions[0].setBadge(this.panelActions[0].getBadge());
+			}
+			this.togglePanelAction.setBadge(null);
+		} else {
+			this.togglePanelAction.setBadge(this.panelActions[0].getBadge());
+			this.panelActions[0].setBadge(null);
+		}
 	}
 
 	private toAction(composite: CompositeDescriptor<Viewlet | Panel>): ActivityAction {
@@ -203,8 +222,8 @@ export class ActivitybarPart extends Part implements IActivityService {
 			this.panelSwitcherBar = null;
 		}
 
-		if (this.showPanelAction) {
-			this.showPanelAction.dispose();
+		if (this.togglePanelAction) {
+			this.togglePanelAction.dispose();
 		}
 
 		super.dispose();
diff --git a/src/vs/workbench/parts/markers/browser/markersWorkbenchContributions.ts b/src/vs/workbench/parts/markers/browser/markersWorkbenchContributions.ts
index 1c935d0929d..aa3095c3494 100644
--- a/src/vs/workbench/parts/markers/browser/markersWorkbenchContributions.ts
+++ b/src/vs/workbench/parts/markers/browser/markersWorkbenchContributions.ts
@@ -3,16 +3,56 @@
  *  Licensed under the MIT License. See License.txt in the project root for license information.
  *--------------------------------------------------------------------------------------------*/
 
+import {localize} from 'vs/nls';
+import lifecycle = require('vs/base/common/lifecycle');
 import Messages from 'vs/workbench/parts/markers/common/messages';
 import Constants from 'vs/workbench/parts/markers/common/constants';
 import { KeyMod, KeyCode } from 'vs/base/common/keyCodes';
+import { IWorkbenchContribution, IWorkbenchContributionsRegistry, Extensions as WorkbenchExtensions } from 'vs/workbench/common/contributions';
 import * as platform from 'vs/platform/platform';
+import { IMarkerService } from 'vs/platform/markers/common/markers';
+import { IActivityService, NumberBadge } from 'vs/workbench/services/activity/common/activityService';
 import { SyncActionDescriptor } from 'vs/platform/actions/common/actions';
 import { IWorkbenchActionRegistry, Extensions as ActionExtensions } from 'vs/workbench/common/actionRegistry';
 import * as panel from 'vs/workbench/browser/panel';
 import { Extensions, IConfigurationRegistry } from 'vs/platform/configuration/common/configurationRegistry';
 import * as markersPanelActions from 'vs/workbench/parts/markers/browser/markersPanelActions';
 
+class StatusUpdater implements IWorkbenchContribution
+{
+	static ID = 'vs.markers.statusUpdater';
+
+	private toDispose: lifecycle.IDisposable[];
+
+	constructor(
+		@IMarkerService private markerService: IMarkerService,
+		@IActivityService private activityService: IActivityService
+	) {
+
+		this.toDispose = [];
+		this.toDispose.push(markerService.onMarkerChanged(() => this.updateActivityBadge());
+	}
+
+	private updateActivityBadge(): void {
+		const stats = this.markerService.getStatistics();
+		const problemCount = stats.errors + stats.warnings + stats.infos + stats.unknowns;
+		if (problemCount > 0) {
+			const badge = new NumberBadge(problemCount, n => localize('errorsAndWarnings', '{0} Errors and Warnings', n));
+			this.activityService.showActivity(Constants.MARKERS_PANEL_ID, badge);
+		} else {
+			this.activityService.showActivity(Constants.MARKERS_PANEL_ID, null);
+		}
+	}
+
+	public getId(): string {
+		return StatusUpdater.ID;
+	}
+
+	public dispose(): void {
+		this.toDispose = lifecycle.dispose(this.toDispose);
+	}
+}
+
 export function registerContributions(): void {
 
 	(<IConfigurationRegistry>platform.Registry.as(Extensions.Configuration)).registerConfiguration({
@@ -46,4 +86,9 @@ export function registerContributions(): void {
 
 	// Retaining old action to show errors and warnings, so that custom bindings to this action for existing users works.
 	registry.registerWorkbenchAction(new SyncActionDescriptor(markersPanelActions.ToggleErrorsAndWarningsAction, markersPanelActions.ToggleErrorsAndWarningsAction.ID, ''), Messages.SHOW_ERRORS_WARNINGS_ACTION_LABEL);
-}
\ No newline at end of file
+
+	// Register StatusUpdater
+	(<IWorkbenchContributionsRegistry>platform.Registry.as(WorkbenchExtensions.Workbench)).registerWorkbenchContribution(
+		StatusUpdater
+	);
+}