Germany’s aged care staff to get pay rise through tax subsidy

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An interesting insight into how other countries are funding wage increases for aged care workers.

Germany’s Government is backing a proposed reform of the aged care sector that includes a €1 billion ($1.57 billion) annual tax subsidy to increase the pay for staff and reduce the contributions of care home residents.

The reform, which will affect Germany’s 1.2 million aged care workers, comes after criticism of the low pay for staff during the coronavirus pandemic and is seen as an attempt to attract more workers to deal with an ageing population.

From next year, the Government plans to contribute €1 billion annually to Germany’s long-term care insurance, which is part of obligatory health insurance. The contribution rate for childless people will increase by 0.1 percentage point to 3.4% of their gross pay, while the contribution level for parents will remain at 3.05%.

Aged care homes and palliative care service providers would have to pay their staff a minimum salary agreed with trade unions from September 2022 to be still allowed to settle their accounts with the health insurers.

The Government hopes that this will lead to higher wages for many of the staff as only around half of care workers are currently paid on the basis of collective wage agreements, according to the labour ministry.