European countries turn to their retirees to deal with job shortages

KANIKA SINGH RATHORE,

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GermanyThe government of has approved a new draft law designed to tackle the growing labor shortage in the country by encouraging individuals to continue working. retirement,

The proposed law, which the Cabinet agreed on Wednesday, would allow retirees to earn up to 2,000 euros (£1,700) per month tax-free.

According to the initiative, which is due to be implemented in early 2026, the state is estimated to lose around 890 million euros (£760 million) in tax revenue annually between 2026 and 2030. reuters Report.

Finance Minister Lars Klingbeil emphasized the economic logic behind the move, saying: “We are setting up further incentives for economic growth in Germany.

“For this, business especially needs older and experienced workers and skilled professionals.”

A solution to fight demographic changes

Eligible are employees who are subject to compulsory social insurance and who have passed the standard retirement age of 67

Eligible are employees who are subject to compulsory social insurance and who have passed the standard retirement age of 67 ,pa wire,

A report from the Ministry of the Interior shows that Germany’s working population is expected to decline by 6.3 million people from 2010 to 2030, a trend that will inevitably reduce GDP per capita due to a reduction in the employee-to-retiree ratio.

“Our companies are already looking for skilled workers and demographic trends will exacerbate the shortage,” Economy Minister Catharina Reich said. He said the number of people of working age is decreasing by about 400,000 per year.

Eligible are employees who are subject to compulsory social insurance and who have passed the standard retirement age of 67.

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The Finance Ministry said that the social system will also benefit from the bonus by maintaining the existing obligation to pay social insurance contributions.

Europe turns to pension reforms to address labor shortage

Working later in life is increasingly becoming the norm

Working later in life is increasingly becoming the norm ,getty,

The German measures to encourage workers to retire later come as governments across Europe are turning to pension reforms to address labor shortages and ease the burden on their pension systems.

Nevertheless, it is a politically divisive topic that can have a high political cost for governments, as seen in France.

French Prime Minister Sébastien Lecornu suspended a historic event on Tuesday 2023 pension reform Until after the 2027 presidential elections, bowing to pressure from leftist MPs who demanded such a move to ensure their political survival.

Uk