21 August 2012 - Source
The flexible contract system allows employees to earn up to €400 (Ł314) a month tax free, while their employers pay an easy-to administer flat rate of wage taxes, insurance and pension contributions.
A statement from Business Secretary, Vince Cable’s department said:
‘This proposal is a German solution designed to deal with particular issues in the German labour market, driven by their relatively high taxes on labour. This is quite different to the situation that exists in the UK.’
Although unemployment in Germany is at near record lows, many of those with ‘mini- jobs’ receive very low hourly wages as there is no blanket minimum wage. Labour market experts and trade unionists have criticised the reforms for having entrenched a new class of working poor in the cleaning, hotel and restaurant trades.
‘It was sold as a way to bring the long-term unemployed back into the labour market. Employers would get to know an employee and then hire them on a permanent basis. But that hardly ever happens,’ Holger Bonin, labour market expert at Germany’s ZEW think-tank, told the Financial Times.
‘In fact the long-term unemployed find it harder to get a full-time job now as these jobs don’t exist anymore. Full-time jobs are being divided up into mini jobs,’ he added. ‘One should be very sceptical about introducing such a system.’