6. Social Insurance

Question 1

social insurance and taxation

Answer 1

• unemployment: federal agency
• pension: federal agency
• health: health insurers
• workplace accident

Question 2

insignificant employment

Answer 2

• ‘mini-job’: monthly wage up to 450
• no health, unemployment insurance; employers pay a lump sum fee into health insurance
• employee can apply for exemption from pension insurance
• lump sum fee income tax instead of individual tax rate possible

Question 3

employers’ / employees’ share

Answer 3

• idea of social insurance: employer / employee bear 50% each of the contribution
• employer’s contribution to health insurance is curbed
• both sides’ contributions refer to a limited parts of gross wage
• employees who earn more than a lower limit are allowed to buy private health insurance instead of public health insurance

Question 4

benefit of social insurance contributions

Answer 4

• creates an utility for the workers

→ workers are willing to work for lower wage since they receive the wage and the additional benefit

Question 5

burden of social insurance contributions

Answer 5

social insurance is mandatory