Germany’s unemployment rate rises to highest level in almost a decade

The unemployment rate in Germany reached its highest level since February 2015 at the start of the year, according to new data from the Federal Employment Agency (BA).

From December to January, the number of people out of work increased by 11,000 on a seasonally adjusted basis.

Compared to the same month last year, the number of unemployed individuals rose by 187,000 - bringing the total to 2.993 million.

The unemployment rate rose to 6.4%, up by 0.4 percentage points on the month.

At this time of year, more Germans tend to be out of work as many temporary contracts end and weather-dependent jobs dry up.

The scale of the seasonal increase can nonetheless be linked to the poor state of Germany’s economy, hampered by a manufacturing downturn and a productivity crisis.

Crumbling infrastructure, political instability, and excess red tape are also adding to Germany’s woes.

The country’s GDP contracted 0.2% year-on-year in 2024, following a contraction of 0.3% in 2023.

The last time unemployment was higher than current levels was in February 2015, when it stood at 3.017 million.

Upcoming elections

The Ifo, a think-tank in Germany, also released economic updates this week.

On Thursday, researchers noted that “almost all branches of industry in Germany want to reduce their headcount”.

Economic concerns will play a significant role in Germany’s upcoming federal election, scheduled for 23 February.

Politicians are considering how best to boost the nation’s competitiveness in the face of global business competition - notably from China.

The renewable energy transition will also be key to the economic debate, as will decisions over Germany’s debt brake.

This mechanism limits public spending in the country, only allowing new government borrowing to exceed 0.35% of structural GDP during emergencies.