Germany’s Mini-Job Exemption Faces Axe as Pension Overhaul Targets 130 Euro Monthly Deductions for Low Earners

A government-appointed pension commission has called for scrapping the special status of mini-jobs for adults, proposing that hundreds of thousands of marginal workers be moved into full social insurance coverage. The move is part of a wider 33-measure package aimed at stabilising Germany’s pension system.

Under the plan, only school pupils would keep the exemption. For a typical mini-job earner making the new monthly threshold of 603 euros, the switch would mean roughly 130 euros in deductions for pension, health, long-term care and unemployment insurance. The commission argues the current system deprives low earners of proper protection and distorts the labour market.

The monthly mini-job ceiling rises to 603 euros from January 2026, in line with the new national minimum wage of 13.90 euros an hour. At the same time, the midi-job bracket – where workers pay reduced social contributions – will cap out at 2,000 euros monthly. Retirees benefit from the so-called active-rent rule: starting in January, they can earn up to 2,000 euros tax-free without affecting their pension. Farmers, meanwhile, will once again receive full rebates on agricultural diesel from the 2026 consumption year.

Broader Reform Package

The commission’s recommendations go well beyond mini-jobs. Key proposals include:

• Mandatory private pension pillar – a compulsory supplementary scheme financed by a two-percentage-point contribution shared equally between employers and employees.
• Phasing out the “pension at 63” – early retirement without deductions for long-term contributors would be gradually abolished.
• Linking the retirement age to life expectancy – starting in 2032, the statutory retirement age would rise automatically as lifespans increase.
• Mandatory insurance for self-employed workers – those currently outside the system would be brought in.

Chancellor Merz told a government question time on 24 June that the pension reform must be passed this year. A coalition committee is set to discuss details on 1 July.

Labour Law and Social Security Overhaul

The labour ministry is also preparing a reform of the Working Hours Act. The traditional strict eight-hour day would be relaxed in favour of a weekly maximum working time – but only where collective bargaining partners agree. Electronic time recording would become mandatory for all employees covered by such agreements.

The social safety net is being redesigned too. From July 2026, the current Bürgergeld (citizen’s income) will be replaced by a new basic security scheme. Standard rates for single adults remain at 563 euros, but the new system imposes stricter sanctions, tougher asset tests, and limits on housing costs. Job-centres are instructed to give priority to placing claimants into work.

Business and Union Criticism

Not everyone is on board. At a logistics industry conference on 23 June, parcel and express delivery firms blasted the higher minimum wage as “disconnected from productivity”. They warned that rising labour costs will accelerate automation.

The German Retail Association (HDE) sounded the alarm over the mini-job overhaul. With roughly 800,000 marginal positions in the retail sector alone, the association called scrapping the special status a risky experiment.

Social welfare bodies and unions also raised objections. Germany’s Social Association warned of rising old-age poverty if low earners lose the ability to top up their incomes through mini-jobs. Trade union representatives criticised the proposed mandatory private pension and the automatic rise in the retirement age. With such sharp divisions, the coming negotiations promise to be fiercely contested.

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