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Labor-Related Incentives

Apart from investment incentives for capital expenditure, labor-related incentives can play a significant role in the operational cost structure of a new business. There are several types of labor-related incentive programs available that correspond with the different stages of a company’s human resource needs. They include recruitment and training support, as well as wage subsidies.

Time Frame for Labor-Related Incentives

 

General programs are run by the Federal Employment Agency in cooperation with the German states. Many labor-related incentives are co-financed through EU structural funds, which define the objectives of these programs.

Recruitment Support

Newly founded companies must naturally hire new employees. In Germany, companies are supported by more than 800 local employment agencies. Regardless of the qualification level required for the offered position, the agencies can support companies in finding new personnel. Recruitment support ranges from pre-selecting applicants to managing assessment centers. These services are free of charge.

Pre-Hiring Training

Before investors formally hire new personnel, the future employees often need to participate in qualifying training measures. Usually these qualifying programs are organized by the local employment agency in close cooperation with the investor.

However, the program can also be organized and run by specialized external institutions. Up to 80 percent of the eligible costs of these training programs can be covered by regional program managing authorities. In this context, the employment agency fully pays all labor and training costs.

Wage Subsidies

There are wage subsidies specifically aimed at integrating the long-term unemployed and the unemployed under the age of 25 into the workforce. Employers can be granted a direct cash payment, which is paid as a proportion of the worker’s wage. The grant can cover up to 50 percent of wages, including social benefits, for up to twelve months from the time of hiring.

If disabled or elderly persons are employed, the grant amount can reach a maximum of 70 percent of wage costs. In return, investors have to grant long-term employment contracts.

On-The-Job-Training

There are a variety of on-the-job training programs available. Companies can be supported with subsidies which cover up to 50 percent of all training costs. Small companies can even obtain financial support covering up to 80 percent of these costs. EU notification is required if the granted sum exceeds EUR 1 million for a single company.

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