“Active retirement” in Germany. There is a new government idea to deal with the labor shortage
It's an element the so-called Active Pension Plan, one of the key electoral commitments of Chancellor Friedrich Merz. The project is to be approved on Wednesday by the ruling coalition of the Christian Democrats (CDU/CSU) and the Social Democrats (SPD).
The government estimates that the cost of the new solution will be approximately EUR 890 million per year. The aim of the reform is to mitigate the effects of population aging and stimulating Europe's largest economy, which has been struggling with stagnation and lack of qualified labor for three years.
“The German labor market is facing structural challenges resulting from demographic changes. The baby boomer generation will gradually retire in the coming years, while fewer and fewer young people are entering the labor market. This leads to a shortage of specialists in many sectors,” the British daily quotes a fragment of the draft law.
Working beyond retirement age is allowed in Germany, as in most European countries. So far, however, many seniors have been discouraged by taxes and burdens. The new regulations are intended to reverse this situation, making additional employment more profitable.
Disturbing forecasts regarding the demographic situation in Germany
Germany is not the only country that uses such solutions. The Financial Times cites Greece as an example, where from 2023, working retirees can keep their full pension, and additional income is only subject to a 10% tax. Effect? The number of working retirees increased from 35,000. to over 250 thousand in September this year, the Greek Ministry of Labor reported.
According to data from the German government, By 2035, 4.8 million workers will retire – about 9%. the entire workforce. This is a challenge both for the social security system and for the economy, which needs workers.
Merz announces that “active retirement” is just one element of the “autumn of reforms” intended to prepare Germany for the upcoming demographic changes and strengthen the country's competitiveness.
