A leading official at Germany’s Federal Employment Agency (Bundesagentur für Arbeit) has emphasized the necessity of reforming the country’s social security systems in light of demographic shifts. Vanessa Ahuja, a member of the agency’s executive board, stated that, given current resistance to increases in contribution rates, systemic adjustments are crucial.
Ahuja advocates for a phased approach to reform, prioritizing targeted changes over a large-scale overhaul as previously considered by commissions like the Hartz IV commission. She suggests a structured reform commission would be beneficial but believes a comprehensive restructuring is currently overly ambitious.
Drawing on her own experience as a department head in the Federal Ministry of Labour and a participant in the Hartz IV commission during the 2000s, Ahuja noted that many of the current challenges were foreseeable at that time – along with potential solutions. She explained that implementing these required changes proved difficult due to insufficient political pressure.
Addressing the impending strain on the system caused by the retirement of the baby boomer generation, Ahuja highlighted several key areas for action. Skilled worker immigration is vital, she stated, but needs to be coupled with efforts to activate existing workforce potential-including older workers, women in part-time positions and the long-term unemployed. A combination of skilled immigration, workforce activation and productivity gains is essential to solve the problem.
The consequences of demographic change are already becoming apparent, with labour shortages leading to economic slowdown and supply bottlenecks, particularly in sectors such as hospitality and healthcare.
Ahuja warned that failing to meet targets for increased immigration of skilled workers could have serious repercussions for both the economy and society. This could lead to companies scaling back investment or relocating, further straining sectors like hospitality, healthcare and skilled trades and diminishing the base of contributors to social security systems.
To streamline the immigration process, Ahuja advocates for process modifications, reducing the number of involved authorities. Universities also need to adapt, she argues, to better facilitate the integration of international graduates into the German labour market. She proposes mandating German language courses as part of degree programs, acknowledging that while employers should be open to international talent, proficiency in German remains a crucial requirement for many positions.
