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Service in a café: Incentives for jobs subject to social security contributions
Photo: Frank Rumpenhorst / dpa
On the labor market, the corona crisis is primarily a mini-job crisis.
The number of people whose employment consists exclusively of a mini-job is eleven percent below the pre-crisis level.
And it's by far not just about student jobs and not just about the hospitality industry.
For comparison: In jobs subject to social security contributions, the minus peak during the crisis was just over one percent.
For many employees and companies there are certainly good reasons to opt for mini jobs.
But there are also good reasons for a change of direction: social security, professional development, further training - none of this is given in mini-jobs.
It was precisely the value of social security that became clear during the crisis, and the gaps were painfully revealed.
Mini-jobs create disincentives, especially for spouses, not to extend their working hours, because otherwise the possibly very high common marginal tax rate in the spouse splitting would be due.
Statutory health insurance is also available through the co-insurance of your spouse without having to pay your own contributions.
Many women would therefore make better use of their potential in the labor market if the mini-job trap did not exist.
Since gross for net applies to employees in mini-jobs, many are also willing to work at lower gross wages.
Without this regulation, the low-wage sector would therefore also be smaller.
Furthermore, representative surveys show that around half of the mini-jobbers would like to have significantly longer working hours.
Class instead of mass
For the economy, mini-jobs offer more flexibility due to the variable application possibilities of the low hourly volume.
On the other hand, they also bring restrictions, because when planning personnel, limits must always be taken into account that stand in the way of a free choice of working hours.
A successful restart of the labor market development after Corona has to be about quality instead of quantity anyway.
Because the mass - i.e. the number of workers - is getting smaller and smaller with demographic change.
The mini-job regulation, however, favors permanently low-paid jobs with little prospect due to the complete tax and duty exemption for the employee.
So what could a restart look like?
The following figure shows: Employment subject to social security contributions is on the mend after the crisis, even if the path that can be achieved without the effects of the crisis is still well below the path.
In contrast, marginal employment has collapsed and has not followed the recovery path taken by the rest of the labor market until the end.
This is exactly where the opportunity lies: Instead of simply heading back to the pre-crisis state, we should focus on a fresh start with employment subject to social security contributions.
In the future, one should consider changing the mini-job rules, which avoids the one-sided favoring of small jobs.
But we can also take action right now after the crisis, by setting positive incentives and supporting those companies that are rebuilding employment above the mini-job threshold!
This could be achieved through temporary staff cost subsidies for companies that are switching from marginal jobs to jobs subject to social insurance.
There is now - or after the fourth wave at the latest - a time window in which a lot of new things will be found in the mini-job market.
We should use this time window.
Specifically, if the number of its mini-jobbers is below the pre-crisis reference month from 2019, a company could receive a monthly "social security bonus" for every new job subject to social security contributions that exceeds the level of the pre-crisis reference month. Except in the current month, the decline in mini-jobs must have already occurred in the past (around May 2021) so that the prerequisites cannot be created through new layoffs of mini-jobbers. An exception to this cut-off date rule could apply if a marginal part-time employee changes to an employment subject to social insurance in the same company.
It would be possible to focus the social security bonus primarily on companies in crisis, which thus make up for job losses from the crisis.
For this, one could stipulate that additional subsidies are only started until the total number of marginal employees who are subject to social insurance contributions has reached the pre-crisis level again.
The social security bonus should be calculated in such a way that it offers at least a relevant compensation for the higher level of taxes and contributions for jobs subject to social security.
This should also be the case with relatively high personal income tax rates for employees.
At least one third of the labor costs - i.e. the gross income plus the employer's social security contributions - should therefore be applied per month.
Additional income from taxes and social security contributions
The program should be limited in time in order to provide incentives for an early change of direction immediately after the crisis.
For example, half a year would be conceivable.
The funding should also be linked to the fact that the plus for those subject to social insurance compared to minor jobs in the sense of a post-employment obligation is retained over a longer period of time.
The social security bonus would provide an initial incentive, and given the potential in terms of working hours, professional development and job satisfaction, the chances of achieving lasting effects would be high in many cases.
Government spending would be offset by additional income from taxes and social contributions over time.
These can be considerable, compounded by the fact that the number of hours is low and even more so when professional development beyond the mini-job trap is set in motion.
Recruitment subsidies show a high degree of effectiveness in scientific studies and have already been implemented with the training bonus and the “restart bonus”.
Now we should take the opportunity to use such instruments to specifically raise the labor market to a higher level.
The recovery after the corona crisis can be the beginning of the mini-jobs.
