Chancellor Merz and Minister of Labor Bas have agreed on the details of the reform of citizens’ benefits. In some places there will be further tightening of the new basic security. Now there is also a concrete savings calculation.
About a month ago, the Union and the SPD announced an agreement on the main controversial issue regarding the reform of citizens’ benefits. However, the relevant laws are still far from being implemented. However, Chancellor Friedrich Merz (CDU) and Labor Ministry Bärbel Bas (SPD) agreed on further details on Wednesday.
The cancellation of citizenship benefits for Ukrainians who fled to Germany since April 1 attracted the most attention. As their special status is removed, they will be treated like asylum seekers in the future. However, the potential for government savings is small. In the future, states and municipalities will pay asylum seekers benefits, but will receive compensation from the federal government.
Currently there is a concrete savings law draft to reform benefits for citizens
In the reform from citizens’ money to basic security, potential savings are now measured more precisely in the new version. If the number of beneficiaries falls by 100,000, “this could result in a significant reduction in spending within the SGB II jurisdiction,” the document said. In particular, based on average pay entitlements, living costs, accommodation and heating allowances, as well as social security contributions will be reduced by approximately 850 million euros per year.
This number has recently been circulating in the Ministry of Manpower, but now for the first time it is in a newspaper coordinated with the Chancellor. For the double-digit billion sum that Merz promised during the election campaign to be saved, nearly 1.2 million people would have to be excluded from citizen benefits.
Basic security will only save a lot through a better economy
Merz, Bas and other coalition politicians have stated lower savings targets in recent months. The Chancellor said in October that with 100,000 people leaving citizenship benefits and entering the job market, the country would save 1.3 to 1.5 billion euros. Either way: to achieve significant savings, hundreds of thousands of the more than 5 million standard beneficiaries will have to get to work.
The updated draft law provides a realistic assessment: “A prerequisite – also for this bill to take effect – is an economic recovery that increases labor market capacity and significantly increases employment opportunities for beneficiaries.”
These savings are also made more difficult by small but interesting changes compared to the October version: The updated draft now provides for an additional cost of 50 million euros for administration; in the previous paper, an additional cost of 48 million euros for the reform was planned.
Tightening of arbitration procedures with employment centers
As well as the numbers, there are now also some details about what citizen benefits reform should look like. Among other things, there is a tightening of arbitration procedures – they should be abolished. The arbitration procedure was only created during the last reform of citizens’ benefits.
This is intended to resolve disputes between job centers and beneficiaries outside of court. If, for example, there is a dispute about how many applications a citizen beneficiary should write, an agreement must be reached on an equal footing through an arbitration procedure.
In May, the Institute for Labor Market and Employment Research (IAB) published an interim assessment of the instrument. Conclusion: Arbitration procedures are rarely used, and job center management is somewhat wary of such instruments.
This may be one of the reasons why the coalition has now agreed to abolish the arbitration procedure. Therefore, job centers must be able to act “more quickly, more reliably, and less bureaucratically,” according to the latest draft law.
The law may not be in cabinet until December
Compared with the October version, there is a greater commitment in the initial interviews of citizens at job centers: those entitled to benefits must come in person. So far there are still exceptions to this.
However, one thing remains clear: this bill still has a long way to go. Originally the plan was supposed to be approved by the cabinet this week. Some lawmakers now predict the group will not address the issue until mid-December. Until now, the association trial is still pending.
During this process and after submission to the Bundestag, further changes to the legal text are possible. There may be another hurdle within the SPD: On Monday, many members of the Social Democratic Party submitted a membership petition opposing the reform of citizens’ benefits.
