Germany looks set to press forward with a number of pension reforms. This week Chancellor Friedrich Merz said he wanted to see all of the Pension Commission’s proposals “implemented swiftly”. Among the 33 measures advised by the commission is a proposal to effectively abolish mini-jobs, which are part-time or short-term jobs that have been excluded from social security contributions until now. Mini-jobs usually consist of just a few hours work per week, or they take place over a short period of up to three months
per year. They were introduced from the start of 2003 as part of the Hartz II program, which was aimed at promoting employment opportunities. Earnings are currently capped at €603 per month or €7,236 per year. Mini-job employees pay no social security contributions on this income, while the employer pays a lump sum of just over 30 percent, including 15 percent for pension insurance and 13 percent for health insurance. The deal thus far was basically that workers willing to take on these mini-jobs get
the benefit of receiving this income without the burden of paying contributions, while employers who need extra hands at the last minute pay a bit more for the benefit of an easy hire and hassle-free registration. But if the relevant proposal goes forward as part of Germany’s bigger pension reform, the special tax and social security status of mini-jobs would be abolished. In future, nearly all employees would pay into pension, nursing care and health insurance regardless of how few hours they work. One notable
exception could be for students who work a mini-job while enrolled in their studies. READ ALSO: What Germany’s planned pension reform means for you How many people have mini-jobs? According to the Minijobzentrale, more than 6.5 million people in Germany are currently registered with mini-jobs. Almost two-thirds of mini-job workers are between 24 and 64 years old, and more than half of them (55.9 percent) are women. An argument in favour of mini-jobs has been that they create opportunities for people with major time constraints,
like mothers, to participate in the work force. Germany currently has a high rate of women’s participation in the labour market compared with other European countries, but the number of hours worked by women in Germany is among the lowest in Europe. Approximately 18.3 percent of mini-jobbers are foreigners. Mini-jobs can also be a good fit for busy students, who face time (and sometimes residence-related) constraints, but often need at least a small amount of income to pay rent and live a comfortable life. READ
ALSO: Which seasonal ‘summer jobs’ are available in Germany? For all mini-jobbers combined, contributions of €1.3 billion were paid in the first quarter of this year for pension insurance and €1.02 billion for health insurance. The majority of mini-jobs in Germany are in the retail and catering sectors. The biggest critics of the proposal to scrap mini-jobs also represent these sectors. “The proposals of the Pension Commission. would be a catastrophe for the hospitality industry,” reads a statement by the Hotel and Restaurant Association in
Bavaria, for example. When would the law change? Chancellor Merz and Federal Minister of Labour Bärbel Bas have said they will push for the full implementation of the proposals of the Pension Commission. So it looks like the imminent end of Germany’s mini-jobs may be coming soon. The question at present is: how soon? There appears to be some disagreement between conservative Union lawmakers and those from the Social Democrat Party (SPD) as to the timeline for implementing the reform. Merz suggests that the reform
is “already late,” and wants to push for a decision in the Bundestag by autumn of this year. Members of the SPD, on the other hand, have cautioned that the reform work is complex and may require more time. It is not yet known if there would be a transition period for workers who currently have mini-jobs. The proposal by the Pension Commission does not clarify regulations for this. But generally, in cases like this, transitional arrangements would be created so that current contracts do
not need to be immediately amended. With reporting by DPA.
Germany, mini-jobs, pension reform, Friedrich Merz, Bärbel Bas, Pension Commission, Hartz II, Minijobzentrale, SPD, Bundestag, healthcare contributions