GERMANY –Labour and social affairs minister Franz Müntefering has announced measures to boost employment among German workers aged over 50 by providing subsidies and other incentives to firms who hire them.
The government is under pressure to boost employment for older German workers to support its plan to gradually raise the legal retirement age to 67 from 65 from 2029. The increase was approved today.
Under the measures, dubbed ‘Initiative 50+’, part of the labour costs incurred by companies hiring workers aged over 50 would be subsidised by the government. The government would also provide funds for retraining and exempt participating companies from paying employment insurance for Initiative 50+ workers.
Müntefering will present an Initiative 50+ draft bill by mid-year before submitting it for parliamentary approval.
Labour and social affairs ministry statistics indicate that only 42% of German workers the age over 55 are still employed, while only 33.5% of male workers wait until 65 to retire.
The government’s approval of a new retirement age for Germans was just one of several pension reforms unveiled by Müntefering today.
Other measures include a raising of the statutory contribution to the state pension scheme to 19.9% in 2007 from the current 19.5% and a ban on further cuts in benefits paid to Germany’s 20m state pensioners.
Meanwhile, in a move to promote the Riester private pension the government will increase a subsidy for Riester pension holders with children. The social affairs ministry said the subsidy would be increased to €300 for every child born after 1 January 2008 from €185 currently.
The ministry reaffirmed its satisfaction with the progress of corporate pensions, noting that 60% of German workers were on some type of a company pension plan in mid-2004.
Finally, the ministry said the sustainable reserve, used to cover deficits in the state pension scheme, would total €5.2bn by the end of 2006, or one-third of what the government pays out in pensions.
Last year, the finance ministry had to bail out the state pension scheme to the tune of €500m after the sustainable reserve completely evaporated. By the end of 2005, it totalled 11% of government expenditure on pensions.