As of January 1st, Bulgarians and Romanians will be free to seek work throughout the European Union, which their countries joined back in 2007.
This has prompted fears of a flood or an influx of people seeking welfare payments in richer countries.
Chancellor Angela Merkel's Bavarian allies have reacted by drawing up proposals to toughen social welfare laws, prompting criticism from Social Democrat politicians – now their coalition partners in the national government.
The Christian Social Union (CSU), sister party to Merkel's Christian Democrats (CDU), are set to discuss at a meeting in January, moves to restrict all welfare payments to immigrants for the first three months after arriving in Germany. They are also looking at tougher penalties for fraud including deportation and refusal of re-entry.
"Those who cheat are out," was one CSU slogan according to the proposals reported in German media.
But members of the Social Democrats (SPD), partners in Merkel's new left-right "grand coalition" government, blasted the initiative as dangerously populist.
"If you play that kind of melody, you're allowing the right-wing extremists to dance," SPD deputy Michael Hartmann told Sunday's Tagesspiegel newspaper.
And SPD deputy leader and the government's integration tsar, Aydan Ozoguz, warned the CSU not to "incite the mood in our society against the poor with false generalizations".
"Those who act as if all people from Bulgaria and Romania were poor and queuing up here for benefits aren't recognizing the many highly qualified people working here for example as doctors or care-givers," she said in a statement Saturday.
The state-run Research Institute for the Federal Employment Agency estimates that the number of Romanians and Bulgarians in Germany could rise from the current figure of 370,000 to between 470,000 and 550,000 when the freedom of movement laws are laxed.
About 10 percent of those already in Germany received subsistence-level payments for long-term unemployed this year. That is more than the population at large with 7.5 percent but fewer than foreigners in the country as a whole with 15 percent.
Germany is Europe's top economic power but suffers from a lack of skilled labour, particularly in its wealthy southern regions including Bavaria.