Where AI could change employment
Nahles expects the losses to fall unevenly, with business services and analytical work at banks and insurers among the areas facing greater pressure. She favors more investment in AI, provided it improves productivity rather than merely follows a trend.
A scenario analysis published on November 19, 2025, by the Institute for Employment Research (IAB), together with the Federal Institute for Vocational Education and Training (BIBB) and the Society for Economic Structural Research (GWS), puts the scale of the shift at about 1.6 million jobs. It projects roughly 800,000 positions lost and another 800,000 created by 2040.
The analysis estimates that AI could add up to 0.8 percentage points to annual GDP growth and increase Germany's cumulative value creation by 4.5 trillion euros through 2040 compared with a scenario without AI. Business services, including consultancies, some IT services and advertising agencies, could lose about 120,000 jobs. IT and information services could gain about 110,000, with employment also growing in education and teaching.
Those projections are distinct from the employment effects observed so far. An IAB study published in October 2026 found no significant job losses attributable to AI in Germany. From 2022 to 2025, employment growth among workers ages 30 to 64 was 5 to 6 percentage points stronger in occupations with high AI exposure than in less exposed occupations.
The pattern was different for workers ages 20 to 29: employment in highly exposed occupations performed 1.2 percentage points worse than in less exposed jobs. The IAB attributed this mainly to younger workers' limited experience and difficulties with onboarding when working from home. It said the negative relationship with the recession was more than twice as strong as the AI effect.
Graduates, skilled trades and training
Nahles cautioned against assuming that highly qualified workers face worse prospects across the board. She cited a US study about young graduates and said German graduates, too, are taking longer to enter the workforce and may not get their preferred job. Even so, their prospects remain substantially better than those of other groups, she said, and the weak economy—not just AI—is contributing to their difficulties.
Skilled trades have proved relatively resilient because hands-on human work remains central, even where AI can change parts of the job. Replacing unskilled or semi-skilled workers with AI may also be uneconomical in some cases. But no group is entirely insulated from change, Nahles said.
The BA has seen a marked shift toward digital continuing education over roughly the past year and a half, increasingly including AI training. IAB surveys found that one in four companies used AI in 2025, and Nahles expects adoption to increase. Some employers set aside time for learning; SAP, for example, gives each employee two hours a week.
The agency supports companies with training programs. Nahles said workers need confidence in their skills if they are to make use of the technology's opportunities.
A weak entry-level market and a delayed recovery
The immediate problem for many young people is a shrinking apprenticeship market. Registered openings have declined for three consecutive years, with this year's total down 6%, or 31,000 positions, even as applicant numbers have risen. Handelsblatt noted that only four in 10 applicants secured an apprenticeship this year.
Nahles said conditions vary by region, but the economic slowdown is now affecting apprenticeships nationwide. She described young people's prospects as the worst they have been in a long time, after warning in 2025 that the situation was deteriorating.
She does not expect an economic recovery to reach the labor market before summer 2027. Registered vacancies have yet to turn upward. Even if a recovery takes hold at the start of the year, she said, employers generally wait for more orders and increase overtime before hiring, leaving a lag of about six months. Construction is showing some improvement, which she said appears to reflect federal infrastructure programs.
For now, Nahles sees unemployment as the more pressing concern. It has risen 24% since 2022—an increase of 580,000 people—and remains close to three million. The numbers of long-term unemployed people and recipients of basic income support, however, are now declining.
Worker shortages and immigration
Looking five years ahead, Nahles expects skilled-worker shortages to become the greater problem. Demographic change is reducing Germany's workforce by a net total of about 500,000 people a year, she said, warning against overlooking that pressure because unemployment is currently high.
Immigration from elsewhere in Europe can no longer meet Germany's needs because other countries also lack enough young workers. Net immigration is at its lowest level in a long time, according to Nahles. Too few skilled workers are arriving and too many are leaving, with EU citizens able to find attractive conditions elsewhere.
She urged Germany to recruit more skilled workers from outside the EU and establish the promised Work-and-Stay Agency. In her view, a centralized, faster and more digital system is needed to compete with other immigration destinations.
Nahles said she was disappointed that protecting the country's 550 local immigration offices appeared to be taking precedence. Those offices were not designed as welcome centers for international skilled workers, she said, and she fears the proposed agency is being fragmented by Germany's federal structure.
Moving workers out of struggling industries
The BA is expanding job-transfer networks, known as Arbeitsmarktdrehscheiben, that connect employees at struggling businesses directly with employers seeking staff. Their number has risen from 30 in spring 2025 to 141, with further growth underway. Much of the activity is in the metal and automotive industries, where mass layoffs are taking place.
The scale of the industrial downturn is reflected in BA figures for 2025. Manufacturing employment fell by 177,000, leaving 6.5 million employees covered by social insurance in December—almost one-fifth of all such employees. Vehicle and auto-parts manufacturers lost 52,000 jobs, metal-products businesses lost 24,000, and mechanical engineering lost 28,000. Employment across all sectors declined by 108,000 because gains elsewhere did not offset manufacturing's losses.
Nahles said the transfer networks work best within the same collective-bargaining sector. They can also connect different industries: in Stuttgart, the BA is helping workers move from industry into skilled trades, where employers in southern Germany need staff. The numbers involved remain modest, she said, but transfers are taking place.
She disputed the economics minister's assertion that the networks were ineffective because employees at large companies preferred to wait for severance payments. The BA is still evaluating their qualitative impact, Nahles said. She pointed to the growing number of networks and said they are established only at the request of employers and works councils.
Transfers can operate alongside severance negotiations and transfer companies, sometimes involving tens of thousands of employees. Nahles also backed the coalition's proposal to reduce taxes on severance payments when recipients take another job, saying it would provide the right incentive.
Deficits and benefit changes
Nahles said the BA still expects a deficit of 10 billion euros at the end of 2026, driven entirely by unemployment. It forecasts a deficit of 8 billion to 8.5 billion euros for 2027 and is due to receive an 8 billion euro loan for that year.
The agency spent its former reserves of 26 billion euros during the coronavirus pandemic to support companies and workers. Nahles argued that this justified federal help through debt forgiveness or a grant by 2028 at the latest. She said she knew of no plans to raise unemployment insurance contributions.
The number of people capable of working who receive basic income support has been falling since the beginning of 2026. Nahles said the BA is both asking more of recipients and offering more help, with particularly strong placement results for Ukrainians and people granted asylum despite the economic slowdown.
Any additional effect from the July 1 switch from Bürgergeld to Grundsicherung, the revised basic income support system, will not become apparent until spring at the earliest, she said. She emphasized employment as the route to savings: last year, the BA placed 64,000 more Ukrainians in jobs than it did in 2024.
Staffing cuts and Nahles's proposed extension
Nahles, 56, has led the Nuremberg-based agency since 2022. Its administrative board recently recommended that the federal government extend her contract through 2032. The government normally follows the board's recommendations.
The agency is implementing a 2% personnel savings target, she said. Staffing in its core unemployment insurance operations fell steadily between 2010 and 2020, but the BA has since taken on additional responsibilities. New duties in vocational training and rehabilitation for basic income support recipients alone require 1,000 more employees.
Although mandatory services account for 80% of its responsibilities, the BA is presenting a cost-cutting budget to its administrative board this week. Under an automation agenda in place since 2024, it is eliminating positions freed up by digitalization, with 7,800 cuts planned by 2032.
