The job market in Germany is increasingly showing signs of weakness: the number of unemployed has risen. A large portion of companies are planning to cut jobs in response to the economic downturn. Nearly half of the workforce no longer sees their job as a priority in life.
Andrea Nahles, the Director of Federal Employment Agency, is once again the bearer of bad news. After the unemployment rate reached its highest level in eight years last month—excluding the exceptional Corona year of 2020—it continues to rise.
In August, the Federal Employment Agency (BA) counted 63,000 more unemployed people than in July, bringing the unemployment rate to 6.1 percent. Compared to the previous year, this is an increase of 176,000 unemployed.
“The job market continues to feel the effects of economic stagnation. Unemployment and underemployment have further increased during the summer break,” says BA head Nahles.
The situation is also worsening for unemployment benefits and basic income. In August, 925,000 people received unemployment benefits, 109,000 more than a year ago. The number of employable citizens receiving basic income has climbed to 4,017,000, an increase of 72,000 people.
The unrest in the labor market is evident not only in the numbers from Nuremberg. “A stabilization of the job market is no longer in sight this year,” warns Annina Hering, an economist at the job platform “Indeed.”
Indeed’s data shows that compared to August 2023, the job ad market in Germany has shrunk by 17.1 percent—and the trend continues downward.
Job ads for IT and HR professionals decline by over 30 percent
Nevertheless, some companies are still desperately seeking staff, with traditional apprenticeship professions being particularly in demand. “Skilled workers are currently more sought after in the job market than academics,” says Hering.
Notably, in the Indeed statistics, only two sectors currently have more job ads than the previous year—transportation and nursing and elderly care.
In all other sectors, there are fewer. Job offers for software development have plummeted by 34 percent, and for human resources by 37 percent.
The Munich-based Ifo Institute’s monthly assessment also remains pessimistic. “The weak economic development is reflected in weak employment growth,” says Klaus Wohlrabe, head of Ifo surveys.
“The lack of orders is hindering companies from hiring new employees. More and more are considering reducing their workforce.” The situation is particularly acute in the industry and trade sectors. “Only in the service sector is there a positive trend in hiring,” says the economist, especially in the IT industry and tourism.
The pessimism of many companies regarding the economic situation is also reflected in their staffing plans. Sixty percent of employers indicate that they plan to lay off employees in the next 12 months. This is according to a survey conducted by Munich-based software company Personio, which surveyed 7,000 employees and 3,500 employers from companies with 10 to 2,000 employees.
This also impacts employees—they are more frequently looking for alternatives. “Economic uncertainties have recently led to employees being less willing to change jobs,” says Lenke Taylor, Chief People Officer at Personio. “But as soon as economic conditions improve, a phase of increased turnover could begin.”
Specifically, 42 percent of employees are considering leaving their current job once the economic situation improves. Nearly half no longer see their job as a priority in life.
Instead, employees are seeking more fulfilling tasks—and would even accept a lower salary for them.
This movement in the job market has another consequence. More than half of companies, according to the Personio survey, expect rising costs for recruiting and higher personnel costs due to wage increases next year. It remains to be seen how these higher budgets will affect the prices of products and services.
At least one figure is moving in the right direction: the number of employed people is expected to rise slightly again next year, likely reaching a new record. The current figure of 46.2 million people is expected to grow by 0.3 percent in 2025.
But there is also a downside. “Employment will continue to grow, but the outlook hasn’t been this weak since the Corona period,” says Enzo Weber, an economist at the Institute for Employment Research (IAB).
As the newspaper WELT recently reported, the number of employed people will begin to decline due to aging starting in 2026—despite migration. For companies already suffering from a shortage of skilled workers, finding talented applicants will become even more difficult.
