"A trap": Experts call for Germany's mini-job system to be scrapped
They were supposed to revolutionise the job market in Germany, but their critics say they only increase social hardship: A new study is calling for mini-jobs to be abolished.
Mini-jobs in Germany
Under the title “Get out of the mini-job trap," a group of economists at the Bertelsmann Foundation has published a new study calling for a major overhaul of Germany’s mini-job system, to provide relief for those on lower incomes.
So-called mini-jobs are jobs in which a person earns a salary of fewer than 450 euros per month and thus is not liable to pay taxes or social security. Generally, the system works well for individuals like students and retirees who want a small side income, but increasingly mini-jobs have also been taken on by individuals with low qualifications and women who want to combine work with family.
There are now more than seven million mini-jobbers working in Germany, out of a total of 40 million employees. One in five has been in a mini-job for more than five years.
Coronavirus has laid bare problems with the system
This presents a problem, the economists Tom Krebs and Martin Scheffel argue, because that’s a lot of people working in precarious conditions. They say that the coronavirus crisis has laid bare significant problems in the system.
While Germany’s Kurzarbeit scheme has ensured the survival of most “normal” jobs, more than 870.000 mini-jobbers were put out of work during the pandemic. The study’s authors argue that mini-jobbers are 12 times more likely to lose their jobs than regular employees. And since they do not pay into the social security system, they are not eligible for short-time work or unemployment benefits. Mini-jobbers are further at risk of old-age poverty in retirement because they do not build up an adequate pension.
Economists call for social security contributions on all earnings
The economists are therefore calling for low-income workers to be better cushioned, by making social security contributions due from the first euro earned, albeit with a very low contribution rate to begin with. The average contribution would increase linearly from zero percent with no earnings to 20,2 percent with a gross monthly income of 1.800 euros.
According to their calculations, this would allow many mini-jobbers to switch to part-time employment - which has until now not made economic sense, since taxes of 10 percent are due the minute someone’s income rises above 450 euros. This could increase the number of part-time jobs on the labour market by around 160.000 by 2030. 5.000 additional full-time jobs could be created, and the number of unemployed people could fall by 88.000.
“Today’s mini-jobs must be reformed in such a way that more work is worthwhile for everyone,” said Bertelsmann board member Jörg Dräger.