German Retail Sector Warns 800,000 Jobs at Risk as Minijob Overhaul Gains Momentum

Proposed phase-out of Germany's Minijob system could eliminate up to 800,000 retail jobs and raise employer costs, as coalition parties remain divided; a final decision is expected by autumn 2026.

The country’s retail trade association, HDE, is sounding the alarm over planned reforms to Germany’s “Minijob” system. It estimates that up to 800,000 positions could disappear from the retail sector alone if the government pushes ahead with its proposal to phase out the special status for low-income, low-hours work. The hospitality industry, represented by the DEHOGA federation, employs roughly 1.1 million Minijobbers and says they are irreplaceable. Agriculture also regards the arrangement as critical.

The reforms, recommended by the federal pension commission, would largely reserve Minijobs for students going forward. Currently, the monthly earnings cap stands at €603. The stated aim is to convert these roles into fully social-insurance-covered employment, reducing the risk of old-age poverty. Yet critics point to a paradox: the Federal Employment Agency notes that roughly 85 percent of Minijobbers already hold a regular job, meaning the current system can actually discourage them from expanding their hours.

Employers are already facing higher costs. A previously decided tax adjustment raises the flat-rate tax on Minijobs from 2 percent to 5 percent. On a monthly wage of €603, that means the levy climbs from €12.06 to €30.15. Employers also pay a flat 15 percent toward pension insurance and 13 percent toward health insurance. Additional pain is coming from the planned statutory health insurance stabilization law, which the HDE warns would lift the health contribution on Minijobs from 13 to 17.5 percent – a cost increase measured in the billions.

Within the coalition government, positions diverge sharply. The Union has signaled a need for further talks. The CSU insists Minijobs must stay as they are. The SPD rejects the status quo. A final decision is expected in autumn 2026. One possible compromise under discussion would grant exceptions for students, perhaps by expanding the “Werkstudent” rule or offering discounted pension contributions. No such carve-out is planned for retirees, though a tax-free “active pension” of up to €2,000 is being floated. Implementation would take two to three years.

The Minijob proposals are just one of 33 recommendations from the pension commission. Among the others: from 2032, the standard retirement age will gradually be linked to life expectancy, reaching 67.5 years in 2041 and 68 in 2051. The penalty-free pension at 63 would be eliminated. A capital-funded supplementary pension is planned, with employers and employees each contributing 1 percent of gross salary. New self-employed people would have to join the statutory pension system from January 2027, unless they belong to a professional pension fund. Existing self-employed would have an opt-in option.

Alongside the pension package, labor law changes are coming. Fixed-term contracts without a specific reason would be allowed for up to 48 months, a rule that sunsets at the end of 2030. The written-form requirement for employment contracts disappears in January 2027. Dismissal protection for high earners is set to be reworked. And in a final twist, the option of a telephone sick note may be scrapped: employers could demand a doctor’s certificate from the very first day of illness.