Elderly German workers just keep on going

Germany’s workforce is rapidly ageing, with the number of workers aged 60 and over almost tripling in the last two decades to more than three million people. But what is behind this trend?

Elderly German workers just keep on going
Photo: DPA

Germany’s population is getting older fast, but the number of workers over 60 is rapidly outstripping that increase.

Between 1991 and 2012 the number of Germans over 60 in work rose from 1.23 million to 3.18 million – a rise of almost 160 percent. The population of over 60's, meanwhile, rose by 34 percent.

And even those nearing the state retirement age of 65 are working longer. In 2012 there were 826,000 Germans aged 65 and over still working, compared to just 320,000 two decades ago, according to figures from Federal Statistics Office, Destatis.

Dr Ulrich Walwei, vice director of the Institute of Labour Research (IAB), told The Local much of this growth was down to the changing world of work.

“We have people who don’t want to leave their jobs,” he said. “It is hard to tell whether they are working longer out of enjoyment or out of necessity. I believe it’s both. They are happy at work but also need to work longer.”

“The employment market for older workers is also less dynamic,” he said. “It is harder to enter the labour market if you are older, and rare to start a new job.”

Perhaps the biggest cause behind this trend are labour market and pension reforms over the last two decades which have seen benefits cut and retirement ages rise.

However, this could now be reversed by the current coalition government which plans to cut the retirement age to 63 for some groups.

This cut would reverse a trend of the last two decades. In 1997 the retirement age for women was raised from 60 to 65. In 2008 it was decided that the age would be increased to 67 by 2029.

In 2009 government subsidies for partial retirement schemes also ended and in 2004 the unemployment benefit for older workers was reduced from a maximum of 32 months to 18 months.

Walwei examined some of these trends in a 2011 report called “Germany – No Country for Old Workers?”. It found that Germany’s labour force would decrease by 15 percent by 2025 without better integration of older workers and immigration.

More degrees, more work

Walwei also put the rise in older workers down to a better educated population.

“People are becoming more qualified,” Walwei said. “The more academic they are, the more likely they are to be employed when older. With each extra year of study they are likely to work longer.”

His report found 67.5 percent of those aged 60 to 64 with a university degree were in work, compared to 35 percent for unskilled workers in 2007. Therefore, as the number of graduates increases, the number of older people in work will also increase in the long term.

Walwei also put much of the rise down to more women being in work.

“Women have contributed to the lion’s share of the growth,” he said. “The model of the male bread-winner is going. More women work and they also work longer.”

Whatever the causes, Germany must get used to older workers, as the trend is set to continue with the next generation nearing retirement age. Between 1998 and 2010 the number of people in work aged 50 and over more than tripled from 2.1 million to 7.3 million. 

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7 tips for how to survive as a freelancer in Germany

Taking the decision to go it alone and freelance in Germany can be a daunting prospect. But, if you do it right, it can be an exciting and liberating path. Here are some of our top tips on how to survive.

7 tips for how to survive as a freelancer in Germany

1. Get a tax advisor

The German tax system is complicated, even for Germans. All the associated paperwork uses the Amtsprache (authority language) which is more like legalese than ‘normal’ German, and mistakes when filling out tax forms can cause you, at best, a massive headache and, at worst, a costly fine. So it’s best that you employ someone who knows what they’re doing to help you out.

That person is called a Steuerberater (tax advisor) in Germany. They will help you register with the tax office, correspond with them and submit your tax declarations.

Be aware that, in Germany, different deadlines apply for tax returns depending on whether you employ an official tax advisor or not. If you are doing the tax return on your own, the deadline for submitting your annual tax return is earlier than if you use a tax advisor’s services. 

READ ALSO: What NOT to do when you’re freelancing in Germany

When looking for a tax advisor, a top tip is to use your network to get recommendations. Ideally, you want someone who will do more than just fill in the forms for you, but who will actually advise you on how best to manage your business finances so that you can make tax savings.

2. Keep your accounting in order

The better you keep your own accounts in order, the easier it will be for your tax advisor to compile your tax declarations and therefore the cheaper their services will be.

As a freelancer, there are a lot of costs you can deduct from your taxes – from train tickets, working materials, to meals out – so it’s best to keep hold of all your receipts and to keep them in good order.

2 euros and 50 cents lie on a receipt in a beer garden. Photo: picture alliance/dpa | Peter Kneffel

In Germany, you’re obliged to keep hold of receipts for two years, in case of a tax inspection, so it’s a good idea to photocopy the type of machine-printed receipts you get from restaurants so that they stay legible for a long time.

There are also a few things to be aware of when writing your own invoices. Firstly, make sure that you include your tax number. This isn’t the 11-digit Steueridentifikationsnummer that everyone gets when registering in Germany, but the 10-digit Steuernummer you get from the Finanzamt after registering yourself as a freelancer. 

Most companies won’t pay you if you don’t have this on your invoices so make sure you include it.

You should also make sure that you number your invoices properly – ideally in ascending order so that you can easily keep track of them. You are not allowed to issue two invoices with the same number and if you do so and the finance office notices, you could face an inspection of your whole accounting system.

There are numerous great accounting software programmes you can use to help you, such as Lexoffice and Sevdesk and, even if you have to pay for them, the costs will be tax deductible!

3. Find out if you’re eligible for financial support

In Germany, there are several opportunities for freelancers to gain financial support and to cut their outgoings, and its worth finding out if you’re eligible for them.

If you’re claiming unemployment benefits under ALG 1 and are thinking about becoming a freelancer, the employment office offers a special type of financial support to help you to get your freelance business off the ground.

Called the Grundungszuschuss (“foundation grant”) the payment is a six-month grant equalling your monthly entitlement under ALG 1 plus €300 towards your insurance costs can be applied for those in receipt of this unemployment benefit.

READ ALSO: Will freelancers benefit from Germany’s €300 energy allowance?

If you are engaged in some form of artistic profession in Germany – which can include journalism to pottery – you may be entitled to membership to the Kunstlersozialkasse (artists’ social insurance).

Being a member of the KSK means you only have to pay half of your health insurance and pension contributions, and the KSK will pay the rest.

4. Work out how much you think you will earn

As with starting any business, you need to have some idea of your expected earnings from the outset.

If you’re just starting out as a freelancer, or have some freelance gigs on the side of an employment position, then it might be worth considering registering yourself as a Kleinunternehmer (“small business”).

As a Kleinunternehmer, you can currently earn up to €22.000 per year without having to charge VAT and having to submit only yearly tax declarations. 

An income tax declaration form lies on a table. Photo: picture alliance/dpa/dpa-Zentralbild | Hans-Jürgen Wiedl

Be aware that if you are registered as this kind of freelancer, you must include the following sentence in your invoices: ‘Gemäß § 19 UStG wird keine Umsatzsteuer berechnet’ which means ‘In accordance with Paragrah19 of the German VAT law, no VAT has been added to this invoice.’

READ ALSO: Everything you need to know about your German tax return in 2022

If you think you will earn more than €22.000 per year, you will need to pay Umsatzsteuer (VAT) and will have to submit tax declarations in advance and more often. Depending on how much you earn, this could be every month or every quarter. 

5. Get your insurance in order

In Germany, it’s a legal requirement to have health insurance.

If you’ve just made the move from employment to being a freelancer and want to keep the same health insurer, you should get in contact with your health insurance provider straight away to tell them about your change of circumstances. They will ask you to re-register and to tell them your projected freelance earnings for the year, so they can amend your monthly fees.

If you don’t keep your health insurer provider updated, you could continue to be charged the higher rate that you had from your previous salary.

The insurance cards of the health insurance companies DAK, AOK, Barmer and Techniker-Krankenkasse TK lie with euro notes under a stethoscope. Photo: picture alliance / dpa | Daniel Karmann

It’s not just health insurance you need to think about as a freelancer. It’s also wise to think about protecting yourself from any sort of claims that could arise as a result of any working mishaps. 

If, for example, you lose your laptop which contains confidential client information, you need to be protected against claims.

That’s why it’s good to have both Betriebshaftversicherung (business liability insurance) and Rechtschutzversicherung (legal protection insurance).

6. Plan your time wisely

All of these bureaucratic obligations take time. So it’s really important that you take account of that when planning your time. For example, planning half a day a week to deal with your invoices, filing, emails to clients, and conversations with authorities can be really beneficial when scheduling your working time. 

7. Grow your network

As a freelancer, networking is absolutely crucial to success. 

Keep an up-to-date profile on websites like LinkedIn and German equivalent XING and keep in contact with anyone you’ve ever worked with, no matter how brief the contact was. 

Having a network is not only about getting more clients, but also about building a support network in your field to exchange advice, tips and generally for your own enrichment. 

Participating in workshops related to your field, going to seminars, and meet-ups, can be great ways of broadening your network.