German Care Reform Stirs Controversy as Cities Warn of Billions in Added Costs
08.06.2026 - 09:16:55 | boerse-global.de
Berlin's latest overhaul of the country's social insurance system is drawing sharp criticism from local authorities and social groups, with a legislative package that includes steep new employer charges for minijobs, cuts to pension support for family caregivers, and a broader expansion of care insurance contributions.
The draft law, which the cabinet aims to pass before the summer break, would raise the employer contribution rate for minijobs from 13 to 17.5 percent. According to the government's own estimate, companies will face an additional €2.3 billion annually—significantly higher than an earlier projection of €1.5 billion. The discrepancy stems partly from previously overlooked effects on midijobs, which experts say could add another €0.5 billion to the total.
Concrete examples illustrate the burden: for a midijob paying €650 a month, employer costs would jump from €180 to €207. A narrow exemption for private households applies to only about five percent of all affected employment relationships.
Parallel to the minijob changes, Health Minister Nina Warken is pushing forward the Pflegeneuordnungsgesetz (PNOG), a care-insurance reform designed to close a projected €22.5 billion deficit in 2027 and 2028. A key element is the introduction of employer care contributions for minijobs, expected to generate around €1.2 billion in additional revenue each year.
From 2027, the contribution assessment ceiling in long-term care insurance will rise to match the compulsory insurance threshold, currently €77,400. The Institut der deutschen Wirtschaft estimates that roughly six million employees will be affected. For high earners without children, the maximum monthly contribution could climb from €244 to over €277.
One particularly contentious measure targets the roughly seven million people who care for relatives at home. Under the new rules, care funds would cover only 70 percent of pension contributions for these caregivers, down from the current 100 percent. For caregivers who have already reached retirement age, contributions would stop entirely.
Social groups and local governments have voiced strong opposition. The German Association of Cities (Deutscher Städtetag) warns that municipalities will face billions in extra costs due to staggered nursing home subsidies and the absence of relief payments. The Social Association of Germany (SoVD) argues the cutbacks disproportionately affect women, many of whom already have patchy employment histories, and that this dramatically increases their risk of old-age poverty.
Additional changes include a 0.1 percentage-point increase in the surcharge for childless people. Starting in 2028, a new 0.52 percent surcharge will apply to spouses covered under a partner’s insurance. Together, the measures form one of the most far-reaching overhauls of Germany’s social insurance landscape in years.
