Thousands of German Workers Face Higher Deductions as Commission Moves to Scrap Minijob Tax Breaks
Published on 06/25/2026 at 23:44 | Redaktion boerse-global.de
A sweeping reform blueprint unveiled Tuesday by Germany’s pension commission would strip the tax and contribution privileges from roughly 6.8 million low-wage workers, sparking fierce backlash from employer groups and the hospitality industry while winning praise from unions and several major parties.
The 33-point package, led by a proposal to end the special status of so-called Minijobs, would require employees earning up to €603 a month — the current ceiling — to pay €130.73 in social contributions. Until now, workers in these roles have been largely exempt from deductions, with employers covering about 30 percent in flat-rate charges.
Professor Peter Haan of Freie Universität Berlin called the shift overdue. “The current rules create perverse incentives, especially for secondary earners in married households, discouraging them from increasing their hours,” he said.
Who Loses the Most
According to the commission’s data, Germany had 6,554,876 commercial Minijob holders and another 252,372 in private households at the time of the study. The retail sector alone accounts for roughly 800,000 of these positions, according to the German Retail Association (HDE). In hotels and restaurants, the Dehoga industry body warned the reform would be “a catastrophe”, threatening the flexibility the sector depends on.
Demographic breakdowns show 55.9 percent of Minijobbers are women, and 18.3 percent hold foreign nationality. In hospitals, where only about 45,000 of 1.45 million staff are in such marginal employment, the impact is far smaller.
Political Battle Lines
Chancellor Friedrich Merz has announced he intends to implement the recommendations in full, drawing support from the SPD, the Greens, the Left Party, and the unions Verdi and the DGB. Labour Minister Andrea Bas urged critics not to “talk the whole construct to bits”. Her state-level counterpart, Lower Saxony’s Philippi, welcomed the integration of Minijobbers into the pension system. Andrea Nahles, head of the Federal Employment Agency, added that the current design “tempts people to keep their hours low”.
On the other side, CSU leader Markus Söder warned against abolishing the model and called for caution. Employer associations stressed that Minijobs are vital for activating labour potential, particularly for people who cannot commit to full-time work.
A Broader Pension Overhaul
The commission’s document goes beyond low-wage work. It proposes:
- Mandatory capital-based pension: Modelled on Sweden’s system.
- Rising retirement age: A gradual increase of half a year per decade, reaching age 70 by 2092.
- Ending special rules for students and pensioners: The student worker privilege (Werkstudentenregelung) remains under discussion as an alternative.
A coalition committee is scheduled to meet on 1 July to map out the legislative timeline. First draft bills are expected by autumn, with transitional arrangements spanning several years to phase in the changes.
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