The more skilled workers there are in short supply, the louder the debate about working life in Germany becomes. The Ifo Institute has calculated the possible effects of controversial proposals on the labor market.
According to calculations by the Ifo Institute, higher pension deductions, longer working lives and cuts in tax and health insurance benefits for married couples could be ways to combat the shortage of skilled workers. In total, according to the Munich economists, changes in these areas could encourage so many people to work longer that this would correspond to an employment gain of around 1.2 million full-time jobs. The recently published Ifo study was commissioned by the Chamber of Industry and Commerce of Munich and Upper Bavaria.
Controversial proposals
In the paper, the scientists calculated the effects of several controversial proposals that are supported by many business representatives but rejected by trade unions and social associations. These include older workers and women who leave the workforce relatively early and/or work part-time. “The tax and contribution system in Germany can definitely be restructured in such a way that the labor shortage is alleviated,” said Volker Meier, one of the authors.
Adjustment screw pension
Raising the retirement age from 67 to 69 alone could therefore equate to a gain of 473,000 full-time jobs. In pension insurance, an increase in the deductions for early retirement could also have a noticeable effect. At present, pensions for early retirement are reduced by 0.3 percent per month. According to Ifo, a higher deduction of 0.5 percent per month could mean an employment gain of almost 180,000 full-time jobs. Abolishing the retirement age at 63 would therefore equate to a gain of 157,000 full-time employees.
… and marriage
According to the Ifo study, traditional discounts for married couples could also be a possible adjustment. The abolition of the contribution-free co-insurance for married couples in statutory health insurance and long-term care insurance could therefore also encourage many people to work more or for longer, amounting to around 150,000 full-time jobs.
And the abolition of the income splitting system for spouses would motivate so many people to work more – or for longer – that this would correspond to around 200,000 full-time jobs. The income splitting system for spouses means that the income of both spouses is taxed jointly. This is particularly worthwhile from a tax perspective if one of the two spouses – traditionally the woman – earns significantly less than the other.
Childcare to combat skills shortages
According to the study, there is also a way to combat the shortage of skilled workers beyond pensions, taxes and social security: 400,000 additional childcare places would lead to employment gains of around 58,000 full-time equivalents.
Source: Stern
