Adjustment to Employment Market to Span Minimum of 12 Months
The German labor market is bracing for a period of subdued growth and ongoing challenges in 2025, as the economy grapples with uncertainties in international trade and the impact of new tariffs on steel and aluminum.
According to recent reports, the number of job vacancies has decreased by 2.2 percent compared to May, reaching a level not seen in four years. In June 2025, the Federal Employment Agency reported 632,000 job vacancies, a decrease of 69,000 compared to a year ago and 250,000 fewer than in 2022. Simultaneously, unemployment is on the rise, with the number of unemployed people in Germany reaching 2.914 million in June 2025, a 188,000 increase from June 2024.
State Secretary Leonie Gebers in the Federal Ministry of Labor has emphasized the need to ensure that as many young people as possible find a training position. For the new training year, 396,000 applicants have registered with employment agencies and job centers, 13,000 more than at the same time last year. Despite these efforts, the number of registered training positions has decreased by 25,000 compared to last year, standing at 455,000.
Andrea Nahles, the chairperson of the Federal Employment Agency, does not expect an improvement until at least next summer. Labor market researchers predict that the number of unemployed people will exceed three million this summer. The shortage of skilled workers persists in many professions, and unemployed individuals are currently facing significant difficulties in finding a new job, with chances being lower than during the Corona pandemic.
However, there is a glimmer of hope on the horizon. Despite signs of economic weakness, the labor market continues to show some signs of improvement, according to BA CEO Nahles. The economic recovery, if it comes earlier, will have some delay in its effects on the labor market. Significant improvement is expected from 2026, supported by increased public investments, especially in infrastructure and defense, and a rebound in private investment and consumption.
Rainer Dulger, President of the Employers' Association, urges the Federal Employment Agency to focus on matchmaking to reduce unemployment benefits and contribute to stable contributions to unemployment insurance. The forecasted growth from 2026 onwards should translate into a marked recovery of the labor market, driven by expansionary fiscal policies and a lessening of trade policy uncertainties. Private investment growth, government spending increases, and a rebound in exports are expected to create more jobs and improve employment conditions.
In summary, the German labor market’s significant improvement is expected to begin around 2026, following a year of stagnation and subdued economic activity in 2025. The recovery will be gradual and dependent on trade policy developments and the impact of public investment programs.
- Amidst the economic challenges, policy-and-legislation regarding job training and apprenticeships could play a crucial role in addressing the shortage of skilled workers and reducing unemployment, as advocated by State Secretary Leonie Gebers and Rainer Dulger, President of the Employers' Association.
- In the realm of general-news, radio broadcasts may disseminate updates on employment figures, labor market recovery progress, and political debates surrounding policy-and-legislation aimed at addressing the current economic and employment situation, providing citizens with valuable insights on the state of the German labor market.
