Low-Wage Work in Germany Gets More Expensive as Coalition Pushes Health Charges and Pension Reforms
08.06.2026 - 02:13:18 | boerse-global.de
Employers who rely on "Minijobs"—the country’s signature low-hour, low-pay contracts—are about to face a sharp jump in social-insurance costs. Under a government draft, the flat-rate health insurance contribution for such roles would climb from 13 percent to 17.5 percent, adding an estimated 2.3 billion euros in annual labour costs across the economy.
A concrete example: a Midijob (the next tier above a Minijob) paying 650 euros a month will cost the employer 207 euros instead of the current 180. That is a 15 percent increase in a single step. Private households that employ domestic help remain exempt from the rise, paying a steady 5-percent rate. Analysts suspect a further half-billion euros in hidden extra costs from knock-on effects inside the transitional-income bracket.
The same regulatory package foresees a 2027 overhaul of the long-term care insurance system, authored by Health Minister Nina Warken. Starting that year, the contribution-assessment ceiling for care insurance will be lifted to match the one already used in statutory health insurance. For 2026 that ceiling stands at 77,400 euros annually. The ministry projects additional revenue of roughly 1.6 billion euros from this change.
According to the Cologne Institute for German Economics (IW), more than six million workers subject to full social insurance will be affected—one in every five employees. Minijobs, previously excluded, will generally become liable for care contributions. Childless workers face an extra surcharge of 0.7 percentage points from 2027, pushing the total care-insurance rate to about 4.3 percent. From 2028 onward, care benefits will be tied to inflation and adjusted each year.
New thresholds already in effect since January 2026
The legal framework for marginal employment has already shifted. The minimum wage rose to 13.90 euros, pushing the Minijob earning limit to 603 euros per month (7,236 euros annually). The Midijob transitional zone now spans 603.01 euros up to 2,000 euros monthly. Employers of commercial workers still pay 15 percent for pension insurance in a Minijob; private households pay 5 percent.
From July 1, 2026, Minijob holders will get a one-time option to revoke their exemption from mandatory pension insurance, thereby earning future entitlements to rehabilitation, disability pensions, and the basic-pension supplement.
Unrelenting criticism from business and economists
Jörg Dittrich, president of the German Confederation of Skilled Crafts (ZDH), sharply denounced the plan. He demanded that total non-wage labour costs—now close to 43 percent—be cut to below 40 percent. That would free up tens of billions, he argued, but would require structural reforms and a stronger emphasis on personal responsibility.
Achim Truger, a member of the German Council of Economic Experts, described the care reform as unbalanced. “A disproportionate share of the consolidation is being placed on the insured and the contributors, while the federal budget gets relief,” he stated. The risk, he warned, is that co-payments for nursing-home residents will rise further, pushing more people onto welfare. Without corrective measures, the care fund could run a deficit of 17.5 billion euros by 2030.
