Germany debates ending minijobs as pension reforms loom

The coalition plans to raise the minijob tax rate and end the pension-opt-out, which could dismantle the low-pay, low-tax jobs used by many students and part-timers.

Germany’s ruling coalition has unveiled a package to overhaul the country’s minijob system, raising the flat tax on such jobs from 2% to 5% and scrapping the option for workers to forego pension contributions. Minijobs, which cap earnings at €603 per month and exempt employees from most social taxes, are popular among students and stay-at-home parents, especially women. The proposed changes are intended to shore up the pension fund, lower the risk of old-age poverty, and address gender disparities in the labour market.

Critics from business circles argue the reforms would reduce staffing flexibility for sectors like retail and hospitality. Labor unions and experts see the shift as a chance to move workers out of precarious, low-pay positions. An exemption for school-age workers is retained, and the Social Democratic Party is debating whether to extend it to university students, a group that currently relies on minijobs for language practice and income, as illustrated by 26-year-old Anahita Abdollahi’s library role.