“Minijobs” or small jobs are regulated jobs in the German labor market that have progressively incorporated relevant reforms. Introduced in the 1960s to accommodate women in a labor market that demanded labor, this type of employment was introduced in 2003 with the Hartz reforms. So, the reform of this type of temporary employment, according to the German institutions, was a tool to improve efficiency when finding a job, cut public spending on benefits for the unemployed, incorporate vulnerable workers into the labor market – women, unemployed long-term, immigrants or young people – and even facilitated the increase in the legal retirement age, which went from 65 to 67 years.
The “minijobs” are temporary contracts with remuneration not exceeding 450 euros, with no time limit but with a maximum of 70 working days per year. These jobs are mainly characterized by being part-time, low-skilled and usually linked to domestic work, catering or retail.
Thus, one of the great criticisms of this type of employment flexibility is that certain overqualified workers became part of the temporary workforce. That yes, the data defend the German economic miracle in employment and that labor reform has made the activity rate go from 73.8% in 2005 to 80% in 2020. All this, maintaining a positive distance over the European average.
In a contract through small jobs, the employer assumes 30% of the labor costs. According to the reform, it was divided into 15% for the pension, 13% for health insurance and 2% for income tax. On the other hand, the main benefit for the worker is that he has no obligation to pay any Social Security contributions or income tax. A particular case of “minijob” is domestic service in total households in charge of the occupant at 13.6% of the salary.
The “mini job” also serves to supplement the income of people at risk of social exclusion with social benefits, as long as the latter are less than 160 euros. Of course, to complement both incomes, Germany requires accepting “minijobs” offers when they appear.
On the other hand, for people -proportionally, a two-thirds majority of women- who believe it is convenient to complement their main job with a few extra hours, maintaining the tax exemption for the owner. There is also the case of people who want to work only a few hours.
In addition to filling vacancies, recovering labor and improving productivity, declaring more workers with this type of contract means moving employees away from the underground economy.
Employment and temporary
The Hartz reforms were born at the beginning of the century to give employability to vulnerable groups. Especially and in the middle of the financial crisis in Europe, the impact on the long-term unemployed became noticeable in a positive way. In the midst of the crisis, Germany had already lowered unemployment in the long-term unemployed by more than 11 points. Almost two decades later, these mini-jobs are also a gateway to the labor market for young people and retirees.
Despite this, German temporality is lower than the European average. With 8.5 points over the total, the European Union is above 10% and Spain is far away with 20.1% in the ratio of temporary contracts.
Is it good for professionals? Contrary to expectations, according to the Labor and Employment Market Research Institute (IAB) of the Federal Employment Agency (BA), “minijobs” only rarely represent a bridge to a job subject to contributions and “the Employees often remain in the low-wage segment and often work below their qualification level.
According to the analysis of the German organization released last week, these jobs replace up to 500,000 jobs subject to contributions in Germany in small companies with less than ten employees. Thus, an additional “minijob” in a small company replaces on average approximately half a job subject to contributions.
In particular, in 2003 the number of people with a “minijob” as their main or occasional occupation rose from around four million to more than six million in the framework of the labor reform during the government of Social Democrat Gerhard Schröder that introduced the possibility of an occasional activity in addition to regular employment.
In 2019, more than seven million people of working age held a “mini-job”, while during the coronavirus crisis, the figure fell to around six million recorded in June last year. The increase in the number of people with minijobs would have been even greater if the tax burden for these types of jobs had not been increased, according to the IAB expert, Collischon.
This higher tax burden for the employer has slowed the growth of this type of work, especially in small companies with fewer than ten employees.
Around 20% of all companies had workers with “minijob” in 2014, although the difference is considerable depending on their size. Thus, in 2014 almost 40% of the personnel in small companies worked with a “minijob” contract, while in large firms this figure was reduced to an average of 10%.
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