A prominent voice within Germany’s economic policy landscape is cautioning against the proposed elimination of “Minijobs” the country’s system of small-scale employment with simplified tax and social security obligations. Michael Hüther, director of the Institute for Economic Research (IW), argues that the move, currently advocated by segments of the employer lobby and the Verdi union, would offer minimal social benefit while imposing a significant financial burden on workers and increasing bureaucratic complexity.
Hüther’s assessment, published in the “Rheinische Post” directly challenges the narrative pushed by proponents who suggest abolishing Minijobs would stimulate overall employment. The IW director anticipates a negligible impact on working hours, highlighting that roughly one in seven German workers currently engages in part-time employment, often due to personal circumstances or limitations that legislation cannot easily address. Forcing these individuals into the standard employment system would simply obligate them to pay contributions towards pensions and unemployment insurance, effectively reducing their net income and potentially discouraging further participation in the labor market.
The potential consequences extend beyond immediate income reduction. Hüther points out that individuals working Minijobs accumulate relatively few entitlements – pension or unemployment benefits – given the limited hours worked. The shift would represent a financial penalty with little compensatory advantage, raising concerns about the impact on already precarious workers.
The debate exposes a broader tension within German social policy. While the push to eliminate Minijobs is ostensibly framed as a measure to modernize the labor market and tackle undeclared work, critics argue it risks disproportionately harming low-income individuals and potentially creating unintended disincentives for those who rely on these flexible employment opportunities to supplement their income or remain within the workforce despite personal limitations. The IW’s warning calls for a more nuanced consideration of the social and economic ramifications before implementing a sweeping reform of this long-standing system.