In a recent article for the “Handelsblatt”, Bernd Fitzenberger, Director of the Institute for Labour Market and Vocational Training (IAB), proposes several reforms aimed at boosting the employment rate among older citizens, a measure he argues is necessary to avert anticipated deep cuts in pension benefits. He emphasized that “there is still much untapped potential” in this area, noting that keeping people employed longer allows them to contribute more contributions and draw pensions later.
To implement this vision, Fitzenberger recommends reducing the maximum duration of unemployment benefits for the aged from 24 months to 18 months. He also suggests that government support for reduced working hours and phased retirement arrangements should be curtailed.
Furthermore, Fitzenberger calls for a guaranteed basic income or compensation for older workers who lose their jobs but find employment at a lower wage. Such a measure would provide temporary financial mitigation for the loss of income, thereby increasing the willingness of older people to return to work quickly.
He also outlines reforms regarding severance pay. Fitzenberger suggests that the state should offer tax incentives for individuals who use severance funds to start a new job. Additionally, he proposes that pension contributions should be due on severance pay, though these contributions could potentially be offset against the individual’s new salary.