A leading official at Germany’s Federal Employment Agency (Bundesagentur für Arbeit) has emphasized the necessity of adapting the nation’s social security systems in response to demographic shifts. Vanessa Ahuja, a member of the agency’s executive board, stated that, given current constraints on contribution rate increases, reforms within the social insurance framework are crucial.
Ahuja advocated for a phased approach to reform, favoring incremental steps over a comprehensive overhaul as previously attempted with the Hartz IV commission. While acknowledging the potential benefits of a structured reform commission, she suggested initiating change through targeted improvements in specific areas would be more feasible.
Drawing on her experience as a former department head within the Federal Ministry of Labour and a participant in the original Hartz IV commission, Ahuja noted that many of the challenges facing Germany today were predictable, as were potential solutions. She explained that a lack of sufficient political pressure prevented the implementation of some necessary changes at that time.
Addressing the impending strain on the system as the baby boomer generation enters retirement, Ahuja pointed to a multi-faceted approach. “Qualified immigration is one lever” she said, adding that maximizing the potential of existing workforces – including older employees, women working part-time and the long-term unemployed – is equally important. She stressed that a combination of skilled migration, workforce activation and productivity gains will be necessary to address the looming issues.
The consequences of demographic change are already visible, with labor shortages leading to growth limitations and supply bottlenecks in sectors like hospitality and care services, according to Ahuja. She cautioned that failure to meet immigration targets could have severe repercussions for both the economy and society, potentially leading to decreased investment, capacity limitations in vital industries and a shrinking base of social security contributors.
To streamline the process for skilled worker immigration, Ahuja proposed simplifying bureaucratic procedures and reducing the number of involved authorities. She also highlighted the need for universities to adapt, better facilitating the transition of international graduates into the German labor market. She suggested mandating German language courses within degree programs, while acknowledging the necessity of language proficiency for certain positions. Employers, she added, should actively seek out and engage with international talent.