Unemployment rises to over three million: will citizen's benefit become a curse?

Unemployment rises to over three million: will citizen's benefit become a curse?

In August 2025, the number of unemployed in Germany will exceed three million and reach a new high of 3,025,000 people. This is an increase of 153,000 unemployed compared to the previous year. Economist Enzo Weber from the Institute for Labor Market and Occupational Research (IAB) had already predicted this development in July. Despite a slight easing in the pessimism of employment agencies, there are major doubts that the trend will turn around in the near future. The weak economic development is contributing to the labor market functioning increasingly poorly.

A significant factor in this is the gross domestic product (GDP), which shrank by 0.3 percent in the second quarter of 2025 - a greater decline than originally expected. Ulrich Kater, chief economist at DekaBank, points out that the sluggish economy is closely linked to rising unemployment. What is particularly worrying is that almost 80 percent of the jobs reported are aimed at skilled workers who have completed vocational training, while two thirds of the unemployed on citizen benefit do not have the appropriate qualifications.

The shortage of skilled workers as a challenge

The shortage of skilled workers will remain one of the biggest challenges for the German labor market in 2025. In March there are over 387,000 vacancies for qualified workers in Germany. The country has a vacancy rate of 86 percent, higher than the global average of 74 percent. Sectors such as sales professions, medical health professions and numerous skilled trades are particularly affected. Bottleneck occupations sometimes show vacancy times of over 280 days, which illustrates the urgency of the problem.

The causes of the shortage of skilled workers are diverse: These include demographic change, growing skills gaps and inadequate integration of immigrants into the labor market. The number of people of working age is falling and it is expected that there will be around seven million fewer skilled workers available by 2035.

Citizens' money: help or hurdle?

Around 5.5 million people in Germany currently receive citizen's benefit, of which around one in four is a child. An interesting detail: one in five of the employable citizens' benefit recipients has a mini-job or is employed part-time or full-time as a supplementary worker. But of the remaining citizens' benefit recipients, only one in two is actually unemployed. The others are in further education, school, training, childcare or have health restrictions.

The federal government is now planning to make adjustments to citizens' benefit in order to increase the pressure on recipients and encourage them to accept vacancies more quickly. Chancellor Friedrich Merz and Labor Minister Bärbel Bas want to improve support for citizens' benefit recipients through job centers. An additional billion euros are planned for integration measures from next year. The aim is to reduce the mismatch between job seekers and available positions, among other things through better qualifications and financial incentives to work more.

A look at the future

The challenge of integrating the unemployed and securing skilled workers is enormous. It remains to be hoped that better framework conditions, targeted further training and a focus on the compatibility of work and family are the key to solving these problems. Increasing women's employment and sustainably securing skilled workers through immigration are seen as crucial factors. This is the only way the German labor market can remain stable in the future.

At a time when a shortage of skilled workers and rising unemployment go hand in hand, comprehensive measures are necessary to set the course for positive development. The coming months and years will show whether the political initiatives are effective and whether confidence in the labor market can be regained.

Mercury reports that the number of unemployed in Germany is now over three million, while MDR addresses the situation of citizens' benefit recipients. Statista adds that the shortage of skilled workers is one of the biggest challenges facing the German economy. Statista shows which industries are particularly affected and which solutions are being considered.