Proposed budgetary contribution by the Federal Employment Agency jeopardises its build-up of reserves

The Chairpersons of the administrative board of the Federal Employment Agency (BA) on the cost-cutting plans of the German federal government

14 Dec 2023 | Press release no.55

According to information from government circles, as part of the budgetary agreement, the German federal government expects the Federal Employment Agency to make a contribution of 1.5 billion euros to the federal coffers in 2024 and 2025, followed by 1.1 billion euros in 2026 and 2027. This amounts to 5.2 billion euros over the course of four years. In this way, the BA would repay some of the funds it received as subsidies during the pandemic – for short-time work allowances, for example.

However, this would also significantly reduce the ability of the BA to rebuild an adequate financial reserve. It would also mean that the German federal government is demanding access to financial contributions made by employers and employees.

Chair of the Administrative Board, Anja Piel:
“With its services, the Federal Employment Agency acts as an important anchor for the welfare state. The BA has achieved great things, especially during the pandemic: in terms of both the stability of society as a whole and the life plans and employment of individual people. If the governing coalition now wishes to make cuts and to recoup the federal subsidies it paid during the pandemic, it will be breaking a promise that it made – and at the expense of those making the financial contributions. Taking money away from the Federal Employment Agency doesn’t save money, it simply postpones problems to a future point in time. The ability of the Federal Employment Agency to act effectively depends on it having reliable funding, which means that it must also build up a reserve for possible future crises. The German federal government should not disregard this responsibility.”

Deputy Chair of the Administrative Board, Christina Ramb:
“Unemployment insurance contributions aren’t like a savings account. The federal government should not be able access such contributions at will. The federal subsidy to the Federal Employment Agency was necessary to cushion the financial burden on society which was caused by the pandemic. Tasks that affect society as a whole during crisis situations should also be borne by society as a whole. Asking for the subsidies to be paid back years later, especially when the sums are so big, is the very opposite of good government.”