German government decides to end 'citizens' income' welfare benefit

The German government has decided to end the citizens' income welfare benefit in its current form, as it makes way for a new system.

The Cabinet gave the green light on Wednesday to a draft law by Labour Minister Bärbel Bas and thus approved the new allowance, dubbed the basic jobseeker benefit.

This will impose significantly stricter rules on the approximately 5.5 million former recipients of citizens' income.

With the Cabinet decision, the legislative process is set to continue in both houses of the German parliament, the Bundestag and Bundesrat. There is significant resistance to the reform plans at the grassroots level of the junior coalition partner, the Social Democrats (SPD).

Details regarding the planned complete elimination of benefits if recipients fail to cooperate have caused friction between the coalition made up of the conservatives and the SPD.

The benefit is to be stopped if recipients of state funds are unreachable, namely if three invitations to appointments at job centres are missed.

They could also face the loss of housing cost coverage. However, according to the plans, authorities must give those affected the opportunity for a personal hearing, for example through a phone call or a visit. Psychologically ill individuals are also to be protected from losing benefits.

Stricter measures

The state will take stricter measures regarding the assets of those affected, according to the plans. The draft law proposes the abolition of a fixed grace period for asset protection. Primarily, personal income and assets are to be used before the basic jobseeker benefit is provided. In the future, the amount of protected assets will depend on age.

Accommodation costs are to be recognized to a limited extent.

The primary goal of job centres is to place individuals in jobs. If further training appears more promising, it should continue to be prioritized under the new plans.

Minimal savings

Originally, it was hoped that the new system would deliver significant savings for the government, especially by the conservative bloc.

In 2026, the federal government, states, municipalities and the Federal Employment Agency are expected to save €86 million ($101 million), then €70 million.

In contrast, in the following years, increased costs of even €11 million and €9 million are expected to be incurred.