Abstract
Midijobs are employment relationships with moderate monthly earnings that benefit from payroll tax subsidies. Since 2003, the subsidy is universally available for all regions, industries, individuals, and employers in Germany. Recently, more than 2.9 million individuals, i.e., almost 9 percent of the German labor force covered by the social security system took advantage of Midijobs. This paper describes the program, its motivation, and utilization over time. We characterize the labor market transitions leading into and out of Midijob employment, the duration of Midijob utilization, and compare recent developments with patterns of program utilization that were observed early on.
Funding source: Deutsche Forschungsgemeinschaft
Award Identifier / Grant number: RI 856/10-1
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Research funding: We thank two anonymous referees and Matthias Collischon for helpful comments and the German Research Foundation (DFG) for funding project RI 856/10-1.
Institutional Appendix
Retirement insurance contributions for Mini- and Midijobbers
Minijobs: Minijob employees do not have to contribute to social insurances. However, since 1999 individuals have the option to forgo the exemption from retirement insurance contributions (opt in). If Minijob employees contribute to the retirement insurance (the contribution rate is 3.6 percent of gross earnings), they can accumulate claims against the insurance in terms of contribution periods and contribution amounts. Only a very small share of Minijob employees used this option. Starting January 1, 2013 regulations were changed. Since then, the default is that workers are required to contribute to the retirement insurance. However, they can easily opt out of the requirement by notifying their employer.
Midijobs: Midijob employees pay social insurance contributions, however at a reduced rate. The subsidy consists of artificial deductions from their gross earnings prior to applying the standard social insurance contribution rates. The deduction amount declines as earnings increase from the Minijob earnings ceiling towards the Midijob earnings ceiling. Since Midijobs were introduced individuals had the option to forgo the subsidy on their contributions to retirement insurance and thus to pay retirement insurance contributions on their full earnings instead. The option was changed with the 2019 reform: since July 2019 the retirement insurance automatically credits workers with contributions on their full earnings even though they pay only the subsidized amount.
Combination of different employment relationships
Minijobs: Workers can hold Minijobs as their main employment or as an add-on employment. If one or more Minijobs are held as main employment then the sum of earnings cannot exceed the Minijob earnings limit without losing the Minijob benefit. If the earnings from one employment exceed the Minijob earnings limit the job qualifies as a Midijob. If the earnings limit exceeds the monthly Midijob earnings limit the job is a regular, unsubsidized job.
Midijob: Workers are allowed to hold one Minijob in addition to a Midijob. If more than one Midijob is held the worker can no longer claim the Midijob subsidy. Since the 2019 reform more than one Midijob can be held as long as the total earnings are below the 1,300 Euro threshold.
Individuals in training or apprenticeships cannot benefit from the Midijob regulation for their training or apprenticeship earnings even if the monthly earnings are within the Midijob earnings range.
Administrative treatment of Midijobs
Employers register their workers with social insurances and handle the transfer of contribution payments. When they notify a new or continuing employment relationship (annual notification) employers inform the unemployment insurance about the Midijob status of the worker using an indicator. The Midijob indicator can take on three different values:
Value 0: Subsidy is not applicable or individual chooses to forgo the subsidy for the retirement insurance (the latter information was relevant 2003–2019). Midijob employments with value 0 are not considered in the aggregate statistics on Midijob employment because it is not certain that the Midijob subsidy is applied (e.g., if several employment relationships are held at the same time).
Value 1: Subsidy is calculated, individual earns within in the subsidized Midijob earnings range.
Value 2: Subsidy is calculated, individual employment includes periods with earnings outside of the Midijob earnings range, i.e., below the Minijob earnings ceiling, within the Midijob earnings range, and/or above the Midijob earnings ceiling. Here average earnings over the entire period are used to calculate appropriate contributions (Mischfälle).
Appendix
Descriptive Statistics
| Variable | N | Mean | Std. Dev. | Min | Max |
|---|---|---|---|---|---|
| Female | 300,539 | 0.616 | 0.486 | 0 | 1 |
| Age 17–24 (reference) | 300,539 | 0.217 | 0.412 | 0 | 1 |
| Age 25–34 | 300,539 | 0.298 | 0.457 | 0 | 1 |
| Age 35–44 | 300,539 | 0.204 | 0.403 | 0 | 1 |
| Age 45–54 | 300,539 | 0.170 | 0.376 | 0 | 1 |
| Age 55–64 | 300,539 | 0.093 | 0.291 | 0 | 1 |
| Age 65+ | 300,539 | 0.018 | 0.132 | 0 | 1 |
| Educ: No voc Train (reference) | 300,539 | 0.405 | 0.490 | 0 | 1 |
| Educ: Voc Train | 300,539 | 0.512 | 0.499 | 0 | 1 |
| Educ: Academic | 300,539 | 0.083 | 0.276 | 0 | 1 |
| Foreign | 300,539 | 0.193 | 0.395 | 0 | 1 |
| East | 300,539 | 0.218 | 0.413 | 0 | 1 |
| Occ: Agricultural (reference) | 300,539 | 0.022 | 0.147 | 0 | 1 |
| Occ: Simple manual | 300,539 | 0.092 | 0.289 | 0 | 1 |
| Occ: Qualified manual | 300,539 | 0.079 | 0.270 | 0 | 1 |
| Occ: Technician/Engineer | 300,539 | 0.023 | 0.149 | 0 | 1 |
| Occ: Simple services | 300,539 | 0.276 | 0.447 | 0 | 1 |
| Occ: Qualified services | 300,539 | 0.069 | 0.253 | 0 | 1 |
| Occ: Semiprofessional | 300,539 | 0.071 | 0.257 | 0 | 1 |
| Occ: Professional | 300,539 | 0.026 | 0.160 | 0 | 1 |
| Occ: Simple clerk and admin. | 300,539 | 0.155 | 0.362 | 0 | 1 |
| Occ: Qualified clerk and admin. | 300,539 | 0.128 | 0.334 | 0 | 1 |
| Occ: Manager | 300,539 | 0.011 | 0.105 | 0 | 1 |
| Occ: Other | 300,539 | 0.047 | 0.212 | 0 | 1 |
| Firm size 0–19 (reference) | 300,539 | 0.356 | 0.479 | 0 | 1 |
| Firm size 20–99 | 300,539 | 0.248 | 0.432 | 0 | 1 |
| Firm size 100–199 | 300,539 | 0.105 | 0.307 | 0 | 1 |
| Firm size 200–299 | 300,539 | 0.053 | 0.224 | 0 | 1 |
| Firm size 300+ | 300,539 | 0.188 | 0.390 | 0 | 1 |
| Ind: Agriculture & Mining (ref.) | 300,539 | 0.024 | 0.152 | 0 | 1 |
| Ind: Food Drink Tobacco | 300,539 | 0.017 | 0.131 | 0 | 1 |
| Ind: Cons. Goods Production | 300,539 | 0.012 | 0.108 | 0 | 1 |
| Ind: Ind. Goods Production | 300,539 | 0.023 | 0.149 | 0 | 1 |
| Ind: Capital Goods Production | 300,539 | 0.028 | 0.165 | 0 | 1 |
| Ind: Construction | 300,539 | 0.037 | 0.188 | 0 | 1 |
| Ind: Trade Service Hotels Rest. | 300,539 | 0.297 | 0.457 | 0 | 1 |
| Ind: Logistics & Financ. Services | 300,539 | 0.307 | 0.461 | 0 | 1 |
| Ind: Educ. Health Publ. Admin. | 300,539 | 0.197 | 0.397 | 0 | 1 |
| Ind: Other | 300,539 | 0.059 | 0.235 | 0 | 1 |
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Source: Own calculations based on SIAB, 1975–2017.
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