Policy Article

The financial perspectives of the German unemployment insurance system (original publication in German)

Kiel Policy Briefs, 119

The paper is motivated by the planned reduction of the rate of contributions to German unemployment insurance from 3.0 to 2.5 percent becoming effective in January 2019. The author describes that the expenditures for the qualification of the employees will be increased and the unemployment benefits will be extended. Thus, the structural budget surplus of the German Federal Labor Agency will shrink to zero. Simultaneously, the reserves of the Agency will continue to increase while the yield on the reserves (euro 23.3 bn. at the end of 2018) probably will be 0.0 percent in 2019 and in 2020. The author concludes that another reduction of the rate of contributions is necessary due to the extremely high reserves of the Federal Labor Agency.

Author

Alfred Boss