Agency expresses concern over potential €11.9 billion income gap by 2029
Berlin — The Federal Employment Agency (BA) may face significant financial strain as rising unemployment rates are projected to push the agency into the red, according to a report submitted to the Budget Committee of the German Bundestag on Friday. The report suggests that the federal government may be required to provide approximately €11.9 billion in liquidity assistance by 2029 to prevent the agency from incurring substantial losses.
For 2021 alone, the BA anticipates a deficit of €5.27 billion, which would exhaust its reserve of €3.2 billion and require additional liquidity assistance from the government in the form of loans totaling approximately €2.35 billion. This number is expected to increase to around €3.8 billion in 2026.
These calculations, made by the BA, are based on a worsened spring projection by the German government for economic development that assumed zero growth in April. The report now forecasts over one million recipients of unemployment benefits, compared to the original plan for 852,000. This increase in recipients is expected to result in additional expenditure of around €4 billion.
BA head Andrea Nahles will present the report to the Budget Committee next week. Nahles has previously ruled out increasing the contribution rate and is instead relying on the new government's investment and economic stimulus measures to turn the tide. The report indicates that the estimates for the coming years are subject to a high degree of uncertainty.
At present, employees and employers pay 2.6 percent of the gross wage to the unemployment insurance. An increase in the contribution rate would need approval from the German Bundestag and Bundesrat.
There were no further details provided regarding the potential impact of these financial projections on the overall German economy, nor on any specific measures the government may take to address the anticipated deficit at the BA.
In light of the anticipated deficit of €5.27 billion for 2021, the Federal Employment Agency (BA) might need an additional €2.35 billion in loans from the government to maintain its financial stability. Furthermore, the report indicates that the general-news sector, including business, politics, and finance, should closely monitor the potential effects of these financial projections on the BA and whether they could impact the overall German economy.
