Merz Opens the Door to Basic Income as AI Threatens German Jobs; Economists Remain Skeptical

At Germany's government "Digital Summit" in early November 2026, a journalist put a hard question to Chancellor Friedrich Merz. If artificial intelligence made hundreds of thousands of people redundant within a few years, might the state need to pay people a basic income to soften the blow? A conservative with a market-friendly reputation could have been expected to say no. Merz did not.

According to the news outlet RND, he said he had been somewhat cautious about the issue in recent years. But he was also aware, he said, that AI would change working life so fundamentally that many of these questions would need serious thought in the coming years, including whether the country's productivity is simply not good enough.

The answer stood out because of what Merz has done in office. His government's planned pension reforms would raise Germany's retirement age. In July this year he announced a crackdown on sick leave. In spring last year, barely in office, he drew criticism for attacking the idea of a "work-life balance" and declaring that Germans must work more and more efficiently.

The labor market he is now being asked about may not fit that agenda. This week, Andrea Nahles, who heads the Federal Employment Agency, warned that AI could cost Germany as many as 800,000 jobs over the next 15 years. She added that AI could eventually create a similar number of new ones, but the upheaval in between would be considerable. Karsten Wildberger, the minister for digital transformation and government modernization, has also repeatedly urged Germany to prepare. A former CEO of a large retail company, he told the Neue Osnabrücker Zeitung in March that he was convinced an unconditional basic income could help cushion the labor-market upheaval.

Campaigners have greeted the shift with caution. Kirsten Herrmann, a board member at the non-profit Mein Grundeinkommen (My Basic Income), which runs projects studying the effects of basic income, said it shows a need to look differently at how people's economic stability is secured. But she told DW that individual statements do not amount to political change; they mean a serious, constructive debate is needed on what role a basic income could play.

The idea is old. Thomas More mentioned it in his 1516 book Utopia. In the 20th century it came to be seen mostly as a leftist ideal, until prominent tech figures adopted it. In 2017, Elon Musk, who had co-founded OpenAI two years earlier, predicted that universal basic income would at some point become inevitable. Dario Amodei, CEO of Anthropic, and Sam Altman, the other OpenAI founder, have since voiced support too, though Altman's enthusiasm has cooled somewhat since he launched a large basic income experiment in the US in 2019.

Herrmann calls tech leaders' backing a double-edged sword. Their version, she said, is a kind of neoliberal basic income, a response to a future with no profitable work for people, whereas her organization wants one that gives people a secure economic base before the job crisis hits.

Mainstream German economists remain unconvinced. Dominik Enste, who directs the democracy, society and economic ethics department at the German Economic Institute (IW) in Cologne, rejects the idea regardless of AI, calling it too expensive. In an email to DW he said many economists have calculated it is financially unfeasible in many countries, in Germany because existing commitments, including pensions, already have to be funded. He did allow that social security will need to change if AI replaces work, possibly with a tax on AI-generated income, but he envisions a conditional basic income that keeps incentives to earn a living.

Maximilian Kasy, an Oxford economics professor who has written a book on AI's social impact, is more open. He said outcomes depend on who makes the choices and in whose interest, noting that much of the current push aims to replace workers to raise profits and corporate control, though that is not the only possible path. He favors basic income if financed progressively, so only those at the lower end of the income distribution are net recipients, but stressed that the small print matters greatly.

The stakes are broad. In 2024 the International Monetary Fund predicted that AI would shape about 40% of employment worldwide and as much as 60% in rich, industrialized countries. Herrmann argues the debate has not reached the deeper questions: who profits when AI makes work more productive, and how that profit is redistributed. Which jobs AI replaces, she said, is not a law of nature but something to be shaped politically and socially, and the real question is who gets a say. What to watch now is whether Merz's remark leads to any concrete proposal, and whether it would be conditional, progressively financed, or something else.