Chancellor to Present Upcoming Proposal for Citizens' Benefit Amendment
The German budget for the current year has been set, with a total planned expenditure of approximately 502.5 billion euros, as decided by the Bundestag today. Notably, the budget does not include any changes to the new debt in the core budget.
Amidst the budget discussions, the planned reform of Bürgergeld, Germany's citizen's allowance, has been a topic of interest. Chancellor Friedrich Merz (CDU) and Federal Minister of Labour, Barbel Bas (SPD) have announced that Union and SPD will agree on the key points for such a reform this year. The coalition contract includes a clear agreement on this matter.
However, doubts have been raised by economics professor Enzo Weber from the Institute for Labor Market and Vocational Research (IAB) of the Federal Employment Agency. Weber questions the feasibility of significant savings by directly reducing citizen's allowance payments. According to Weber, any savings would only be possible if there is more economic growth and fewer citizen's allowance recipients.
The planned reform of Bürgergeld aims to replace it with a basic security. This new system would have different waiting periods, feasibility rules, and a priority of mediation. Chancellor's Office Minister Thorsten Frei believes that a savings target of five billion euros for the reform of Bürgergeld is very realistic.
Federal Minister Bas will submit a proposal for the reform of Bürgergeld in the coming days. The reform, scheduled for fall 2025, also aims to integrate and streamline Bürgergeld, housing allowance, and child supplement, while strengthening work incentives and reducing bureaucracy. It is worth noting that the monthly rates of Bürgergeld will remain stable with no increases, as planned.
The reform discussions focus on budget sustainability and reforms to contain rising costs. With Bürgergeld costs projected at about 52 billion euros annually, calls for reform to save costs have been raised. However, no explicit five-year savings target has been detailed publicly yet.
New loans of almost 82 billion euros are still pending in the core budget. These loans are expected due to loans from special funds for the Bundeswehr and infrastructure. Despite this, the planned expenses for the current year are around 460 million euros less than the federal government initially planned, thanks to final changes made in a reconciliation meeting by the House of Representatives' Budget Committee.
In the past, Merz and Bas had expressed opposing views on the financial burden of the social state. Merz had stated that the social state is no longer affordable, while Bas rejected this as "bullshit". Despite these differences, they have managed to find common ground in the planned reform of Bürgergeld.
Thorsten Frei, the Chancellor's Office Minister, emphasized that the Minister will orient herself to this agreement in the coalition contract. The reform of Bürgergeld is a significant step towards modernising Germany's social welfare system and ensuring its sustainability in the long run.
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