Social security reforms urged by the BA Board due to demographic shifts
In the face of demographic change, Germany is taking a strategic approach to maintain economic stability and address labor shortages. According to Vanessa Ahuja, a member of the board of the Federal Employment Agency (BA), a combination of targeted measures and gradual adjustments is key.
Ahuja advocates for individual reform steps instead of a large-scale reform like the Hartz-IV commission. She believes that reforms of the social security systems are inevitable due to demographic change. One such reform is the maintenance of the statutory pension level ("holding line") at 48% of average income until 2031, a measure aimed at preserving retirees' income stability. Additionally, incremental increases in pension contributions from 2027 will finance these maintained pension levels.
Expansion of eligibility and benefits for the mothers' pension (Mütterrente) is another reform, targeting births before 1992 and effective from 2027. This move aims to compensate for child-rearing periods with increased pension credits. Furthermore, the introduction of schemes such as an "Active Pension" and an "Early Start Pension" are designed to support retirees and encourage continued workforce participation.
Regarding qualified labor migration, the German government acknowledges its crucial role in mitigating labor shortages caused by demographic shifts. Economy Minister Katherina Reiche has highlighted the need for longer working lives and increased labor participation, which can be complemented by attracting qualified migrants to balance the workforce demands. To facilitate this, changes need to be made to processes and the number of authorities involved to speed up labor migration procedures.
Universities also play a significant role in this regard. They need to change to make it easier for foreign students to enter the German labor market after graduation. Ahuja suggests making German a compulsory subject in study programs to facilitate integration.
The consequences of demographic change, such as labor shortages, growth losses, and supply bottlenecks, are already visible in sectors like gastronomy, care, and crafts. Ahuja suggests a structured reform commission but considers a large-scale overall reform very ambitious. She states that all levers must be used to close the gap created by the retirement of the baby boomer generation, with qualified labor migration being one such lever.
Ahuja believes that the problems we have today were foreseeable and the solutions were also known, but many necessary changes were not implementable due to insufficient political pressure. However, with a strategic approach focused on incremental reforms and qualified labor migration, Germany is taking steps towards counteracting the challenges posed by demographic change.
Policy-and-legislation changes in relation to labor shortages caused by demographic change are being advocated by members like Ahuja, who suggests incremental reforms rather than large-scale reforms. This includes measures such as maintaining the statutory pension level, expanding eligibility and benefits for the mothers' pension, and introducing schemes like "Active Pension" and "Early Start Pension." (policy-and-legislation, politics)
In the field of qualified labor migration, the German government recognizes its importance in offsetting labor shortages caused by demographic shifts. Ahuja suggests making changes to facilitate the integration of foreign students in the German labor market and speed up labor migration procedures. (policy-and-legislation, general-news, politics)
