FDP calls for tax incentives for overtime

FDP calls for tax incentives for overtime

The FDP has proposed tax relief for overtime in order to deal with the labor shortage in Germany. This measure provides for a limited number of overtime hours and the corresponding bonuses to be exempt from tax. Trade unions have criticized the proposal, while economist David Stadelmann from the University of Bayreuth believes the idea makes sense.

The FDP's proposal is met with mixed reactions. DGB leader Yasmin Fahimi described it as a “crazy idea” as it could potentially lead to the displacement of full-time work and an unequal distribution of work. FDP leader Christian Lindner defended the proposal and emphasized that it was particularly intended for people who have a mini-job in addition to their full-time job.

A possible tax incentive for overtime, as outlined by economist Stadelmann, could increase overall labor availability and alleviate labor shortages. The introduction of allowances for overtime from a certain number of working hours per week could be a model that is implemented based on Austria, where overtime bonuses are only partially taxed.

However, the tax discount for overtime also carries risks. It could result in only full-time employees benefiting, as switching to part-time work and then working tax-deferred overtime becomes more attractive to other employees. At the same time, there is a risk that the recruitment of young talent into companies and female employment could decline.

The discussion about tax-privileged overtime is part of a broader approach to counteract the shortage of skilled workers in Germany. In addition to this measure, there are efforts to facilitate the immigration of 1.5 million skilled workers per year and to motivate older workers to stay in their working lives longer. Among other things, this is intended to help relieve the burden on the pension system, which is increasingly suffering from demographic change.