For millions of employees, but also for retirees, the coming year will bring some changes. The federal government’s plans in the field of labor and social affairs give hope for more money and new income limits. An overview.
minimum wage
Many low-wage earners will see on their pay slip that the new year has started. The statutory minimum wage will rise on January 1st from the current EUR 9.60 gross to EUR 9.82 per hour. On July 1st, it is to be increased again by a further 63 cents to 10.45 euros gross per hour. That adds up to an increase of almost nine percent.
The wage increase is likely to be even greater, however. During the election campaign, Chancellor Olaf Scholz (SPD) promised to raise the minimum wage to twelve euros in the first year of the new government. This is what it says in the coalition agreement – without a time limit. Labor Minister Hubertus Heil (SPD) has announced several times that the minimum wage will be his first major project and that he will present a draft law at the beginning of next year so that the minimum wage will rise to twelve euros in 2022. However, a date does not name salvation either.
The Federal Statistical Office presented new figures on low wage earners on Monday. According to this, almost 7.2 million employees should benefit from this planned minimum wage increase. The new minimum wage does not apply to interns or minors.
Mini and midi jobs
Probably parallel to the minimum wage, the income limit for mini jobs will rise from 450 to 520 euros, an increase of almost 16 percent. This means that mini jobbers can earn more in the future. The connection to the minimum wage follows from the determination of the traffic light coalition that the mini-job limit will in future be based on working hours of ten hours per week at the minimum wage, resulting in 520 euros.
This means that whenever the minimum wage is raised, which would be typical at the turn of the year, the income limit for mini-jobbers also rises. The mini-jobs are easier to handle for employers than jobs subject to social insurance, as they are associated with less administrative work. However, they hardly offer employees any social security.
Something should also change in the so-called mid-jobs, which so far include monthly incomes of 450 to 1,300 euros. The mid-job limit should increase to 1,600 euros. The project is in the coalition agreement in the same paragraph as the mini-jobs, but the SPD, Greens and FDP have not stated whether the reform will be implemented in one go. In mid-jobs, employees have to pay a small contribution to social security, but still acquire pension entitlements as if they had paid the full rate. Employees who earn between 1,300 and 1,600 euros a month could benefit from the new upper limit.
pension
The more than 21 million retirees in Germany can look forward to a significantly higher pension from July 1st. How high the increase will be will only be clear in the coming spring. Minister of Social Affairs Heil expects an increase of 4.4 percent, in the east this is likely to be even higher, experts there expect around five percent.
Originally, the pension insurance had expected an even higher increase, namely 5.2 percent in the west and a good 5.9 percent in the east. The downward adjustment is due to the so-called catch-up factor, which links pensions to wage developments. According to this, the pensions should even have decreased in 2021 because the wages of the employees have fallen overall. Such a pension reduction is excluded by law. The federal government now wants to reintroduce the catch-up factor and offset the lack of pension cuts in the coming years with the upcoming increases. This means that possible pension increases are smaller.
In the new year, there are also new, perhaps higher, age limits at which you can retire regularly. Those born in 1956 can retire at 65 years and ten months, employees born in 1957 after 65 years and eleven months.
By the way, if you didn’t want to wait that long and have retired despite deductions, you can earn significantly more money than before. In 2019, before the start of the corona pandemic in Germany, there was an additional income limit of 6,300 euros per year; every euro beyond that was offset at 40 percent against the pension. Because of the Corona crisis, the federal government at the time increased this upper limit to EUR 46,060 gross. This should actually only apply temporarily, but the regulation has been extended again and will also apply in 2022 – and possibly beyond. After reaching the regular retirement age, seniors are allowed to earn an unlimited amount of money in addition to their pension.