At the moment we don’t know exactly what kind of reforms will be carried out. But constitutional questions are expected to be raised. But ultimately, this depends on the specific design of the planned regulations. However, the decision of the Federal Constitutional Court in 2019 regarding unemployment benefit sanctions II clearly shows the tension between ensuring a subsistence level on the one hand and the possibility of a complete reduction in benefits on the other.
Among other things, people who miss appointments three times will be able to have their benefits completely withdrawn in the future, and those who refuse them completely will sometimes not have their accommodation paid.
There seems to be a great need in society to make citizens’ money a little tighter because it is considered too generous. Therefore, changes are also planned for asset waiting periods and housing costs.
Many believe that citizen beneficiaries earn a living at the expense of the state. Based on your experience, does this correspond to reality?
As a social judge, I have practically never encountered so-called “total rejecters.” Estimates show that not one percent of all community beneficiaries refuse to participate. However, there are many people with psychological problems, anxiety disorders and disabilities who have difficulty keeping appointments or working for this reason.
However, 3.8 million of the 5.2 million recipients of citizen benefits are considered able to work.
Employable means people can work three hours a day. Their performance often does not match the needs of the labor market.
More than 800,000 people are top-up workers, meaning they can work. Can at least these people be better integrated into the job market?
So-called add-ons come in many variations. This includes many women who work part-time; they are limited by inadequate child care. A single breadwinner with a large family can also receive additional citizen’s benefits with full-time work if he earns only the minimum wage. It is certainly a real goal of the federal government to do more to combat undeclared work.
Are harsher penalties necessary?
That’s not my problem as a social judge. I would like to see better discussion of the social security system as a whole and not give the impression that it is dilapidated, excessive, or unfundable. Young people are unsure whether they will still receive the pension funds that will guarantee their livelihood or whether the surgery will be paid for at a later date. This uncertainty surprised me. It cannot be denied that the social security system needs to be reformed in some areas, but we are not heading towards disaster. This hysteria is too much.
At a certain income threshold, the extra work is almost pointless because state benefits are no longer available.
This is not a realistic assessment of how people behave in relation to work. Citizen money is an independent and coherent system. At the same time, there are upstream benefits such as child allowance and housing allowance. It is true that these systems are not optimally coordinated with each other. However, I don’t think it makes sense to relax additional income rules in general, as has been suggested in some cases. This means that the right to tax-financed social benefits will emerge among the people.
The Ifo Institute counts more than 500 social benefits. Do you still have a general idea?
I can’t list all the services for you on an ad hoc basis. At the same time, standardizing services and systems is not trivial. The coalition agreement states, for example, that housing allowance and child allowance should be combined. Reasonable simplification goals for citizens. However, the federal government is responsible for one service and the municipal government is responsible for another service. There are already constitutional questions raised, and there are also different IT systems.
Where would you start to simplify the system?
What is important is the difference between social insurance claims, for which contributions are paid, and tax-financed benefits. Therefore, a certain level of complexity is inevitable. In the case of tax-financed benefits, regulations regarding citizen benefits – namely basic security for the future – and social assistance for people who are unable to work should be standardized. I would also like to see federal departments take responsibility for all social laws to avoid attrition losses. Currently, for example, the Ministry of Construction is responsible for housing benefits and the Ministry of Families is responsible for child benefits and not the Federal Ministry of Labor and Social Affairs, even though these benefits are financed only by taxes.
When paying money to the state, citizens always have to deal with the tax office. Why isn’t it easy otherwise?
Such a model might be applicable to tax-financed benefits, but it is not possible for social insurance, simply because of self-administration. We have a system with many components. Take Bafög for example: It is intended to advance education, not to secure one’s existence. That’s why you can’t just combine these benefits with citizens’ money. Otherwise, politics tends to take a different path. If refugees from Ukraine were now assigned to the Asylum Seekers’ Allowance Act, then there would be two authorities who would be responsible, not employment centers. The city government pays benefits and the Federal Employment Agency arranges job placement.
Currently you have to fill out forms for each authority individually, and income is calculated differently for each social benefit. So nothing can be changed about it?
Yes, but it doesn’t happen that fast. Of course, the definition of income is stricter when it comes to citizen’s allowances compared to, for example, parental allowances. Reforms here must be considered carefully. However, a modular revenue concept that is based on existing data and allows for quick revenue calculations is feasible. The most important thing is a common IT system so that authorities can exchange data efficiently. Digitalization requires standard solutions. This also applies to court documents, which we can more or less read well here.
Let’s address the issue of pensions: How unfair is this system to the younger generation?
What bothers me a little is the tone of your question, which has a negative connotation towards the pension system. In principle, the pay-as-you-go system is a solid and proven principle. Of course, changing demographics present us with challenges. I also believe that one day the retirement age should be raised to more than 67 years. I assume that this development will continue given the increase in life expectancy. The status quo is only regulated in the coalition agreement until 2031.
And will the increase continue at the same rhythm after that?
How exactly will depend on several factors, such as immigration or value creation. But we also have to talk about other adjustment factors. For example, you should think about whether pension funding is decoupled from wage developments and whether inflation compensation is sufficient. These are all elements you can and should talk about objectively without foaming at the mouth. And not with a generational onslaught like this: Boomers taking everything from us or younger generations not wanting to work as much. I have three children and three grandchildren. I want us all to be fine and continue to be able to rely on social security.
Why are we suddenly talking about justice at every corner?
For me as a judge, justice is an important word. There is an evil sentence from civil rights activist Bärbel Bohley: The people want justice and the rule of law. We live in times filled with many reasons that give rise to uncertainty: the corona pandemic, global politics and the climate crisis. In addition, there are structural changes, for example due to digital change. People can no longer believe that they will be able to do what they have been trained to do their whole lives. In situations like this, we tend to question whether the other person is actually better off and whether it is fair.
Do you think politics is being pushed too far by criticism of the welfare state?
It is not my job as President of the Federal Social Court to evaluate political actions. With regard to the Commission, which is supposed to make reform proposals for the welfare state, I can say: It is an excessive expectation that very large reform proposals will now be realized in a very short time by various bodies without a clear decision-making structure. This cannot be achieved in this form. But the Commission can start a process that can make a difference in small steps. The welfare state is always in need of reform and can be reformed.
Disappointment with future reforms is inevitable?
There is an accelerating spiral in the discourse: someone has an idea about what needs to be changed, and then it has to be implemented immediately. Regarding retirement, we are also talking about generations who have accumulated their rights over a long period of time. You can’t do it one way at a time. Recent changes to maternal pensions also show that retroactive intervention on pension history is difficult: the complete insurance history in tens of millions of cases would have to be thoroughly rechecked, to obtain half a contribution point. There is 50 million euros in administration costs alone, in addition to five billion a year for the mother’s own pension.
Which reform do you most want?
Sociologist Niklas Luhmann says: Complexity is not a rational goal of evolution, but a byproduct of it – and complexity can also be further reduced. I want a culture where we talk about necessary reforms without fear.
