The Federal Employment Agency can start rebuilding the reserve in 2023

Berlin In the coming year, the Federal Employment Agency (BA) will be able to present a balanced budget for the first time since 2019 and begin to rebuild a financial cushion. “But it will take years before an effective reserve for difficult times on the labor market is built up,” said BA boss Andrea Nahles (SPD) on Friday in Nuremberg.

The administrative board of the Nuremberg authority had previously decided on the budget for the coming year. It envisages spending of 40.6 billion euros. The BA is based on the federal government’s autumn forecast, which assumes an average of 2.5 million unemployed and around 200,000 short-time workers in 2023 – around half as many as this year.

However, there are “economic uncertainties, the developments of which cannot be foreseen in detail and therefore cannot be taken into account,” said the BA. In terms of revenue, the authority is benefiting from the sustained growth in employment and the planned increase in unemployment insurance contributions from 2.4 to 2.6 percent at the turn of the year.

According to the budget, the revenue will amount to 42.6 billion euros, so that the bottom line is a surplus of two billion euros. The BA can therefore fully repay the loan of 800 million euros, which the federal government had granted to compensate for this year’s deficit, in the coming year.

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Before the start of the corona pandemic, the Federal Agency had a reserve of 26 billion euros, which has now been used up. This money enabled politicians to react quickly to the crisis with measures such as easier access to short-time work benefits, said the deputy chairwoman of the administrative board, DGB board member Anja Piel.

Andrea Nahles wants financial cushions for the Federal Employment Agency

Labor market experts consider a reserve of 0.65 percent of economic output to be appropriate in order to be able to react quickly to major crises such as the pandemic. Measured against the gross domestic product (GDP) of the past year, that would be around 23 billion euros. Building up such a cushion takes time, said Nahles.

Federal agency for work

Due to economic uncertainties, it is difficult to forecast the authority’s income and expenditure.

(Photo: dpa)

The Chair of the Board of Directors, Christina Ramb, said that the BA will continue to be extremely challenged in uncertain times next year. In addition to the challenges posed by structural change, war and the pandemic, numerous planned legislative projects will have to be implemented in 2023, noted Ramb, who is a member of the BDA executive board. “Additional tasks that have to be implemented hastily represent a great burden. A sense of proportion will be required here in order not to overwhelm the BA.”

The Nuremberg authorities had warned early on that they needed sufficient advance notice if the citizen’s allowance was to be paid out as planned from January 2023 as a replacement for the previous unemployment benefit II. Nahles urged a political decision by the end of November, otherwise a punctual start could not be guaranteed.

>> Read here: The Federal Employment Agency doubts that citizen income will be introduced on time

The Bundestag passed the citizens’ income law on Thursday, but countries with Union participation are threatening to block it on Monday at the planned special session in the Bundesrat. Then there is a mediation process.

The BA budget for the coming year earmarks 18 billion euros for unemployment benefits, around 1.5 billion euros more than will be paid out in the current year. The increased demand can be explained primarily by increased wages, the authority said. Unemployment benefit I is paid as a fixed percentage of the lost wages.

More money for training and further education

The authority expects expenditure of EUR 1.3 billion for short-time work due to the economy – after an estimated EUR 3.8 billion in the current year. As in this year, 900 million euros will be taken into account for the insolvency money.

>> Read here: Federal budget for 2023 stands – debt brake holds

It is particularly important to the Board of Directors that the BA sends a clear signal for more training and further education with a significantly increased budget for active employment promotion, says Ramb. For example, around 20 percent more funds would be made available for active employment promotion – without the short-time work allowance – in the coming year than is expected to be paid out this year.

This includes around 2.2 billion euros for further training funding, 1.4 billion euros for unemployment benefits during vocational training and 2.8 billion euros for the participation of people with disabilities.

More: BA boss Andrea Nahles in an interview – the planned increase in the unemployment contribution could be too low

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