Without immigration from third countries, there would no longer be any growth in the labor market, says Daniel Terzenbach, board member of the Federal Employment Agency (BA). From 2023 to the end of 2024 he was also the federal government’s special representative for the traffic light government for the integration of refugees into work.
THE TIME: Mr. Terzenbach, hardly a week goes by without companies announcing job cuts. How do you view the crisis year 2025 on the labor market?
Terzenbach: There are already more dark clouds in the sky than bright sunshine. We are seeing a decline in jobs in the industry. More than 10,000 manufacturing jobs are lost every month. Nevertheless, it is positive that the number of jobs subject to social insurance contributions has actually increased slightly this year. However, this growth comes exclusively from part-time employment; full-time employment is declining.
TIME: That doesn’t sound very confident now.
Terzenbach: Nope. Although youth unemployment is rising slightly, it remains one of the lowest in the EU. But we are observing a gap in the training market that is closing more and more after a long phase. There are fewer training places and more applicants who cannot find a job. The leading institutes, including our Institute for Labor Market and Occupational Research (IAB), do not expect a strong recovery for next year either. The credo is: It won’t get any easier.
TIME: It is primarily the public service that creates jobs. Is that healthy?
Terzenbach: Not only public administration, but predominantly the areas of education, care and health, for example, are intensively looking for staff. The increase in workforce here is permanent because the aging society needs more care and because more child care is needed. In my opinion, the increase in personnel in administration is a transition: With digitalization, automation and artificial intelligence, which is honestly still the exception in administration, many standard processes are becoming faster and leaner – as a result, personnel requirements will level off in the medium term.
TIME: Do you actually already see concrete effects of AI on employment?
Terzenbach: We will tend to initially see productivity gains as a result of AI: more output per capita, not necessarily more people. Only when the economy picks up again and demand increases will the number of new jobs grow. So far, the effects of AI are more anecdotal, but already measurable in some areas. Translation tasks and text summarization are increasingly being carried out by AI tools. In the media, graphics and design industries, AI tools take over routine work. Teams are becoming smaller and free orders are becoming rarer. In industry we are in a kind of testing phase: There are many projects with AI that are already helping with quality, maintenance and planning, parts of processes are becoming more efficient so that tasks can be completed with fewer additional positions.
TIME: That sounds like job cuts in the medium term.
Terzenbach: But it’s not that clear. This depends, firstly, on whether companies use the productivity gains to grow and offer new products, and secondly, on how quickly they train their people so that employees can move into jobs with future prospects. Germany in particular is at a crucial threshold: the widespread implementation of AI now requires investments, IT security and new processes. This takes time and should happen with as little bureaucracy as possible. The USA and China are much further along, partly because they have fewer regulatory hurdles.
