Policy Article

Federal Employment Agency: Why an instant reduction of the contribution is needed (original publication in German)

Kiel Policy Briefs, 114

The rate of contributions to unemployment insurance should be reduced immediately from 3 to 2.5 percent. The increase of employment would be fostered. The budget balance of the German Federal Labor Agency was much higher than projected in the period 2013 – 2017. The forecast errors for the expenditures were much larger than those for the revenues. To a very large extent, the budget surplus is a structural one. The yield on the reserves of the German Federal Labor Agency (Euro 17.2 bn. at the end of 2017) probably will be 0 percent in 2018. The intended reduction of the rate beginning in 2019 is too small.

Author

Alfred Boss