The Federal Employment Agency (BA) may face new financing gaps. The agency’s budget for the current year was likely set too optimistically, according to an analysis by the Institute of the German Economy (IW), which was reported by the “World on Sunday”.
“The financial situation will likely worsen,” said IW labor market researcher Stefanie Seele. “If we project the previous financial development for 2024, there will be a deficit of 1.3 billion euros compared to a surplus of 2.1 billion euros.”
The main reason is that the expenses are expected to increase to 44.6 billion euros, compared to 42.2 billion euros in the previous year. Seele cites two main reasons: “The expenses for short-time work benefits, totaling 0.6 billion euros, and for unemployment benefits, totaling 20.3 billion euros for the first eleven months of the current year, are already above the annual target for 2024 for twelve months.”
Costs are also expected to continue rising next year, according to the economist’s forecast. “The BA, based on the autumn forecast for 2024, has planned total revenues of 46.5 billion euros and expenses of 47.8 billion euros for the 2025 budget, and thus expects a deficit of 1.3 billion euros.” The IW expects an unemployment rate of 6.2% in the 2025 annual average. Second reason: The number of reported short-time work positions is likely to increase, particularly in the manufacturing sector.
Furthermore, the agency with over 100,000 employees has never spent so much on its own administration and personnel. Eleven billion euros are the figure for this year, with the federal government compensating 3.9 billion euros for the administration of benefit recipients. According to the Federal Audit Office, the administration expenses will rise to 11.7 billion in the next year, compared to 8.9 billion in the pre-Corona year of 2019, an increase of 23% in nominal terms, equivalent to around 3.3% in real terms. The administration budget also includes expenses for external service providers, such as programmers, for which the BA has planned 25 million euros this year.