Tax, contribution restructuring could alleviate labor shortage (Il Sole 24 Ore Radiocor) - Berlin, 16 Aug - Germany's tax reform could create over 1.2 million full-time jobs as there is still considerable untapped employment potential due to disincentives especially for women and older people, according to a survey released by think tank Ifo.

"The tax and contribution system in Germany can definitely be restructured to alleviate the labor shortage,' said Volker Meier from the ifo Center for Labor and Demographic Economics, one of the authors of the study.

The decision just made to abolish tax classes 3 and 5 while retaining marital splitting could create 67,000 new full-time jobs in Germany.

Shifting from marital splitting to family splitting would prompt an increase in employment of around 200,000 full-time jobs in Germany, and the end of the non-contributory co-insurance of spouses in statutory health and long-term care insurance bring another 150,000 full-time employees into employment.

Higher pension deductions for early retirees would increase employment by the equivalent of 180,000 full-time employees.

According to ifo, a 0.5% pension deduction is actuarially justified for each month of early retirement. Only 0.3% of the pension is currently deducted.

Raising the statutory retirement age from 67 to 69 would even result in an additional 473,000 full-time employees.

Abolishing retirement at 63 would mean an increase of 157,000 full-time employees, according to the study.

'In view of population aging and the labor shortage, our tax and social security system must consistently reward gainful employment. Every employment incentive counts: Whether it's starting work, working a few more hours a week part-time, or working longer because it's more attractive up to retirement - every extra hour worked per week counts," said Manfred GoBl, chief executive of IHK, Germany's Chamber of Industry and Commerce.

"Corresponding reforms would also make an important contribution to greater fairness among all tax and contribution payers and between the generations. However, the fact also remains that the tax and contribution burden for employees in Germany is generally too high.'.

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(RADIOCOR) 16-08-24 10:46:58 (0179) 5 NNNN