Investing in the future – despite the difficult economic environment

The Board of Directors today approved the budget of the Federal Employment Agency (BA) for 2025, which is made up of employers’ and employees’ contributions to unemployment insurance.

15 Nov 2024 | Press release no.46

The budget strikes the necessary balance between cost awareness at a time of economic challenges and investment in supporting transformation. Companies, those in gainful employment and those who are currently unemployed can rest assured that all the necessary support will be available to them, despite the difficult economic environment.  For these reasons, the 2025 budget will focus on:

  • Continuing vocational training to help ensure the availability of skilled workers
  • Investments in digitisation and automation within the BA itself, and
  • Cost-aware financial management due to the difficult economic situation

Income and expenditure

In its planning for its 2025 budget, the BA is set to have a total income of 46.5 billion euros and expenditure of 47.8 billion euros. The resulting deficit will be offset by a withdrawal from the BA’s reserve fund, which is expected to amount to just 1.5 billion euros by the end of 2025. In the light of this situation, the BA will be exceptionally cost-aware in 2025.

1.6 billion more euros to help ensure the availability of skilled workers

Despite its cost-aware approach, the Board of Directors is sending out a clear signal that the tight budget will not lead to cuts to the necessary areas of funding. The German economy is currently in the midst of a transitionary phase, while at the same time also experiencing a very difficult period in terms of economic development. Ensuring stability is therefore both necessary and important. For this reason, approximately 12.0 billion euros is to be made available for the promotion of employment in 2025. This is an increase of 1.6 billion euros compared with the amount spent in 2024. The key focus of this funding will be on ensuring the availability of skilled workers. Approximately 3.4 billion euros will be allocated to continuing vocational training, 1.3 euros billion of which will be spent on the qualifications-based training for employed people alone.
The budget also includes 900 million euros for the assumption of responsibility for further training and rehabilitation measures for persons entitled to benefits according to Book II of the German Social Code (Citizen’s Benefit), which will continue to be provided by the tax-funded Jobcenters until the end of 2024.

Just under 900 million euros for digitisation and automation

886 million euros is being set aside for IT and for the further digitisation of the services provided by the BA. The BA will further expand its increasingly wide range of online services in the interests of providing customers with easy access to a variety of services and further accelerating the reduction of bureaucracy. Customers are already able to use and access all the key services of the BA online, including 67 to which the Online Access Act applies.

Higher spending on Unemployment Benefit

This year’s increase in unemployment is weighing heavily on the BA’s budget. This is joined by the factor of the increased wages and salaries, which lead to entitlements to higher amounts. The budget for 2025 provides for total expenditure of 22.1 billion euros, which pretty much approximates to the expenditure in 2024. By way of comparison: in 2023, expenditure was just 18.8 billion euros. The basis for the planning is the autumn forecast of the German Federal Government, which expects unemployment to reach 2.76 million in 2025.

Tough economic environment and statutory responsibilities affect the budget of the BA

The economic downturn is having a major impact on the labour market, which is, in turn, affecting the budget of the Federal Employment Agency. In addition to this, the BA has been assigned additional statutory responsibilities. This means that in 2025, the BA will be forced to fund some of its planned expenditure by drawing on its reserve fund.

As explained by the Chair of the Board of Directors, Christina Ramb: “The Federal Employment Agency must be able to protect people from unemployment, especially in difficult economic times. The BA also has to be able to prepare for crises and build up a sufficient reserve fund. This is often not possible, however, as the Federal Government has repeatedly assigned the BA new tasks and responsibilities and shifted costs from the budget which is agreed at the federal level to the contribution-based fund. This has to stop. It is also necessary for the Federal Employment Agency to operate economically, frugally and productively. In difficult times, this means a consistent focus on its core area of business, support through digitisation as well as efficient structures and processes.”

Deputy Chair of the Board of Directors, Anja Piel, explains: “The Executive Board and Board of Directors both agree that in turbulent times such as these, if it is to be effective, the BA must act as an anchor for people who need rapid financial support after losing their job. Since work guarantees social participation and the loss of work is invariably a low point in the lives of those it affects, we must put resources aside for providing advice and helping to place people in jobs or training, so that no one is left out in the cold without any support. Supporting people and providing them with qualification-based training must be possible for every individual, regardless of their age or personal situation. Making cuts, which have an adverse effect on our employees, isn’t the right approach. We have therefore advocated for an urgent increase in our staff resources. An effective and resilient Federal Employment Agency isn’t just an anchor that provides security, it is also one of the cornerstones of our democracy.”

Chair of the Executive Board, Andrea Nahles, explains: “The BA’s budget for the year 2025 is based on the premise of being able to take action despite the current economic difficulties. We are expecting a deficit next year due to the difficult economic environment and our assumption of additional tasks. That is why we are determined to be very cost-aware – but without making any cuts to the support we provide to our customers. We will therefore be investing more in qualification-based training and integration services as well as the further expansion of the services that we offer online. We want to focus our efforts on providing advice and helping to place people in jobs or training, preventing unemployment from happening in the first place. We take responsibility for the expedient and correct use of contributions seriously. This also includes speaking out when politicians want us to take on more and more responsibilities.”