How AI is likely to change Germany's job market

At the German government's 2026 "Digital Summit" in early November, Chancellor Friedrich Merz was asked to address a difficult economic question: If AI makes hundreds of thousands redundant, might a basic income be necessary? Surprisingly, the conservative politician didn't dismiss the idea outright. "I've always been a bit cautious about this issue in recent years," he said. "However, I'm also well aware that the issue of AI will change our working world so fundamentally that we'll have to give serious thought to many of these issues in the coming years." This marks a significant shift for Merz, whose policies have focused on making Germans work more, including raising the retirement age and cracking down on sick leave.

Job Losses and Economic Disruption

This week, the head of Germany's Federal Employment Agency, Andrea Nahles, warned that AI could cost Germany as many as 800,000 jobs in the next 15 years. Though she noted AI could eventually create a similar number of jobs, the socio-economic upheaval would be considerable. "The issue of AI will change our working world so fundamentally that we'll have to give serious thought to many of these issues," Merz acknowledged.

Tech Leaders and Basic Income

Germany's minister for digital transformation, Karsten Wildberger, has also warned about AI's economic disruptions. He told Neue Osnabrücker Zeitung that "an unconditional basic income can be part of the solution to cushion the upheavals in the labor market." This aligns with views from tech leaders like Elon Musk, who predicted UBI would become inevitable, and Anthropic CEO Dario Amodei. However, Kirsten Herrmann of Mein Grundeinkommen warns that tech bosses may have different motives. "The basic income that people from the tech business talk about is a kind of neoliberal basic income," she said, whereas we talk about a basic income that is meant to give people a secure economic base before the crisis in the job market happens.

Economic Perspectives

Mainstream German economists have largely rejected the basic income idea. Dominik Enste of the German Economic Institute dismissed it as too expensive, especially given existing social welfare costs. "Many economists have calculated that implementing this in many countries is financially unfeasible," he said. However, he acknowledged that social security systems will need to change if work is replaced by AI, suggesting a conditional basic income that still provides incentives to earn. Oxford economist Maximilian Kasy takes a more positive view, believing a basic income could work if "financed in a progressive way." The IMF has predicted that 40% of global employment will be shaped by AI, rising to 60% in industrialized nations.

Shaping AI's Future

Herrmann argues that society needs to ask more fundamental questions about AI's socio-economic implications. "Who actually profits when we become more productive through AI? And how do we redistribute that profit to everyone?" she questioned. Which jobs are going to be replaced by AI is not some law of nature. It's something that we can shape politically and socially. The German government's evolving stance on basic income reflects growing recognition that the AI revolution may require radical rethinking of economic systems and work itself.