German unemployment edges down to 2.94 million in June, but underlying weakness persists

National picture

Germany's labour market showed only a fractional improvement in June. The Federal Employment Agency (BA) reported 2.936 million unemployed, 15,000 fewer than in May. The unemployment rate slipped 0.1 percentage points to 6.2 percent. Despite that monthly dip, the year-on-year comparison was negative: there were 22,000 more people without a job than in June 2025.

There is hardly any change on the labour market. Unemployment is falling only slightly and the downward trend in jobs subject to social insurance contributions is continuing.

The BA described the usual spring revival as muted, weakened by the economic downturn and the effects of the war in Iran. Seasonally adjusted, unemployment fell by just 1,000.

Bürgergeld paradox

A counterintuitive development emerged among recipients of basic income support, the so-called Bürgergeld. Even before a major reform tightens work requirements on 1 July, the number of unemployed within that group dropped to roughly 1.8 million in June, about 10,000 fewer than in May and 56,200 fewer than a year earlier. Meanwhile, the contributory unemployment insurance scheme (ALG I) recorded 1.14 million recipients, up 78,000 year on year, as more people who lost long-held jobs fell back on it. Manufacturing shed 174,000 jobs compared to the previous year, and retail lost 47,000, though the public sector added 155,000 positions.

Regional snapshots

Eastern states mirrored the national trend. In Saxony-Anhalt the jobless rate dipped 0.1 points to 7.9 percent, with 87,331 unemployed. Thuringia saw a more pronounced drop of 1,166 to 68,385. The north was also slightly better: Lower Saxony’s rate held at 6.0 percent, Schleswig-Holstein’s fell to 5.7 percent, and Mecklenburg-Western Pomerania’s declined to 7.6 percent. All regions noted that the improvement was seasonal rather than structural.

Long-term scars

Almost two-fifths of the unemployed in Saxony-Anhalt and Thuringia have been out of work for more than a year, and people aged 50 and over make up more than a third. Labour union DGB underlined the persistent disadvantage for older workers.

Anyone now calling for a longer working life is ignoring the reality on the labour market. Older employees lose their jobs more often and remain unemployed for significantly longer.

On the demand side, the number of vacancies registered with the BA stabilised at a low level: 648,000 open positions, 16,000 more than a year earlier. The slight rise is attributed to retiring baby-boomer cohorts rather than a pickup in hiring.

Reform and outlook

A politically charged reform of basic income support takes effect on 1 July. The new rules, hammered out by the CDU/CSU–SPD coalition in the spring, aim to push beneficiaries more forcefully into work. The unexpected pre-reform fall in Bürgergeld unemployment may ease some political pressure, but the labour market remains fragile. The BA expects joblessness to rise again in July when summer holidays and company shutdowns begin.