Current Status of the Mini-Job and Midi-Job Schemes for Older Workers in Germany

Abstract

In most of the world’s industrialized countries, labor force participation among the population aged 65 and over has continued to grow as a result of sustained improvement in the health of this demographic group and increases in the age at which individuals begin to receive public pension benefits. Germany’s mini-job and midi-job schemes are part of employment policies targeting groups considered more vulnerable in the labor market, including older workers. Individuals in mini jobs must not have monthly earnings exceeding 556 euros and are exempt from paying social insurance contributions. Midi-jobs are defined as monthly earnings falling within the 556-2,000-euro range, with those in these jobs paying social insurance contributions on a sliding scale. The two employment schemes have contributed to raising the employment rate, but they are not without drawbacks, such as entrenching low-wage work or creating what is known as mini-job trap. Also, assessments are mixed about how the fiscal support provided for these programs affects income distribution. Germany’s mini-job and midi-job policies have revealed both their potential and limitations as policies intended to meet older people’s desire for work and the demands of the market.