Germany’s Minijob Squeeze: Higher Employer Taxes and a Looming Abolition Debate Leave 6.8 Million Workers in Limbo
Published on 07/04/2026 at 06:35 | Redaktion boerse-global.de
Germany’s coalition government has quietly more than doubled the flat-rate tax on so-called minijobs, lifting it from 2 to 5 percent, effective immediately. The move is the most concrete element of a broader reform package that remains deeply contentious, with a separate government-appointed commission now calling for the near-total scrapping of the mini-job model itself.
Under the new rate, an employer paying a minijobber the current ceiling of €603 a month will see their tax burden rise from €12.06 to €30.15. For employees, the arrangement stays tax-free — but the law allows employers to pass those extra costs onto workers, effectively cutting net pay.
Politicians like Friedrich Merz (CDU) and Markus Söder (CSU) have stressed that the minijob model will survive in principle. A final decision on further changes is expected only this autumn, with the entire legislative package slated for passage by year-end.
Far more radical is the prescription from Germany’s Pension Commission. It recommends stripping minijobs of their special status under tax and social-security law, leaving an exemption only for school pupils. If enacted, more than 6.8 million minijobbers would be required to pay standard contributions to health, long-term care and pension insurance. In the state of Hesse alone that would affect around 525,000 people; in the smaller state of Saxony-Anhalt, roughly 90,000.
Labour-market researcher Ulrich Walwei of the IAB welcomes such an overhaul. Studies by the institute suggest that minijobs are currently displacing approximately 500,000 regular, fully insured positions. Former Federal Employment Agency head Andrea Nahles has also criticised the model, arguing it often locks workers into casual roles instead of helping them transition into mainstream employment.
Business associations are pushing back hard. The German Retail Association and the hotel-and-restaurant federation DEHOGA warn of severe staff shortages and potential closures — especially in hospitality, retail and agriculture.
A narrower change took effect on 1 July: minijobbers who previously opted out of pension insurance can now make a one-time return to being fully insured. The decision is irreversible and covers all the minijobs they hold. Supporters say it will improve retirement entitlements and secure access to disability pensions and rehab programmes. Full old-age pensioners are generally excluded from this option.
For recipients of standard unemployment benefit (ALG 1), the picture remains tangled. The minijob earnings limit rises to €603 in 2026 and to €633 in 2027, but the tax-free allowance for ALG 1 recipients stays frozen at €165. Any income above that is counted against the unemployment payment — unless special rules for jobs held before the period of unemployment apply. The hourly ceiling of fewer than 15 hours per week also remains as a hard criterion.
Employers’ president Rainer Langhof has slammed the lack of planning certainty for companies. The pension reform expected this autumn is widely seen as the decisive signal for the future shape of Germany’s low-wage sector.
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