Policy Article

German Federal Labor Agency: reasons for much lower contributions (original publication in German)

Kiel Policy Briefs, 115

In this paper it is explained why the rate of contributions to unemployment insurance should be reduced from 3.0 to 2.4 percent immediately. The reduction of the rate by 0.3 percentage points beginning in 2019 is too small. It is argued that to some extent the budget surplus of the German Federal Labor Agency is a structural one. A further increase of the reserves would be also questionable under the aspect that the yield on the reserves of the German Federal Labor Agency (EUR 23.7 bn. at the end of 2018) probably will be 0 percent in 2019. Moreover, a higher reduction of the contributions would foster the increase of employment.

Author

Alfred Boss