Germany's minijob reform faces business backlash over tax rise and pension push

The government‑appointed Rentenkommission has recommended major changes to Germany's minijob sector. It proposes ending the tax‑ and social‑security‑free status of minijobs, raising the employer‑paid flat tax from 2 % to 5 % and integrating minijob workers into the statutory pension scheme, with exemptions only for students.

More than 6.8 million people currently hold minijobs, many in gastronomy, retail, hotels and cleaning. Business federations such as the German Hotel and Restaurant Association (DEHOGA) and the Association of German Retailers warn that the higher tax and mandatory pension contributions will increase employer costs by about €18 per job per month, making the jobs “less attractive” and risking closures, especially for small operators. They argue the reforms could cause “irreversible damage” to Germany's economic location.

Labour‑market experts consider the measures “half‑hearted”, noting that while they will generate additional state revenues (estimated €0.5‑1 billion), they do not solve deeper issues: minijobs provide weak bridges to full‑time employment and can displace regular jobs in small firms. The government has postponed the final decision on pension contributions to the autumn, leaving the sector in uncertainty.