Medium-term projections based on calculations from the Leibniz Institute for European Economic Research (ZEW) suggest that the federal government’s reforms could generate close to 20,000 new jobs. According to ZEW, the available labor supply is expected to increase by 19,000 full-time equivalents, representing the total additional work offered at the end.
The coalition government had agreed in July upon a broad range of reforms affecting tax law, healthcare, care services, and pensions. The ZEW’s calculations use these specific policy measures as a basis, excluding mandatory actions required by the constitution, such as the periodic adjustment of the basic tax-free amount.
The primary factor driving this increase in labor supply is the elimination of the previously free health insurance for spouses who either have little to no employment. Previously, these individuals often found it uneconomical to accept a job because it triggered mandatory health insurance contributions; these contributions must now be paid regardless of employment status.
The study also found that the increased financial burdens resulting from these reforms will remain manageable for most households. This is because some of the cost increases due to higher social contributions are counteracted by reductions in taxes. While there is practically no change for households earning up to a gross income of about €55,000, lower net income is observed for those earning more. For incomes surpassing €250,000, the average additional burden is estimated at €2,421 annually.
