Andrea Nahles, the CEO of the Federal Employment Agency (Bundesagentur für Arbeit), has called for the national government to grant either a debt cancellation or a subsidy to the heavily indebted agency by 2028 at the latest. Nahles told the “Handelsblatt” that the agency has already accrued ten billion euros in debt to the federal government this year, and due to increased spending on unemployment benefits, she expects an additional deficit of between 8 and 8.5 billion euros in the coming year.
The agency head recalled that its previous reserves of 26 billion euros were utilized during the COVID-19 period to support companies and assist employees. For this reason, she argues it is legitimate for the state to help the Employment Agency through debt forgiveness or federal aid by 2028.
Alternatively to receiving assistance from the federal government, an option would be to place a greater financial burden on contributors, specifically employees and their employers. However, Nahles stated that the agency does not know whether the federal government is considering raising the current contribution rate of 2.6 percent, which would further increase payroll costs.
