Berlin, Germany – Germany’s unemployment rate has climbed to its highest level in nearly a decade, reaching 6.4% at the start of 2025, according to new data from the Federal Employment Agency (BA).
The latest figures show that 2.993 million Germans are now unemployed, an increase of 187,000 compared to January 2024. On a seasonally adjusted basis, jobless numbers rose by 11,000 from December to January.
While an increase in unemployment is typical at the start of the year—due to the expiration of temporary contracts and seasonal job losses—the scale of the rise points to deeper economic problems.
Economic Slowdown Worsens Labor Market Struggles
Germany’s economy has been struggling with weak manufacturing output, sluggish productivity, and crumbling infrastructure. Excessive bureaucracy and political uncertainty have further dampened investor confidence.
The country’s GDP contracted by 0.2% in 2024, following a 0.3% decline in 2023. This two-year downturn has contributed to rising unemployment, with job losses particularly affecting industrial sectors.
The last time unemployment levels were this high was in February 2015, when 3.017 million Germans were unemployed.
Companies Cutting Jobs as Economic Uncertainty Grows
The Ifo Institute, a leading German economic think tank, warned this week that most industries in Germany are planning to reduce their workforce due to deteriorating business conditions.
“Almost all branches of industry in Germany want to reduce their headcount,” Ifo researchers stated on Thursday.
Manufacturers, in particular, have been struggling against rising costs, global competition, and slowing demand, leading to layoffs and hiring freezes.
Economic Issues to Shape Upcoming Elections
With Germany set to hold federal elections on February 23, economic challenges are expected to be a key issue in political debates.
Lawmakers are considering strategies to boost competitiveness amid growing pressure from China and other global players.
Germany’s transition to renewable energy and the controversial debt brake—a mechanism that limits public borrowing to 0.35% of structural GDP, except in emergencies—are also set to dominate discussions.
As economic uncertainty looms, policymakers face increasing pressure to revive growth, protect jobs, and restore confidence in Europe’s largest economy.
