Unemployment costs
The Federal Employment Agency’s budget is in the red
High spending on unemployment and short-time work benefits is tipping the budget of Germany’s largest authority into the red, and the reserves have practically been used up. The situation is even worse than the assumptions.
Because of the high costs of unemployment and short-time work, the Federal Employment Agency has to dip into its savings and could even need an injection from the federal budget next year if things go unfavorably. The authority is heading for a deficit of 197 million euros this year, and next year the budget that has just been approved will see a loss of 1.3 billion euros, said the Federal Agency’s CEO, Andrea Nahles, in Nuremberg. Both have to be covered from the reserves, which currently only amount to 2.8 billion euros – around a tenth of the cushion that was available before the corona pandemic. “We continue to find ourselves in a phase of economic weakness,” said Nahles.
The budget estimate is based on the Federal Government’s autumn forecast, which is no longer current due to recent economic and political developments. While the autumn forecast predicted growth of 1.1 percent for 2025, the Federal Government’s Advisory Council now only expects growth of 0.4 percent.
Significant risks from Trump
There are also considerable risks, for example from announcements about the customs policy of the future US President Donald Trump and other possible international upheavals. The Bundesbank had calculated that Germany would lose 1.0 percent of economic output if Trump followed through on his announcements.
Christina Ramb, Chairwoman of the Federal Agency’s Board of Directors, said that there is a risk that the autumn forecast is significantly higher than the Expert Council’s report. “We are focused on the fall forecast and anything that deviates from that will go into negative territory,” Ramb explained. Unless it is possible to operate more economically.
The Federal Agency’s budget is largely derived from unemployment insurance contributions. Despite the economic difficulties, income increased again thanks to higher wages and a continued increase in employment – to 46.5 billion euros next year. This is offset by expenditure of 47.8 billion euros.
22.1 billion euros for unemployment benefits
Nahles emphasized that 3.4 billion euros will be available for professional qualifications alone, including 1.3 billion euros for people who are in employment. A total of 12 billion euros are planned for active job promotion. “We’re investing more in qualifying and integrating offerings so that people don’t remain unemployed for too long, because that’s what costs money.”
The Federal Agency is providing 22.1 billion euros for unemployment benefits alone – in 2021 it was 18.8 billion euros. The costs for short-time work are also increasing again. By 2024, the costs for this will be 726 million euros, more than twice as high as planned a year ago. Next year, 790 million euros will be made available. The Federal Agency is planning 900 million euros for tasks that have been newly assigned to it by the federal government and that have previously been carried out in the tax-financed job centers, such as the further training of citizens’ benefit recipients.
dpa
Source: Stern
