German IWH Institute: Abolition of Minijobs Will Hit Net Incomes of Millions of Workers

An analysis conducted by the Halle Institute for Economic Research (IWH) sheds new light on the proposal by the CDA, the workers' wing of the CDU party. The project envisages the almost complete abolition of minijobs and their mandatory conversion into standard employment contracts. While the goal is to combat labor market fragmentation and provide better pension protection, economists warn of a drastic drop in workers' purchasing power. Calculations show the change would directly affect 4 million people out of the 7 million currently using this form of employment. The minijob system was introduced in Germany in 2003 as part of the Agenda 2010 market reform package, aimed at reducing unemployment by making low-wage sectors of the economy more flexible. Supporters of the reform, including the German Trade Union Confederation (DGB), emphasize that the current system, while financially beneficial "in hand," is a dead end leading to poverty in old age. Meanwhile, Stefan Schünemann of the CDA argues that minijobs have ceased to serve as a bridge to full-time employment, becoming a permanent trap of low earnings. However, the IWH points to the other side of the coin: the state budget and the social security system could gain an additional 4.5 billion euros annually at the expense of the wallets of the poorest. In states like North Rhine-Westphalia, where the number of such jobs reaches 1.6 million, the social effects could be particularly palpable. „We want to bring order to a labor market that has gotten out of control; minijobs were meant to be just a supplement, but they have become everyday reality for millions.” — Stefan Schünemann Critics of the project argue that forcing small incomes to be subject to social contributions will make part-time work unprofitable for students and pensioners. There is also a risk of some employment shifting to the shadow economy, which would completely negate the planned budget revenues. The debate over the future of this form of employment will become one of the key points at the upcoming CDU party conference, determining the direction of the economic policy of Germany's largest opposition party. Total: 7, At Risk of Income Drop: 4, North Rhine-Westphalia: 1.6 4.5 bn € — would be the additional revenue for social insurance Emphasizes the need for social protection and stable pensions, seeing minijobs as a form of exploitation that weakens the insurance system. | Highlights freedom of choice and the negative impact of additional tax burdens on work motivation and household budgets.