The much-criticized part-time trap of mini-jobbers will soon be largely a thing of the past, according to the German pension insurance. The part-time trap will “actually be abolished” by the upcoming new regulation of mini and midi jobs, said Reinhold Thiede, head of research and development at the German Pension Insurance (DRV), on Monday at a lecture in Berlin. In the future, employees would have an incentive to work beyond the earnings limit of the mini-job, said Thiede. However, the pension insurance would lose revenue as a result. The rules for mini and midi jobs will be revised on October 1 together with the increase in the minimum wage to twelve euros an hour, the earnings limit will increase from the current 450 to 520 euros per month and will grow in parallel with the minimum wage in the future.
The part-time trap is the effect that people who have started working part-time can no longer get a full-time job. In the case of mini-jobs, the temptation to remain below 450 euros is particularly great, because the basic rule here is: gross equals net. If you earn more than 450 euros, social security contributions and taxes are due immediately. As a result, he or she initially loses net income and would have to work significantly more to get back to the same amount after taxes and duties. This is particularly serious for a spouse with a mini-job if the partner’s income is higher – and with it the tax burden. This mostly affects women. A career is thus blocked for them, and they also acquire only small pension entitlements.
More earnings, more into the account
The regulation that will apply from autumn will mean that employees actually get more money on their salary account, even if they earn a little more than 520 euros a month, said Thiede. For every additional euro earned, 70 cents remain after deducting social security contributions. However, taxes also have to be paid – and here there can still be high deductions, Thiede admitted, depending on which tax class is chosen. The pension expert did not give any figures for this. According to calculations by the DGB, mini-jobbers with tax class V must continue to expect a loss of income above 520 euros, but this is significantly lower than before.
The background to this is that in future employees will no longer have to pay social security contributions above the 520-euro limit; instead, the employer’s share will increase. With increasing earnings, the proportion of employees in social insurance increases, until it reaches the regular level with monthly earnings of 1,600 euros. Thiede said the higher contributions from employers do not compensate for the lower payments from employees, and employees will accumulate pension rights that are not covered by contributions. The part-time trap is thus defused at the expense of the pension fund. “If we do not receive additional federal funds for this, we may have to increase the contribution rates,” said Thiede. On the other hand, the risk of poverty in old age is reduced.
The pension expert expects that because of the new regulation, mini-jobbers will work more and become midi-jobbers. These will be more expensive for employers in the future due to the higher social security contributions. “But employers are desperately looking for people.”