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Bad economy spurs jobs agency deficit

Germany’s Federal Labour Agency confirmed Saturday that it is facing a €17.8 billion deficit as the worsening economy, higher unemployment claims and government support for a shorter working hours scheme drain the its coffers.

Published: 7 November 2009 13:23 CET

Bad economy spurs jobs agency deficit

Photo: DPA

Policies such as Kurzarbeit, which cover a portion of workers’ pay packets if their employer has to cut hours, have kept unemployment lower than most economists expected. But the government, already facing record deficits and ambitious plans to cut taxes, will have to fill in most of the budgetary gap itself.

The agency, which is financed primarily by worker and employer contributions, expects to spend almost €54 billion next year, but will take in just €36.1 billion and has just €1.8 billion in reserves to cover the deficit itself.

According to a report first published by Der Spiegel newsmagazine, the agency expects to pay out €22.5 billion in unemployment benefits in 2010, a €4.8 billion increase over 2009.

The agency’s figures are certain to intensify the political debate over planned tax cuts. The new centre-right coalition of Christian Democrats and pro-market Free Democrats have planned tax cuts of €24 billion and the FDP in particular had hoped to implement those cuts immediately. With government budget deficits projected to pass €86 billion, CDU Finance Minister Wolfgang Schäuble has indicated he would like to roll back the planned tax reductions.

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Germany's Scholz rejects calls for later retirement in Labour Day message

“For me, it is a question of decency not to deny those who have worked for a long time the retirement they deserve,” said Scholz.

Employees in Germany worked more hours in 2023 than ever before: “That’s why it annoys me when some people talk disparagingly about ‘Germany’s theme park’ – or when people call for raising the retirement age,” he said.

Scholz also warned of creating uncertainty due to new debates about the retirement age. “Younger people who are just starting out in their working lives also have the right to know how long they have to work,” he said.

Scholz did not explicitly say who the criticism was targeted at, but at its party conference last weekend, the coalition partner FDP called for the abolition of pensions at 63 for those with long-term insurance, angering its government partners SPD and the Greens.

Scholz saw the introduction of the minimum wage nine years ago – and its increase to twelve euros per hour by his government – as a “great success”. “The proportion of poorly paid jobs in our country has shrunk as a result,” he said.

READ ALSO: EXPLAINED: Is it worthwhile to set up a private pension plan in Germany?

However, he said there were still too many people “who work hard for too little money,” highlighting the additional support available through housing benefit, child allowance and the reduction of social security contributions for low earners.

“Good collective wage agreements also ensure that many employees finally have more money in their pockets again,” he added.

And he said that the country wouldn’t “run out of work” in the coming years.

“On the contrary! We need more workers,” he said, explaining that that’s why his government is ensuring “that those who fled to us from Russia’s war in Ukraine get work more quickly.”

Work means “more than making money,” said Scholz. “Work also means: belonging, having colleagues, experiencing recognition and appreciation.”

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