Large supply gap in the skilled trades

The "golden soil" of skilled trades is losing its luster. At least when you consider the retirement benefits of business owners, says the ifh Göttingen.

This article is part of the special feature on retirement planning – what's worthwhile for tradespeople.

More than 60 percent of owners of skilled trades businesses expect a statutory pension of less than €600. Only one in eight has the prospect of receiving more than €1.000. This is the finding of a study by the ifh Göttingen. Three-quarters of owners of skilled trades businesses spend more money on private pension provision than on statutory pension insurance.

According to the study's authors, significant differences still exist between self-employed individuals in the non-licensed and licensed trades, as well as between small and large craft businesses. Furthermore, a clear west-east divide is emerging.

The objectives of compulsory craftsmen’s insurance are no longer being achieved

The researchers say the original goals of compulsory insurance for craftsmen are no longer being achieved today. Particularly as a result of the 2004 amendment to the Crafts Code, many self-employed craftsmen are no longer subject to compulsory insurance, even though they are considered to be among those most in need of protection.

This group of skilled tradespeople has grown significantly. Many seek pension advice very late in life, even though it makes sense to do so early in their working lives. 

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This is what the authors of the study suggest to improve the situation:

1. Advice: Since general information events and advisory services are relatively poorly received, retirement planning could be addressed in the general business advisory services offered by the Chambers of Skilled Crafts. Particular attention should be paid to the self-employed. They often fail to generate sufficient income, resulting in a lack of retirement planning.

2. Compulsory insurance: Politics could also contribute to improving retirement provision. All major parties had already spoken out in favor of compulsory insurance for the self-employed in the 2017 federal election. According to the authors, this would help avoid distortions of competition and reduce bogus self-employment. They also recommend linking compulsory insurance to a number of earnings points, rather than calculating the compulsory insurance period in months, as has been the case since 1960. A corresponding number of points would guarantee a statutory pension above the basic social security level, which would have to be supplemented by private pension provision to ensure an adequate standard of living.

Source: ifh Göttingen