The German government has reached an agreement on a legislative proposal aimed at encouraging work after retirement.

According to the draft law, retirees who decide to work again could earn up to two thousand euros per month without having to pay tax, writes portal N1. The aim of the measure is to alleviate the acute labor shortage in Europe's largest economy.

The new regulation is expected to enter into force at the beginning of 2026. Estimates show that due to lost tax revenues, the state budget will be reduced by around 890 million euros each year from 2026 to 2030. A demographic analysis by the Ministry of the Interior warns that by 2030, the number of working-age residents in Germany will be lower by as many as 6.3 million compared to 2010. It is stated that such a trend will inevitably lead to a decline in gross domestic product per capita because the number of workers per retiree will continue to fall.

A number of European countries are facing the same problem and are implementing pension reforms to stabilize the labor market and reduce pressure on the pension system. However, this is a socially sensitive issue that carries significant political risks. This is also shown by the example of France, where Prime Minister Sébastien Lecornu decided this week to temporarily suspend the 2023 pension system reform. The reform will be reconsidered only after the 2027 presidential elections, because its postponement represented a key condition of left-wing lawmakers for the political survival of the French government.