The vast majority of cleaning service workers operate in an unofficial capacity.
The vast majority of cleaning service workers operate in an unofficial capacity.
The underworld market for domestic workers in Germany expands more extensively. A study suggests that an astonishing 91% of these workers are operating illegally.
The number of officially documented domestic workers is on a downward trend, while revenues from the black market are on the upswing, as per a report by the Institute for the German Economy Cologne (IW), shared with Funke media group newspapers. This findings reveal a drop of 4.5% in registered domestic helpers, leaving us with approximately 246,700 employees in 2022. Contrarily, the income from these clandestine laborers has surged by 15%, reaching over 11 billion euros, according to the study's authors Dominik Enste and Christina Anger.
For the research, latest data from the Socio-Economic Panel (SOEP) from November and additional statistics were employed. As per SOEP data, around 2.87 million households in Germany employ domestic helpers on a regular basis, and 1.15 million households occasional do so. However, just 246,686 individuals are registered as mini-jobbers with the mini-job center. Only around 44,000 household helpers are subject to social security contributions, as per the Federal Employment Agency.
As per the IW study, families with domestic workers typically have a net monthly household income in the range of 4,300 euros, far exceeding the average (3,200 euros). Depending on the location, experience, and reliability, hourly wages for domestic workers vary between 15 to 25 euros, as per the study. The figures from illegal employment have been rising steadily over the years. While they were around 7 billion euros in 2020, they now stand at 11.4 billion euros. "The share of turnover in the black market is expected to increase in recent years and is estimated to be around 85% by 2024," the study mentions.
"Black market thrives"
The study's authors highlight that registrations with the mini-job center for legal employment are relatively straightforward yet seldom utilized. "The private household is not always perceived as a regular work environment: paying wages during illness or the absence of the domestic worker are uncommon and often unwanted responsibilities," the economists Enste and Anger conclude. For many domestic workers, social security contributions are unattractive, and the bureaucratic burden is also a deterrent. "This leads to the black market continuing to thrive in this sector," the IW researchers explain. They cite France and Belgium, which subsidize prices using voucher models, and Finland and Sweden, which offer tax incentives up to 50%, as potential examples.
Initially, the proposed traffic light coalition had also envisioned a voucher model. The plan was to provide vouchers worth up to 2,000 euros for families with children, single parents, and individuals caring for relatives. Despite agreeing on a voucher model in the coalition agreement, it was never implemented. The IW economists now estimate the cost of such a model to range between 4 to 5 billion euros.
The study conducted by the Institute of German Economics Cologne (IW) revealed that the black market for domestic workers in Germany is significantly thriving, with the share of income from illegal employment estimated to increase to around 85% by 2024. The IW researchers attribute this continuation of the black market to factors such as the unattractiveness of social security contributions and the bureaucratic burden for many domestic workers, which often lead them to opt for illegal employment instead.