Stalling German economy prompts graduate ‘poverty’ fears

An increase in the number of German university graduates at risk of poverty is more a reflection of a stalling economy that is affecting workers at all levels rather than a sign that degrees are losing their value, economists say.

Around 1.9 million people with university-level qualifications in Germany were at risk of poverty in 2025, a rise of 350,000 in three years, according to figures reported by Deutsche Welle, which cites Germany’s federal statistics office. The figures were released in response to a request from Sahra Wagenknecht Alliance (BSW), a left-wing political party. 

In Germany, individuals are considered “at risk of poverty” if their net household income is less than 60 per cent of the national median. The findings feed into broader debate about whether a university degree still offers the financial security it once did. 

“Graduates are indeed struggling more. But unemployment has risen across the board, both on the academic and non-academic level,” said Enzo Weber, an economics professor at the University of Regensburg and the head of the research department at the Institute for Employment Research (IAB). 

Weber explained that while unemployment among university graduates had risen, they accounted for only 17 per cent of the increase in unemployment since August 2022 among those under the age of 30. Job openings are at a record low, he said, adding that the rate at which young people – degree or no degree – are finding jobs had fallen no faster than for any other group. “In an economic downturn, all ships sink,” he said. 

Many of those counted in the poverty statistics may not stay there long. Bernd Fitzenberger, the director of the IAB and an economics professor at University of Erlangen-Nuremberg, said a large share of the 1.9 million were students who had bachelor’s degrees and were in the process of finishing their master’s or PhD programmes, which meant they were living on low stipends but with strong career prospects ahead. 

“A major part of the 1.9 million people with university-level qualifications in Germany are only temporarily at risk of poverty. Once they enter the labour market in their intended career, they will leave poverty,” he said. 

Christian Dustmann, an economist at UCL who researches inequality in Germany, said returns to higher education, including white-collar apprenticeships, had been declining since the Great Recession in 2008, but it was not a phenomenon that was unique to Germany. 

He said the rise of artificial intelligence adds further pressures on young people across Europe. “Many of those occupations that have been well-paying and require university education are very much endangered by new developments in artificial intelligence, in the law profession, even among economists.”

IAB’s Bernd also pointed to AI as a factor that’s transforming the job market, warning that some graduates would have to do jobs that paid less. “For those jobs, for example business-related services, media-related jobs, the university degrees are indeed becoming less valuable. Still, that does not put those graduates at the risk of poverty,” he added.