Artificial intelligence expected to impact German labor market and wages

Recent reports from the Munich-based Ifo Institute and the German Federal Employment Agency indicate that artificial intelligence (AI) will significantly reshape the German labor market over the next five to fifteen years. A June survey of over 3,000 businesses revealed that approximately half of those utilizing AI expect downward pressure on wages for employees with less than five years of professional experience. Meanwhile, about 40% of firms anticipate lower wages for more experienced staff, though individuals with university degrees are projected to have better earnings prospects compared to those without higher education.

Separately, Andrea Nahles, head of the Federal Employment Agency, stated that Germany could lose approximately 800,000 jobs to AI-driven automation over the next 15 years. Sectors such as banking, insurance, and service provision are expected to be the most affected. However, Nahles noted that new positions will simultaneously be created, and occupations requiring specialized human skills remain resilient. While unskilled labor may face challenges, Nahles emphasized that some manual roles are less likely to be replaced by technology, and she advocated for increased investment in AI to ensure the country's economic future.