German Unemployment Level Hits Highest Level in over 12 Years

(MENAFN) Germany’s unemployment level has climbed to its highest point in over a decade, according to newly released official data, underscoring mounting pressure on the country’s already fragile economy as it risks a third straight year without meaningful growth.

Figures released Friday show that the number of people without jobs increased by 177,000 in January compared with December, pushing total unemployment beyond 3 million. The jobless rate, measured without seasonal adjustment, rose by 0.4 percentage points to reach 6.6%.

“There is currently little momentum in the labor market,” said Federal Employment Agency head Andrea Nahles, pointing to widespread caution among employers as weak growth and economic uncertainty continue to weigh on hiring decisions.

Separate indicators suggest a mixed picture across the private sector. Preliminary business activity data shows some improvement in overall activity during January, but manufacturing continues to lag behind, while workforce reductions have accelerated.

Germany’s labor market struggles follow a prolonged economic downturn. The country slipped into recession in both 2023 and 2024, followed by near stagnation in 2025. Earlier this week, the government revised down its growth expectations for 2026 and 2027, acknowledging that recent fiscal measures have failed to revive the economy as quickly as planned. Economy Minister Katherina Reiche said Germany must shift toward new “growth engines,” arguing that traditional export strengths “no longer carry our growth.”

Economic headwinds have been intensified by persistently high energy costs. After the European Union scaled back imports of relatively inexpensive Russian pipeline gas following the escalation of the Ukraine conflict in 2022, energy prices surged. The resulting crisis has driven up living costs and eroded the competitiveness of energy-intensive industries, particularly in manufacturing-heavy economies such as Germany.

Concerns have also been raised about the government’s proposed €1 trillion ($1.2 trillion) spending package for infrastructure and defense, part of a broader militarization trend across the EU. Analysts caution that the plan could place additional strain on the economy rather than deliver rapid relief.

In its latest outlook, the German Economic Institute warned that the economy has entered a state of “shock,” citing weak global demand, elevated interest rates, and an unresolved energy crisis as key factors behind the ongoing slowdown.

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