The Cabinet has signed off on a draft law, which it hopes to introduce next year if it clears parliament in time, that would allow over-70’s still working in Germany to earn up to €2,000 (roughly $2,325) per month tax-free while still drawing a pension.
The idea is to alleviate Germany’s skills shortages in some work sectors, and to prepare the country for .
“We are setting more impetus for economic growth in Germany,” Finance Minister Lars Klingbeil, a Social Democrat, said, adding that the economy needed older and more experienced workers to achieve this.
“This strengthens the labor market, strenghtens the economy and is a real plus for everyone who wants to remain active in work,” Klingbeil said.
It’s billed as part of , including plans to try to fix the so-called pension level at its current value relative to average income.
The government predicts that roughly 168,000 people are likely to make use of the option when it is introduced.
The scheme is predicted to cost the state around €890 million per year, with the federal and state governments covering most of the costs and municipalities also contributing.
However, the plans have also faced resistance from within the coalition government. The youth wing of the Christian Democrats, for instance, had publicly questioned why younger taxpayers — already facing the prospect of supporting a disproportionately large number of pensioners in an aging country — should have to compete for part-time work with people who could earn tax free and still draw a state pension.
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