Strategies for change in the German job market
The current debate focuses not so much on straightforward employment costs, i.e. salaries – in recent years, real-terms remuneration in the German economy (understood as net pay adjusted for inflation) either decreased or posted negligible gains. The question is more about additional payroll costs, first and foremost about social insurance contributions.
Under the previous German regulations, employers and employees would split the social insurance contributions on a 50/50 basis. Various strategies have been implemented to limit employment costs insofar as they pertain to social insurance contributions paid by employers; for instance, health insurance premiums incumbent upon the employee are already higher than those covered by the employer (8.2% and 7.3% of the gross remuneration, respectively).
The second strategy refers to limiting health insurance benefits. The more radical ideas speak of reducing the employer contribution to 6.5% of gross remuneration and of decoupling employee contributions from the salaries, which would leave the higher costs of health insurance to be borne by the employees only. (…)