German Economics Minister calls for voluntary higher retirement age

German Economics Minister Robert Habeck has said that the federal republic should move away from a fixed retirement age, and allow people to flexibly work for longer, if they so wish. The move could help solve Germany’s persistent shortage of skilled workers.

German minister calls for flexible retirement age

As much as some of us simply can’t wait for retirement, for others it’s a day they dread. This latter group will be pleased to hear that Germany’s Economics Minister, Robert Habeck, has floated the idea of allowing people to voluntarily retire later in life, to help cushion Germany’s shortage of skilled workers. 

In an interview with Handelsblatt, Habeck said that people “should be able to flexibly work longer. That would be a double benefit: if you want, you can contribute your knowledge, skills and experience for a longer period of time. And we could counteract the shortage of skilled workers.” He said that instead of a fixed retirement age, Germany should think about having a flexible “retirement window” between the ages of around 65 and 70. 

According to a paper put together by the Ministry of Economic Affairs, a framework will be created to allow employees to work at least up to the standard retirement age and, if they so wish, voluntarily beyond that - by making retirement more flexible, and giving financial incentives to those who do decide to work longer. 

Working beyond retirement already possible, but few take up offer

In principle, such a framework has already existed since 2017 with the government’s so-called flexi-pension scheme. Currently, someone who stays in employment beyond statutory retirement age can take home 0,5 percent more pension benefits for every month worked - making it a pretty lucrative scheme. 

However, not many people take up the offer. Indeed, data from the Federal Employment Agency in 2021 shows that around 80 percent of working pensioners are actually working mini jobs (earning a salary of less than 450 euros per month that is not subject to social security). 

According to Anja Piel, a board member of the German Trade Union Confederation, the problem is not with pension law but the German labour market, which she described as “walled up” for older employees, with few jobs available. She called on Habeck to instead “make tough demands on employers so that older employees can still be hired and are able to work under conditions until they retire.”