Germany’s unemployment tops three million amid economic strains

Germany’s unemployment has risen above three million for the first time in a decade, labour office figures showed on August 29, underscoring mounting pressure on the government’s investment push to revive the economy.

A total of 3.02 million people were out of work in August in seasonally unadjusted terms, up by 46,000 from July. The seasonally adjusted jobless rate held steady at 6.3%, in line with forecasts, Caliber.Az reports via Reuters. 

“In Germany, three million is not just a number. In the context of the labour market, it represents a symbolic threshold – one that separates strength from weakness,” said Carsten Brzeski, global head of macro at ING.

Adding to the concerns, inflation rose to 2.1% in August from 1.8% in July, according to preliminary data. Job openings also declined to 631,000, down 68,000 from a year earlier.

“The labour market is still shaped by the economic slump of recent years,” said labour office head Andrea Nahles.

Labour Minister Baerbel Bas cited “global economic uncertainties and Russia’s war of aggression against Ukraine” as reasons for continued weakness. She said the government was responding with a major investment program, including a €500 billion special fund for infrastructure.

“The rise in unemployment is not unexpected. However, the figure illustrates how necessary reforms are for more growth and employability. The German government will focus on this,” Chancellor Friedrich Merz said.

“Three million unemployed is a damning indictment of the refusal to reform in recent years. Germany needs a genuine ‘autumn of reforms,’” said Rainer Dulger, president of the BDA employers’ association.

Clemens Fuest, head of the Ifo Institute, warned that rising joblessness would dampen household spending. Retail sales already dropped 1.5% in July, far worse than the 0.4% decline economists had expected.

“However, these hopes were disappointed in July,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.

By Sabina Mammadli