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Germany to cut support services for long-term jobseekers

Germany plans to slash funding for services that help the unemployed get back into the world of work.

Düsseldorf jobcentre
The hallway of the jobcentre in Düsseldorf. Photo: picture alliance/dpa | Oliver Berg

In the draft budget passed by the cabinet last week, the government earmarked €163 billion for the Ministry for Labour in total – the largest allocation of spending in any ministry.

However, though the overall amount spent in this department was €2 billion higher than last year, the so-called “benefits for integration into employment” will be cut from €4.8 billion to €4.2 billion.

The benefits for integration into employment are designed to ease to the transition from long-term unemployment into full-time work. The budget is used to finance wage subsidies for employers who hire the long-term unemployed, in addition to services like addiction counselling and debt advice.

READ ALSO: EXPLAINED: Germany’s plan to ditch sanctions for the unemployed

Having lifted caps on borrowing during the Covid crisis, Finance Minister Christian Lindner (FDP) is keen to reinstate them next year under a policy known as the ‘debt brake’.

This year, Germany has taken on around €140 billion in new debt to assist with the fallout from the Ukraine war and energy crisis, but Lindner is eyeing a more fiscally conservative approach in 2023. 

Both the opposition CDU/CSU and the Left Party responded furiously to the cuts, describing the some €600 million in savings from the jobseekers’ budget as “social austerity”. 

Jessica Tatti, the Left’s social policy spokesperson, told Spiegel that the changes would make it more difficult for the long-term unemployed to integrate into society and to participate in society.

“It is not surprising that the Federal Minister of Finance, Christian Lindner, is making cuts to long-term unemployment benefits in order to comply with the debt brake,” Tatti said. “If the SPD and the Greens go along with this, however, they’ll lose the last vestige of social credibility they have.” 

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MONEY

EXPLAINED: Who will benefit from Germany’s minimum wage hike?

Germany's new €12/hour minimum wage, which came into force on October 1st, is set to benefit more than six million people. We look at exactly who is going to be helped by the €1.55/hour increase.

EXPLAINED: Who will benefit from Germany's minimum wage hike?

How much has the minimum wage risen by?
As of October 1st, the minimum wage now stands at €12 per hour, up from €10.45 previously, i.e. an increase of almost 15 percent.

How many people are going to benefit from the increase?
According to the Hans Böckler Foundation’ Institute of Economic and Social Research (WSI), a trade union-linked research foundation, there are at least 6.64 million people who were earning less than €12 per hour before the increase. This includes 3.5 million women and 2.7 million men.

Will this mainly benefit people in full- or part-time work?
If we look at the number of hours worked, we can see the following picture: 1.4 million full-time employees will get a boost to their earnings, and 1.8 million part-time staff and three million people with so-called ‘mini-jobs’ will earn more per hour. A mini-job is where you can either earn a maximum monthly sum or work for no more than three months/70 days per year. Those who only have a mini-job don’t have to pay social security contributions.

The upper earnings limit for people with mini-jobs also rose on October 1st. People can now earn a maximum of €520 per month, up from €450/month previously. 

READ ALSO: The rules in Germany around mini and midi jobs

Does the increase have anything to do with the current energy crisis?
No. The coalition government had already planned this before Russia invaded Ukraine and the resulting energy crisis. After the Bundestag (lower house of parliament) passed the draft law on June 3, 2022, it was confirmed by the Bundesrat (upper house) on June 10 where concerns about the cost-of-living crisis played a key role in the final debate. At that time, several politicians warned that spiralling energy prices and inflation were making many people’s living situations untenable. The government has since introduced other initiatives to help people cope.

READ ALSO: Wohngeld: How people in Germany can get help with rising living costs

In which sectors will the increase have the biggest impact?
More than 60 percent of people working in the hospitality sector will be affected by the increase. According to government data, 46 percent of those working in the agricultural and forestry sector were earning below €12/hour. Thirty-two percent of those in the property sector and 29 percent in the transport and warehousing sector also earned less than the minimum wage.

What are trade unions and employers’ associations saying about the hike?
The German Trade Union Confederation (DGB) has been pushing for an increase for a long time. DGB head Stefan Koerzell recently called the step “a ray of hope in these difficult times”. But the Confederation of German Employers’ Associations’ BDA called Labour and Social Affairs Minister Hubertus Heil’s draft law for the increase of the minimum wage “extremely questionable” from a political and legal perspective. The BDA’s criticism was not targeted at the increase itself, but rather the fact that it was the legislator who was deciding on wage increases instead of employers and trade unions.

What role do trade unions and employers’ associations play when it comes to the minimum wage?
Normally a big one – they sit on the minimum wage board. This committee normally proposes the incremental increases for the base hourly salary, which was introduced in 2015 – it then stood at €8.50. The new legal increase to €12 is outside of this usual mechanism, but the coalition government has promised that after this, the minimum wage commission will be responsible for future increases once again. 

READ ALSO: Everything that changes in Germany in October 2022

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