Dgb fears surveillance of the unemployment insurance system

Dgb fears surveillance of the unemployment insurance system

"In the medium term, there is a threat of renewed increases in contributions or benefit cuts for the unemployed," according to a DGB position paper. The DGB’s bone of contention is the budget consolidation resolved by the black-yellow cabinet, which also entails billions in savings for the social security funds. The government is doing nothing other than "continuing a shunting yard at the expense of the contributors and in favor of the federal government and the more financially efficient taxpayers".

"Unemployment insurance is structurally underfunded," criticizes the author, DGB labor market expert wilhelm adamy. According to the cabinet’s decision, a tax subsidy totaling 5.1 billion euros is to be cut from the federal employment agency (BA) over the next four years to ease the burden on the federal government.

"As a result, contributors to unemployment insurance – i.E., predominantly small and middle-income earners – are financing the tax cuts to which the federal government has committed itself," writes adamy.

However, contributors were relieved by the significant reduction in the contribution rate to unemployment insurance: until 2006, it was still 6.5 percent, and was then gradually reduced to 2.8 percent. Since the beginning of this year, it has stood at 3.0 percent.

The BA received the federal subsidy for the first time in 2007, when it amounted to 8 billion euros. In the same year, the VAT was increased from 16 to 19 percent. The amount for the BA was equivalent to one VAT point and was intended to relieve the burden on contributors. The allowance was reduced for the first time in 2011. According to the DGB, the fact that it is now to be used "directly for the federal budget" undermines the BA’s efforts to pursue a sustainable budgetary policy.