Crucial changes have recently emerged with regard to employment and social law; particularly, lower contributions and taxes, but also due in part to the rise of income thresholds, to higher duties.

The contribution to unemployment insurance has decreased from 4.2% to 3.3% of the gross salary, meaning the economy is relieved of more than €7 million per annum. But, an average wage-earner can retain €400 more of his gross earnings.

An extension of the period for obtaining unemployment benefit for elderly employees was intended for 1 January 2008. The government has submitted proposals but has not yet been decided by the Bundestag (lower house of German Parliament) and therefore, a reactive provision has been taken into consideration. According to the proposals, employees older than 50 are supposed to receive the ALG 1 (unemployment money I) for 15 months, employees older than 55 years for 18 months and employees older than 58 for 24 months. The Retirement Income Act, which has been in force since 2005 has also been changed. In view of pension taxation the taxable pension portion will increase from 54% to 56% in 2008.

Voluntary contributions paid into old age provision schemes or pension schemes are exempt for paying social security contributions and this will be continued indefinitely beyond 2008. The fourth and last grade of support for the Riester-Rente will also come into force. “Riester” private pensions were introduced on 1 January 2002. These are voluntary with contributions increasing gradually from up to 1% of gross salary in 2002 to 4% in 2008. They attract tax exemptions or matching cash contributions from the state, with special incentives for families with children. Benefits have to be taken as an annuity or paid in installments from age 60 and are taxed on receipt. This leads to an increase in the basic allowance for all the Riester savers to €154 and €185 per annum for child allowance.

[It is known that the omission of the monopoly on letters, extensions concerning the Arbeitnehmerentsendegesetz] (an Act in Germany, according to which minimum standards in certain branches for working conditions can be determined) have been pursued and that a minimum-wage for post service providers has come into force. This is valid for companies, predominantly dispatching letters. The minimum-wage for postmen now amounts to €9.80 in the west of Germany and €9 in the east. All other employees within this branch obtain a minimum-wage of €8.40 in the old federal states and €8 in the new federal states.

In view to the income threshold the following values apply for the national insurance branches as of January 2008: