Germany considers sweeping minijob reform that could reshape work for millions

Anahita Abdollahi arrives at the University of Cologne's physics library twice a week, checking emails and helping students locate research materials. The 26-year-old Iranian master's student waters plants, answers phones, and occasionally inventories the collection—work that fills roughly five hours per shift. She earns €603 a month, the legal ceiling for what Germany calls a minijob, and pays no income tax or social security contributions on those wages. It is, by her account, an almost perfect arrangement. That arrangement is about to change.

For decades, minijobs have been a fixture of German employment. Introduced in the 1960s to reduce bureaucratic friction around casual work, they were redesigned in 2003 as part of a broader labor market overhaul. The system allows workers to earn up to €603 monthly without triggering tax obligations or mandatory pension contributions—a threshold most minijobbers reach by working around ten hours per week. Nearly seven million Germans hold minijobs, some as their sole income, others alongside primary employment. The work suits students, stay-at-home parents, and others juggling competing demands. Women comprise 57 percent of all minijobbers, a concentration that has long troubled labor economists and policy makers.

Retail and hospitality depend on minijobs to manage fluctuating demand. A supermarket needs more cashiers on Saturday afternoon than Monday morning; a restaurant requires extra servers on weekends. Employers pay a flat tax of 2 percent on minijob wages plus social contributions around 30 percent of gross pay—costs they accept because the flexibility justifies the expense. Holger Schäfer, a labor economist at the German Economic Institute, explained the logic plainly: some work only makes economic sense if hours remain truly minimal.

But the system has drawn sustained criticism for entrenching precarity, particularly for women. Minijobs do not build pensions. They do not lead to better employment. They cement people—disproportionately women—in low-wage positions with no path forward. In early July, Germany's governing coalition announced plans to dismantle this structure. The government would raise the employer flat tax from 2 percent to 5 percent and, more significantly, eliminate the opt-out for pension contributions. Minijobbers would become subject to regular social security contributions, effectively ending minijobs as they exist. The Pension Commission, which proposed these changes in late June, argued the reform would strengthen social security systems, reduce old-age poverty, and address gender inequality.

For Abdollahi, the math is immediate and painful. Full social contributions would cost her roughly €130 monthly—a 21 percent reduction in take-home pay. She could increase her hours to compensate, but that would slow her studies. A research position offering up to twenty hours weekly would provide better pay but would consume time she needs for coursework. The trade-off is real and unforgiving. Labor unions have embraced the proposal. Guido Zeitler, chairman of the NGG union representing food and hospitality workers, stated plainly that minijobs have not bridged workers into better employment; they have cemented precarious conditions for millions. Enzo Weber, a labor market researcher, argued the reform would prevent people from becoming trapped in low-wage work and would allow women's careers to develop beyond the minijob ceiling.

Employers have pushed back hard. Rainer Dulger, president of the Federal Association of German Employers' Organizations, called abolishing minijobs a mistake, warning that businesses rely on them for flexibility and access to additional labor. Schäfer, the economist, expressed skepticism that eliminating minijobs would drive significantly higher work hours. A €600 job subject to full social contributions would generate modest additional revenue for social security systems—perhaps not worth the administrative machinery required. He saw a narrower case for reform: targeting people who take minijobs alongside primary employment, a situation that represents economic misallocation when skilled workers deliver pizza after hours instead of working overtime in their main jobs.

The government has signaled one possible compromise. The Pension Commission's proposals include an exemption for school students, allowing them to continue minijobs in their current form. The Social Democratic Party is now considering whether to extend that exemption to university students. Abdollahi believes this would be essential. Her minijob gave her entry into the German labor market and a low-pressure environment to improve her language skills—advantages particularly valuable for students from outside the European Union. She and millions of others now wait for the government to debate these changes later in the year, uncertain whether the minijob that has sustained her studies will survive the reform.