Berlin The reform of mini-jobs planned by the federal government means additional costs of 800 million euros a year for the economy. This emerges from the draft bill of the Federal Ministry of Labor, which is available to the Handelsblatt. To this end, employees in mini and midi jobs are to be relieved of social security contributions totaling 1.6 billion euros annually. The social security funds will lose almost 800 million euros in revenue.
The SPD, Greens and FDP had agreed in the coalition agreement to adjust the earnings limit for marginal part-time employees by raising the minimum wage to twelve euros. It is currently 450 euros per month and has not changed since 2013.
Up to this threshold, mini-jobbers do not pay any taxes or social security contributions if they are exempt from compulsory pension insurance. Employers pay a flat rate of 28 percent of the gross salary to health and pension insurance.
The rigid limit means that many mini-jobbers who work for the minimum wage reduce their working hours every time the statutory lower wage limit is raised. Because beyond the mini-job threshold, there is a jump in contributions under current law: the mini-jobber has to pay around ten percent of his gross wages if he earns just one cent more.
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Overtime is therefore not worthwhile for many employees because they have less net money in their pockets due to the social security contributions then due. According to the draft bill from Labor Minister Hubertus Heil (SPD), the rigid earnings ceiling “also limits important employment potential”.
Liberals pushed for raising the mini-job limit
Mainly at the insistence of the FDP, the mini-job limit is now being raised to 520 euros. With a minimum wage of twelve euros, which Heil plans to apply from October, this corresponds to a weekly working time of ten hours. This benchmark also applies to future minimum wage increases, so the mini-job limit will grow with it.
This automatism is required because it prevents minimum wage increases from immediately leading to downward adjustments in working hours, says labor market expert Holger Schäfer from the German Economic Institute (IW). There was also a dynamic limit from 1977 to 1982 and from 1985 to 1998.
“On the other hand, raising the midi job limit does not seem to me to be unproblematic,” says Schäfer. The traffic light coalition also wants to reform the so-called transition area (midi jobs), which currently starts above 450 euros per month and goes up to 1300 euros.
Here, employers pay almost half of the full social security contribution, while employees pay a reduced rate that depends on their income. From the earnings limit of 1300 euros, the full social security contributions are due, which the employer and employee then each pay half.
According to Heil’s draft, the midi job limit will now be raised to 1,600 euros. And in order to make employment beyond the mini job more attractive, employees in the entire transitional area should be financially relieved and employers should be burdened more. The jump in contributions above the mini-job threshold is flattened out.
According to calculations by the internet service Portal-Sozialpolitik.de, with a gross monthly income of 1,000 euros, the employer’s contribution – without accident insurance – is currently 199.75 euros. After the change in the law, it would rise to EUR 222.94. In return, the employee contribution falls by almost 42 euros to around 142 euros.
Institute of the German Economy sees negative incentives for part-time employees
However, the upward expansion of the transition zone could lead to employees reducing their working hours, warns IW economist Schäfer. Because part of the loss of earnings is compensated for by the reduction in social security contributions.
However, this only applies to part-time employees, because full-time employees with a minimum wage of twelve euros already earn a gross monthly income of EUR 2,000. The expansion increases the incentive for part-time employees to work less, says Schäfer. “But the goal should actually be that they have incentives to switch to full-time.”
The planned reform of marginal employment is politically controversial. The SPD and the Greens would have preferred to do away with mini-jobs entirely, with exceptions at most for pensioners or students. The trade unions also consider the planned increase in the earnings limit to be wrong. There is a danger that mini-jobs will displace more and more regular jobs, said the chairman of the NGG, Guido Zeitler.
Mini jobs are a part-time trap, especially for women, for whom poverty in old age is inevitable. “It is wrong in terms of employment policy that the traffic light coalition does not want to make mini-jobs subject to social security contributions from the first euro,” said Zeitler.
The trade unions feel confirmed by the experiences from the corona crisis. The mini-jobbers who do not pay any contributions to unemployment insurance were often the first to lose their jobs and then end up without unemployment benefits. They are also not entitled to short-time work benefits.
On the other hand, the FDP criticized the fact that mini-jobbers were cut off from the general wage trend by the rigid earnings limit. “We want to change that and thus ensure more fairness in performance,” promised the Liberals in their federal election program. As early as 2018, the FDP had presented a draft law to make the mini-job limit more dynamic, which the grand coalition had rejected at the time.
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