(de-news.net) – Germany’s labor market faces a dual shift as businesses increasingly expect AI to widen wage disparities while average working time declines. The trends are intensifying debate over whether competitiveness should be strengthened through longer working hours or through skills, technology and productivity gains.
According to a recent survey by the ifo Institute, German businesses are increasingly expecting artificial intelligence (AI) to put downward pressure on wages over the next five years. Employees with fewer than five years of professional experience are expected to be particularly exposed. About half of organizations that use AI anticipate lower compensation for this group, compared with roughly 40 percent for employees with at least five years of experience. At the same time, wage expectations vary according to employees’ qualifications, with between one-third and one-half of businesses anticipating that pay will remain stable. The findings suggest that AI is likely to affect different segments of Germany’s labor market unevenly, with less experienced workers facing greater risks of both wage reductions and job losses.
Among service-sector companies, employees without a university or university of applied sciences degree face the strongest expectations of wage declines. Some 53.3 percent of service providers expect lower wages for less-experienced personnel, compared with 44.2 percent for workers with more experience. In retail, the corresponding figures are 47.9 percent and 41.3 percent; in manufacturing, 46.5 percent and 38.9 percent; and in construction, 39 percent and 31.3 percent. Across these sectors, therefore, expectations of declining pay are consistently higher for workers with less professional experience.
Expectations of wage reductions are comparatively stable among employees with formal higher education, while prospects for wage gains are substantially stronger, particularly for those with greater professional experience. About 26 percent of businesses anticipate positive wage effects for highly qualified workers with more experience, while 16.3 percent expect potential gains even among those with less experience. By contrast, only 5.9 percent of respondents anticipate higher pay for workers who have both less experience and fewer qualifications. The survey therefore indicates that companies associate favorable wage effects from AI more frequently with formal qualifications, especially when those qualifications are combined with substantial professional experience, according to ifo researcher Anna Ruffert. Construction companies are particularly optimistic: 24 percent expect higher wages for highly qualified workers with less experience, compared with 29.8 percent for those with more experience. The corresponding figures are 14.9 percent and 27.3 percent in services, 15.9 percent and 24.9 percent in retail, and 15.6 percent and 24.2 percent in manufacturing.
Aging workforce fuels new debate over time at work, skills, and productivity
Meanwhile, after several decades in which working time had generally expanded, Germany’s average per-capita working time has recently begun to decline. The average weekly working time fell from a record 28.8 hours in 2023 to 28.4 hours in 2025, according to projections by the Federal Institute for Population Research (BiB) based on the Microcensus. In purely mathematical terms, that reduction corresponds to almost 460,000 full-time jobs. The decline was more pronounced among men and among younger and middle-aged adults, while working hours among older people continued to increase.
From 2005 through the beginning of the 2020s, the longer-term trend had pointed in the opposite direction. Men’s working time reached 33.5 hours per week in 2019, its highest level since 1991, before declining to 32.6 hours in 2025. Harun Sulak, a BiB researcher, said the current reduction had been less severe than during previous downturns but was partly attributable to Germany’s economic difficulties. Women’s working time, by contrast, has remained relatively stable at slightly more than 24 hours per week. One factor has been significant labor shortages in sectors in which women are heavily represented, including education, child care, health care and nursing, which have helped sustain demand for their labor.
Age and education have also shaped the pattern. People over 60 have continued to increase their working hours, whereas those between 25 and 54 have reduced theirs. The development is partly linked to the gradual increase in the statutory retirement age and to greater participation by older workers. People with lower levels of educational attainment experienced the largest decline, in significant part because of their lower employment rates. Among people who remained employed, however, reductions in weekly hours were more pronounced among higher-qualified workers, including as a result of greater use of parental leave and part-time arrangements by men.
Sebastian Klöllener, director of research at BiB, cautioned that demographic aging will substantially reduce the size of Germany’s labor force over the coming decades. As a result, he argued, per-capita working time will become an increasingly important measure of how effectively Germany is using its available labor pool. The findings come amid a political dispute over working hours, with leading SPD labor-market policymakers opposing proposals from business organizations to abolish the 35-hour workweek. They have argued that the shorter workweek is not a unilateral concession that companies could simply reverse, but instead the result of negotiated agreements between employers and unions. Dagmar Schmidt, the SPD’s deputy parliamentary leader, maintained that productivity, labor qualifications and investment in technology are just as important to competitiveness as the number of hours worked.
The 35-hour workweek helps limit excessive workloads, supports work-family compatibility and assists the metal and electrical industries in attracting skilled workers amid demographic pressures, according to SPD labor-market policymaker Annika Klose. She also rejected longer working hours without corresponding wage compensation. Klose challenged the assumption that higher productivity can be achieved primarily by extending working hours, instead pointing to a broader policy conflict over whether Germany should seek greater labor input through longer working time or raise output through skills, qualifications and technological investment.
