German unemployment hits ten-year high

The country’s economy is facing a third consecutive year without growth

Unemployment in Germany has risen to its highest level in a decade, official figures released on Friday showed. The labor report comes as the country's faltering economy risks contracting for a third consecutive year.

The figures showed the number of unemployed individuals having topped three million in August for the first time since 2015. The month-on-month increase came in at 46,000 to put the tally at 3.02 million in seasonally unadjusted terms, or 6.4% of the population.

Federal Employment Agency chief Andrea Nahles blamed the labor market struggles on Germany’s weak economy. The EU’s largest economy shrank by 0.2% in 2024 after contracting by 0.3% in 2023. This year, following a 0.3% expansion in the first quarter, output fell by 0.3% in Q2 as uncertainty grew over new US tariffs. The International Monetary Fund recently warned that Germany could face a third consecutive year without growth.

Germany’s economic downturn has coincided with Berlin’s decision to halt imports of low-cost Russian energy, which was vital for its industry. European gas prices rose sharply after Russian pipeline deliveries largely stopped and the Nord Stream pipelines were sabotaged later that year. Before the sanctions, Germany sourced 55% of its gas from Russia, but has since shifted to pricier liquefied natural gas (LNG) imports from the US and Qatar.

Moscow has repeatedly denounced Western sanctions as illegal and ineffective, arguing they have instead backfired on the countries that imposed them.

Chancellor Friedrich Merz admitted last week that Germany is facing a “structural crisis” rather than temporary “weakness” and said that steering the economy toward growth has proven more difficult than expected. Key industries such as the automotive segment “no longer truly competitive,” he added.

The country's automotive sector has shed more than 51,000 jobs just in the past year alone, according to recent data.

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