Germany’s labor market is signaling a concerning slowdown, according to preliminary data released by Destatis, the national statistics office. The number of employed individuals in Germany reached approximately 46.0 million in the third quarter of 2025, a marginal decline of 41,000, or 0.1 percent, compared to the previous quarter – marking the second consecutive quarterly decrease. The year-on-year growth has also drastically decelerated, registering a mere 7,000 individuals increase (0.0 percent) compared to the third quarter of 2024, a far cry from the 96,000 average increase observed between 2022 and 2024.
The contraction in overall employment primarily reflects a significant downturn in sectors outside of services. While employment in service industries expanded by a modest 151,000 individuals (0.4 percent) year-on-year, non-service sectors experienced a more substantial reduction of 174,000 individuals (1.5 percent). Notably, the public sector, including education, healthcare and social services, continues to be a bright spot, demonstrating robust growth of 201,000 individuals (1.7 percent). However, this is counterbalanced by worrying declines in crucial areas.
The information and communications technology (ICT) sector continues its downward spiral, experiencing a loss of 9,000 jobs (0.6 percent). This signifies the end of a nearly decade-long period of employment growth, highlighting potential structural issues within this vital sector. The trade, transport and hospitality industries also suffered, marking a reduction of 29,000 individuals (0.3 percent), indicative of persistent challenges in the post-pandemic recovery. A significant decline of 60,000 individuals (1.0 percent) was also reported within business services, which includes temporary employment agencies, raising concerns about the health of the broader economic ecosystem.
The manufacturing sector, excluding construction, has also seen a substantial decrease of 154,000 individuals (1.9 percent), suggesting a weakening industrial base. Construction employment followed suit, albeit at a less dramatic pace, with a reduction of 19,000 individuals. Even the agricultural and forestry sectors experienced a decline.
While the increase in social security-covered employment contributed to preventing a more significant overall decline, a worrying trend reveals a decrease in individuals engaged in marginal employment – those with part-time work, short-term contracts and subsidized jobs. Furthermore, the number of self-employed individuals, including those with family assistance, has continued to fall, dropping 30,000 (0.8 percent) year-on-year.
Despite a slight uptick in average working hours, the overall volume of work performed has diminished by 5 million hours, signaling a concerning trend of reduced economic activity. The decelerating labor market data raises significant questions about the long-term sustainability of Germany’s economic model, particularly concerning its industrial competitiveness and potential vulnerabilities within critical sectors. The government faces increasing pressure to address these structural shifts and implement policies that foster sustainable job creation and support the self-employed population.
