The German government wants to (finally?!) tackle the shortage of skilled workers - at least a little.
There is still a lack of details, which is why the package of measures planned by the Ministry of Economic Affairs under Robert Habeck cannot yet be fully assessed. But the direction already sounds very, very important: work incentives are to be increased for several groups.
- A legal entitlement to flexible working (i.e. working from home) should bring mothers in particular more into the labor market - but could also have a positive effect on the labor supply beyond this
- The transfer withdrawal rates for low-income earners are to be reduced, meaning that working more would also lead to higher wages than before. Nowadays, working more hours in the low-income bracket sometimes leads to little or no additional income, as state transfer payments are no longer available. In such cases, it has so far made no sense at all for those affected to work longer.
- Older people are to be encouraged to work longer through higher pension payouts, e.g. by paying 100% of the contributions to unemployment and pension insurance from the regular entry age. That can make a really big difference.
- The bureaucratic burden for migrants should be reduced so that they can enter the labor market more quickly. For example, when checking whether migrants have the same status as German employees with an employer. This could take place less frequently or be completely eliminated in the case of collective bargaining agreements.
I'm curious to see what will be left of this draft in the end. I wouldn't be surprised if the FDP (on the legal right to work from home) and SPD (on pensions) kick up a storm. Perhaps the Greens are bothered by any reduction in employment protection for migrants.
Either way, it is always good to see the government doing something about the shortage of skilled workers - but it has to be enough and not hesitant little things. Work incentives are an incredibly important lever, but they have to be strong enough and well targeted.
We all need to understand that nothing else will determine our long-term prosperity as much as the shortage of skilled workers - so let's get to work on solving it.
