Müntefering presented the government's labour and social affairs policy at a press conference in Berlin. He announced that he would like to see a bill passed that would prevent the danger of downward pension adjustments. He underscored that there are two main things on his ministry's agenda: secure pensions and labour market reform.
1. Secure pensions
The following measures are to be implemented with a view to ensuring the ability of the government to continue to finance pensions:
No pension increases, but also no pension cuts
The current weak growth in wages and salaries means there won't be an upward adjustment of pensions this year. Indeed, given that pensions are indexed to gross wage and salary levels, a downward adjustment of pensions could very well be the result. The government intends to introduce a bill to keep this from happening.
Makeup mechanism
On the other hand, a makeup mechanism must be provided for, by means of which downward adjustments not carried out at present are made up for at a later date when income levels go up again. However, this mechanism would not go into effect before 2010. The downward adjustment of pensions that would actually be necessary in 2006, but is being refrained from, is costing the government two billion euros, Müntefering said.
Retirement age to be raised to 67
The government plans to gradually raise the statutory retirement age to 67, starting in 2012. The corresponding bill will go into effect in 2007. Raising the retirement age needs to go hand in hand with a major improvement of the labour market situation for older members of the workforce.
Pension contribution rate 19.9 percent as of January 1, 2007
For nearly six years now the statutory pension contribution rate has been 19.5 percent. As of January 1, 2007 it will be 19.9 percent. At the same time, the unemployment insurance contribution will be decreased by two percentage points. The result will be an overall decline of 1.6 percent in non-wage labour costs.
Child supplement increase for supplementary retirement plans
Around five million people are now saving for retirement with a government-subsidized supplementary pension plan ("Riester pension plan"). The government would like to provide stronger support to families with children. For this reason the child supplement provided in the framework of the "Riester pension plan" is to be increased to 300 euros a year for children born on or after January 1, 2008.
2. Labour market reform
Müntefering intends to subject all instruments for the promotion of employment to review. An expert report is to show how successful the "reforms for modern services on the labour market" (Hartz I - III) have been. He announced that an interim report by a government-appointed evaluation committee will be discussed by the cabinet at the beginning of February.
He indicated that evidence is emerging of a need to reform the various instruments, saying that they can be used more effectively and more cost-effectively than is currently the case.
Sticking with what works, getting rid of what doesn't
Instruments that have been successful in practice are to be continued. By the end of the year an assessment is to be made as to what measures will create more employment over the long term. Active labour market policy is to undergo fundamental reform in the course of the coming year.
The basic minimum income for the unemployed ("Hartz IV") introduced on January 1, 2005 is to be definitively assessed by the Ombud Council for Surveillance of the Labour Market Reform by the end of June.
The government created the Ombud Council before Hartz IV went into effect. Its purpose is to assess on the basis of complaints filed whether or not the merging of unemployment compensation and social welfare benefits has led to unacceptable hardships. After a year and a half the Council will be able to determine where the reform has been successful and where it needs to be corrected.
In most cases thus far proposals put forward by the Ombud Council have been accepted and implemented.
Reducing costs
Müntefering announced that a number of changes are going to be made in the Hartz IV rules. For instance, unemployed persons under the age of 25 still living with their parents will no longer automatically be eligible for unemployment compensation and will not be able to claim financial support for an apartment of their own.
These and other changes are aimed at avoiding unnecessary costs.
Bundesregierung
Secure pensions and labour market reform are key policy objectivesWed, 18.01.2006
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Labour and Social Affairs Minister Franz Müntefering gave his assurances that there will be no cut in pensions during the present legislative term and promised improvements of labour market reforms (Hartz I to IV).
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