Social insurance systems differ from country to country, but there are some basic features and numbers that facilitate comparative analyses and conclusions.
The Organisation for Economic Co-operation and Development (OECD) defines Social Security Constribution (SSC) as follwos:
Social security contributions are compulsory payments paid to general government that confer entitlement to receive a (contingent) future social benefit. They include: unemployment insurance benefits and supplements, accident, injury and sickness benefits, old-age, disability and survivors' pensions, family allowances, reimbursements for medical and hospital expenses or provision of hospital or medical services. Contributions may be levied on both employees and employers. Such payments are usually earmarked to finance social benefits and are often paid to those institutions of general government that provide such benefits. This indicator relates to government as a whole (all government levels) and is measured in percentage both of GDP and of total taxation.
https://data.oecd.org/tax/social-security-contributions.htm (accessed 15 May 2020)
In the OECD area the rate of SSC is at average about 22 %. In Germany the contribution is - second to Austria - about 33.5 %. Other countries with a rate higher than 30 % are - in alphabetical order - Belgium, Italy, France, Hungary, Czech Republic, Slovenia, Slovak Republik and Greece. For a detailed presentation see
https://read.oecd-ilibrary.org/taxation/income-tax-plus-employee-and-employer-social-security-contributions-2019_3af5163a-en#page1 (accessed 19 May 2020)
In the following I look on health insurance (HI), long-term care insurance (LTCI) and pension insurance (PI).
Stop the window dressing
So we learn, that social insurance contributions consume a more or less large part of the income. In my view it is useless to divide between the employee's SSC and the employer's SSC, as the employer has to calculate the cost of wages including the parts, he has to pay. The employee sees on his payslip the parts he pays, for instance, assuming 15 % income tax and 10 % SSC and the part ther employer "pays":
3000 € income - 450 € income tax - 300 € employee's SSC = the employee gets 2250 €
For the employer it is as follows:
3000 € income + 300 € SCC = 3300 € wage costs
In this example I disregard further wage costs like unemployment insurance. The focus lies on health insurance (HI), long-term care insurance (LTCI) and pension insurance (PI).
So the employee's SSC are 600 € out of 3300 €. That is 18.18 %, not the 10 % for the employee and 10 % for the employer. The differentiation is window dressing, in my view, just to give the employee the good feeling, that his employer pays a part fo the SSC for the employee.
Freelancer have - of course - to pay the "full rate", as they are their own employers and employees. Even more, as the sum in the calculation example shows, that the real contribution rate is 18.8 % instead of 20 %. The freelancer pays with a gross income of 3300 Euro per month 59.40 € more than the employee.
As this is a serial on cornoa-induced _change_ it is to ask:
Who is in charge?
Politicians and decision makers in the social insurance system, I ask you to
finish the window dressing and treat employees and freelancers equally.
And there is a second wrongfulness.
Erase wrongfulness for artists and other freelancers
In Germany 14 % of the gross income SSC go to health insurance (HI) and 3.3 % to long-term care insurance (LTCI) and 18.6 % to pension insurance (PI), (TK 2019).
Freelancers are not only the "rich" consultants, coaches, authors, artists, lecturers. Most of them strive to survive. corona showed this so clearly that people, who never had seen this or ignored it, had to become aware. The latter are for instance politicians and the heads of institutions in the higher education sector (Weßel 2019).
In Germany the contribution of freelancers to the health and nursing insurance is calculated upon a "einheitliches fiktives Mindesteinkommen" (unified fictional minimum income) of 1.061,67 € (krankenkassen zentrale 2020). This results in contributions of 149 € (HI) and 35 € (LTCI) plus an additional contribution that varies between the insurance companies. The contributions grow with the income.
If your income averages less during a year, for instance only 800 € per month you have to pay the SCC minimum anyway. And your rent, your food, other expenses? Does not matter. If you do not have enough money you have to file applications at social welfare departments and / or the job center. Or, as a client recently said: "My other job is to be the wife of a good earning husband - and I don't like this financial aspect."
As already said above, in charge are
Politicians and decision makers in the social insurance system. I ask you to
face reality and erase the "einheitliche fiktive Mindesteinkommen", the unified fictional minimum income.
In other words: take indeed 14 %, 3.3 % and 18.6 % and not more. For instance: if a freelancer earned 800 €, take only 139 € instead of 180 € for HI and LTCI.
Plus: erase the wrongfulness described above on the real contribution rates.
After these areas of political and economical changes the following part of "Fair Play" looks on the life of individuals and their capability to act in the areas environment, travel and consumption.
Christa Weßel - Thursday, 04 Jun 2020
- krankenkassen zentrale. Beitragsbemessungsgrenze für Selbständige 2019 / 2020. - https://www.krankenkassenzentrale.de/wiki/beitragsbemessungsgrenze# (accessed 15 May 2020)
- OECD. Social security contributions (indicator), 2020. - doi: 10.1787/3ebfe901-en - https://data.oecd.org/tax/social-security-contributions.htm (accessed 19 May 2020)
- OECD. Income tax plus employee and employer social security contributions, 2019. - https://read.oecd-ilibrary.org/taxation/income-tax-plus-employee-and-employer-social-security-contributions-2019_3af5163a-en#page1 (accessed 19 May 2020)
- OECD. Taxing Wages (2020). 2015-2019. Specail feature: how tax systems influence choice of employment form. - https://www.oecd-ilibrary.org/taxation/taxing-wages/volume-/issue-_047072cd-en (accessed 19 May 2020)
- TK - Techniker Krankenkasse. Contributions as of 1.January 2020. PDF. 09 Dec 2019. - https://www.tk.de/resource/blob/2076664/18e8b5f3001ba608976eff746cab5460/beitragstabelle-englisch-2020-data.pdf - donwload via https://www.tk.de/firmenkunden/versicherung/beitraege-faq/beitragssaetze/aktuelle-beitragssaetze-in-der-sozialversicherung-2031554 (accessed 15 May 2020)
- Weßel C. andere arbeiten lassen … Lernen und Lehren an Hochschulen mit dem A A L. Weidenborn Verlag 2019.
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