Unemployment in Germany was at its highest level in 12 years in 2025, and this year will continue to be challenging for Europe's biggest economy, the country's labor office said Wednesday.
The average number of jobless in 2025 rose by 161,000 to 2.948 million, the highest annual figure since 2013, according to the labor office.
Although the trough has probably been reached, a slight easing is not expected until the middle of the year at the earliest, said labor office head Andrea Nahles.
"2026 is not a year of the all-clear, but a year with noticeable challenges," Nahles said, noting that a moderate recovery, supported by the government's fiscal packages and a rebound in construction, would not be enough for a significant fall in unemployment.
The number of people out of work in Germany rose in December, but by less than expected, labor office figures showed.
The office said the number of unemployed grew by 3,000 in seasonally adjusted terms from the previous month. Analysts polled by Reuters had expected a rise of 5,000.
The seasonally adjusted jobless rate remained stable at 6.3%.
"The labor market continues to lack economic momentum," said Nahles. "The weak trend is therefore continuing at the end of the year." Germany ended 2025 with 2.9 million people out of work, close to the three million mark, which was topped for the first time in a decade in August.
"The bottom line is that the labor market is weaker than it was a year ago," said Nahles.
Over the last four years, German unemployment has increased by some 500,000 people, said Carsten Brzeski, global head of macro at ING.
"This gradual worsening reflects textbook economics: with the economy effectively stagnating for more than five years and industry facing severe structural challenges, a deterioration in the labor market was inevitable," Brzeski said.
Germany has been struggling with a persistently weak economy. There were 619,000 job openings registered with the labor office in December, 35,000 fewer than a year ago.
The unemployment rate in 2025 was 6.3%, up from 6.0% in 2024.
"The gradual deterioration of the German labor market is likely to persist, clearly complicating any recovery of private consumption in 2026," Brzeski said.
However, the shortage of skilled workers remains a problem despite unemployment, and Germany's potential labor force is expected to decline for the first time.
The number of available workers will fall by a noticeable 40,000 in 2026 due to demographic factors, according to labor office estimates.
"Rising unemployment does not mean that we don't need skilled workers," said Nahles. "Nothing, I emphasize nothing, protects against unemployment better than good qualifications."
Nahles praised the integration of Syrian refugees into the labor market, with the integration rate of Syrian men higher than for the German comparison group.
However, there is still a deficit in the integration of Syrian women.
The situation among Ukrainian refugees has also improved, with 370,000 Ukrainians working in Germany, 79,000 more than a year ago.
