Germany's unemployment rate reaches a peak not seen in a decade
In a recent development, Germany's unemployment rate has seen a significant increase, with the number of unemployed individuals rising to 3.025 million in August 2025. This marks the highest unemployment figure since February 2015.
According to the BA's detailed monthly report, the number of unemployed individuals actually fell by 9,000 compared to July 2025, when adjusted for seasonal factors. However, this positive trend was not enough to counteract the overall rise in unemployment.
The increase in unemployment has put Chancellor Friedrich Merz under pressure. Merz, who is the leader of the CDU, is part of the current coalition government alongside the SPD, but Olaf Scholz (SPD) currently holds the Chancellor position.
Andrea Nahles, head of the German Federal Employment Agency, attributed the increase in unemployment to weakness among Germany's manufacturers. German manufacturers have been struggling due to high energy costs and increasingly fierce competition from China. Over 110,000 jobs have been lost in German industry in the past year, with about 50,000 of these job losses occurring in the car industry.
Thilo Brodtman, head of the VDMA machine-makers' association, called for costs to decrease and rigid rules to be loosened to help support the struggling manufacturing sector. Bärbel Bas, Labour Minister, echoed this sentiment, stating that the government intends to spend hundreds of billions on infrastructure and support employees and industry.
Economist Stephanie Schoenwald of KfW Research noted that the rise in unemployment in August was primarily seasonal. However, the overall trend remains concerning. Andrea Nahles expressed her concern about the economy and emphasized the need for signs of recovery.
Despite the current challenges, there is a glimmer of hope. The expected upturn in the coming year may lead to an improvement in the labor market situation. The overall unemployment rate in Germany is now 6.4 percent.
As the German government navigates these economic challenges, it will be crucial to find solutions that support both employees and industry, while also addressing the underlying issues that have contributed to the rise in unemployment.
