Germany’s labor market is signaling a worrying trend, according to preliminary data released by Destatis, the Federal Statistical Office. The number of employed individuals in Germany reached approximately 46.0 million in the third quarter of 2025, representing a slight contraction compared to both the previous quarter and the same period last year. This marks the first annual decline in employment since the first quarter of 2021, a stark contrast to the post-pandemic rebound witnessed in mid-2022.
The decline, though seemingly minor at 0.0% to 0.1%, reveals underlying structural weaknesses and raises questions about the sustainability of Germany’s economic trajectory. While seasonally adjusted figures show a reduction of 41,000 jobs in Q3 2025 compared to Q2 2025, the contrast is even more pronounced when considering the substantial seasonal increases observed in the prior years-averaging 96,000 in 2022-2024.
The data highlights a widening disparity between sectors. Public sector jobs, particularly in education, healthcare and social services, continued their upward trajectory, adding a significant 201,000 positions. Similarly, “other services” – encompassing organizations such as unions and advocacy groups – saw growth. However, this positive performance was overshadowed by significant job losses outside the service sector, totaling a reduction of 174,000 individuals-a drop of 1.5%.
The manufacturing sector is particularly concerning, experiencing a significant decrease of 154,000 jobs. The construction industry also saw a decline. Even the traditionally stable agricultural and forestry sectors didn’t escape the downturn.
The shift is not merely a reflection of cyclical economic fluctuations. The contraction in the information and communication technologies sector – a cornerstone of future growth – continues and the business services sector, including temporary employment agencies, has seen substantial job losses. This suggests a deeper restructuring of the economy, potentially linked to digitalization and automation trends.
Furthermore, the data differentiates between employee and self-employed categories, revealing a continued decline among self-employed individuals and those with part-time or temporary contracts. While social security-covered employment provided a minor buffer against overall job losses, the shrinking base of self-employed workers paints a picture of increased economic insecurity in certain segments of the population.
The slight increase in average working hours per employee, as calculated by the Institute for Labor Market Research, has failed to offset the shrinking workforce, with the total volume of work produced decreasing by 5 million hours compared to the previous year. This suggests that increased productivity has not translated into sustained economic activity, reinforcing concerns about the country’s long-term economic resilience.
The ongoing shift raises serious political questions, particularly concerning the government’s ability to adapt policies to support a rapidly evolving labor market and mitigate the potential social consequences of structural unemployment.