Germany's Conservative Chancellor Flirts with UBI as AI Job Losses Loom — But Nobody Has a Plan to Pay for It

Friedrich Merz's cautious openness to basic income marks a rhetorical shift, not a policy one. The real question: who captures AI productivity gains, and who absorbs the displacement costs?

Friedrich Merz is not a man you'd expect to muse publicly about universal basic income. The German chancellor built his political brand on making Germans work more — raising the retirement age, cracking down on sick leave, publicly deriding the concept of work-life balance. Yet at the 2026 Digital Summit in early November, Merz conceded that AI will "change our working world so fundamentally" that questions about basic income deserve serious thought. It's not an endorsement. But the fact that he didn't dismiss it outright tells you something about the gravity pulling on the conversation.

The numbers driving that gravity are stark. Andrea Nahles, head of Germany's Federal Employment Agency, warned this week that AI could eliminate 800,000 German jobs over the next 15 years. She added that AI might eventually create a similar number of jobs — but "eventually" is doing enormous load-bearing work in that sentence. The International Monetary Fund estimated in 2024 that 40% of global employment would be shaped by AI, rising to 60% in rich industrialized nations. Germany's digital transformation minister Karsten Wildberger, a former retail CEO, has gone further than Merz, telling the Neue Osnabrücker Zeitung he is "convinced that an unconditional basic income can be part of the solution." The UBI idea has a strange coalition of supporters. Thomas More mentioned it in 1516. Elon Musk called it inevitable in 2017. Sam Altman launched a massive UBI experiment in the US in 2019, though his enthusiasm has reportedly cooled. Dario Amodei of Anthropic supports it. What unites these tech figures is a specific version of the argument: AI will eliminate profitable employment for many people, so you need a cash floor to prevent social collapse. Kirsten Herrmann of the nonprofit Mein Grundeinkommen draws a sharp distinction between this "neoliberal basic income" — essentially a palliative for surplus labor — and the version her organization advocates, which would provide economic security before the crisis hits, as a foundation rather than a bandage. Mainstream German economists remain hostile. Dominik Enste of the German Economic Institute in Cologne dismissed UBI as financially unfeasible, noting that Germany's existing pension commitments already strain the budget. He suggested a conditional basic income — one that preserves work incentives — combined with taxes on AI-generated income. Oxford economist Maximilian Kasy was more receptive, arguing that UBI could work "especially if it's financed in a progressive way," but stressed that the "small print matters very much." The financing question is where every UBI debate eventually runs aground. The deeper structural issue, as Herrmann frames it, is not whether AI will displace workers but who captures the productivity surplus when it does. If AI makes a company 30% more productive and the gains flow entirely to shareholders, then UBI becomes a mechanism for redistributing corporate windfalls to displaced workers — which means UBI's viability depends entirely on the tax architecture that funds it. Without that architecture, UBI is a slogan, not a policy. What's genuinely new here is not the UBI idea itself but its migration from left-wing aspiration to centrist-conservative talking point. When a chancellor who campaigned on "we must work more" starts hedging on basic income, the Overton window has shifted. But a shifted window is not a policy. Germany has no UBI legislation pending, no pilot program at scale, no financing model. The debate remains in the "wouldn't it be interesting if" phase — which is exactly where it's been for the better part of a decade. Hermann's most pointed question deserves the final word: "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 — and then the bigger question is: Who gets a say?" That question — about democratic control over technological deployment — is upstream of the UBI debate. Until it's answered, basic income proposals will remain reactive, not generative.