IEF Faces 160 Million Euro Financing Gap

Labour Minister Korinna Schumann faces a 160 million euro IEF deficit as reserves drop to 30 million euros by the end of 2026.

The Insolvenz-Entgelt-Fonds (IEF), which secures employee wages and severance during insolvencies, faces a 160 million euro financing gap. Although the fund started 2026 with 385 million euros, reserves are projected to fall to 30 million euros by year-end. With 2027 expenditures estimated at 350 million euros and annual revenues at 162 million euros, Labour Minister Korinna Schumann must ensure a balanced budget. The shortfall follows a 2022 decision by former Minister Martin Kocher to reduce the IESG surcharge to 0.1 percent. Schumann can adjust the surcharge, currently averaging 54 euros per employee, or secure loans to cover the gap. These financial challenges emerge as the government plans to reduce non-wage labor costs by two billion euros in 2028.