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ARTICLE · 11 DECEMBER 2018

Increased Burden On German Employers

Mayer Brown
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How social security contributions are financed in Germany and why employees will benefit from upcoming legislative changes

GermanyInsurance
Pauline Moritz
Pauline Moritz
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As of January 2019, the laws governing the social security system in Germany will be fundamentally amended. This is the result of a long-planned major prestige project of the Social Democratic Party. The upcoming changes will lead back to full parity financing of health insurance contributions, as was the case until 2005. At that time, under the social democratic leadership of former chancellor Gerhard Schröder, parity financing was abandoned in order to lower non — wage labor costs and combat a crisis in the labor market. The labor market has improved since then — in harsh contrast to the current status of the Social Democratic Party's poll results. In response, with an eye to the good condition of the labor market, the Social Democratic Party is trying to regain ground with the upcoming reform. In truth, there will be no real innovation, but rather a return to old principles.

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