Germany weighs the future of minijobs
Germany's popular minijob system allows millions of workers, including students, to avoid paying income tax or social security contributions. But a reform is on the
Germany's popular minijob system allows millions of workers, including students, to avoid paying income tax or social security contributions. But a reform is on the cards that may soon end this advantage. When Anahita Abdollahi starts her shift, she first checks her emails to make sure she's up to date on all the library requests. The 26-year-old master's student from Iran describes her job as a "part-time librarian" — she helps people find books they need for their studies, answers phone calls, and waters the plants. Abdollahi says she likes "almost everything" about her job at the University of Cologne's physics library — the only exception is the occasional tedious task, such as taking inventory of the library's collection. But even that doesn't bother her too much — after all, she only works twice a week for around five hours at a time. This type of employment is known in Germany as a "minijob", whichthe country's government is considering eliminating in its current form. Minijobs popular with women and students A minijob is a form of part-time employment in Germany which pays a maximum of €603 (around $685) per month. As long as employees don't earn more than this amount, they don't have to pay social insurance contributions or income tax. Minijobbers can also opt out of paying their share of pension contributions — and most of them do just that. A minijobber typically works around 10 hours per week to reach the €603 cap, making it an ideal job for those with other commitments, such as students or stay-at-home parents. Women make up around 57% of all minijobbers, according to Germany's central agency for minijobs. The agency also estimates that nearly 7 million of Germany's 45 million employees have a minijob. Some of them have it in addition to another job, while others have a minijob as their only form of employment.
Minijobs were introduced in the 1960s to facilitate low-level employment with little bureaucracy and to combat moonlighting. In 2003, they were redesigned as part of a comprehensive labor market reform. They have long been criticized for reinforcing gender inequality in the job market, as minijobs are held disproportionately often by women, preventing them from building up substantial pensions. Are Germany's 'mini-jobs' being scrapped? To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video What are the benefits for employers? Employers typically pay a flat tax of 2% on minijobbers' wages, as well as social contributions amounting to around 30% of gross pay. Despite these additional costs, many businesses rely on minijobbers because they offer flexibility. "There are operational situations where hiring someone only makes sense if the number of hours is truly minimal," Holger Schäfer, a senior economist specializing in labor market economics at the German Economic Institute (IW), told DW. Supermarkets, for example, need more cashiers on Saturday afternoons than they do on Monday mornings, making minijobs an easy way to fill the staffing gap. The extra weekend work is also why retail and hospitality are the two industries that employ the most minijobbers. How could minijobs change? In early July, Germany's governing coalition announced its plans to raise the flat tax rate for minijobs from 2% to 5%. The government also stated its intention to fully implement the Pension Commission's proposals, which were presented in late June and aim to ensure the sustainability of Germany's pension system in the future. One of these proposals focuses specifically on minijobs, and would eliminate the opt-out option for pension contributions and abolish the special status of minijobs. This would make minijobbers subject to regular social security contributions, effectively bringing an end to minijobs in their current form.
The BriefWire