EXPLAINED: Will Germany’s controversial Bürgergeld still come into force?

On Monday, the German government's plans to reform unemployment benefits were blocked in the Bundesrat. Here's what you need to know.

EXPLAINED: Will Germany’s controversial Bürgergeld still come into force?
Hubertus Heil (SPD), Federal Minister of Labor and Social Affairs, follows the debate on citizen's income in the Bundestag. Photo: picture alliance/dpa | Michael Kappeler

What’s happening?

The government‘s plans to replace the current Hartz IV unemployment benefits system with a new “citizens’ income” from January 1st next year have been voted down in the Bundesrat. In a special session on Monday, several states led by, or in cooperation with, the CDU/CSU voted against the new measure or abstained.

Why is Bürgergeld so controversial?

The opposition Christian Democrats (CDU) and its sister CSU party has opposed the planned Bürgergeld reform from the outset and has been making clear for weeks that it wants to prevent it from coming into force. CDU leader Friedrich Merz refers to the reform as the “so-called citizens’ income” and considers it to be a path toward an unconditional basic income. Bavaria’s regional leader Markus Söder (CSU)  has also repeatedly voiced his opposition and finds the citizen’s income “socially unjust and unfair.”

READ ALSO: Bürgergeld: What to know about Germany’s unemployment benefits shake-up

While the CDU/CSU are in favour of higher standard payments for benefits recipients, their criticism is directed against individual rules, which they argue set the “wrong incentives”.

One of the main sticking points for the Union is the fact that, under the new rules, there will be an initial six-month “trust period” during which claimants would face only limited benefit cuts if they miss several appointments at the job centre or turn down a reasonable job offer.

Bavarian regional leader Markus Söder called it “completely absurd” that, despite a labour shortage, “there might not even be the possibility of motivating someone to take a job.”

Another sticking point is the fact that benefits are to be granted for 24 months even if there are “substantial assets”. Under the new plans, claimants would be able to have €60,000 in savings, and still claim unemployment allowance. 

CDU Secretary General Mario Czaja criticized the amount of the tax-free assets as “deeply antisocial” in regard to families who have worked and paid taxes to finance the citizen’s income. The Federal Audit Office also called the exemption limits “disproportionately high”. 

Another controversial part of the proposed Bürgergeld reforms relates to the home size of the recipients. As with Harz IV, rental costs would be paid by the Jobcentre for recipients of the new citizens’ income, but the first two years would be a grace period, meaning that recipients would not have to downsize their homes. Only after two years, would the Jobcentre be able to demand that claimants seek a smaller home, measuring 45 square meters for a one-person household and 15 square meters for each additional person. 

What will happen now?

Now the mediation committee of the Bundestag and Bundesrat will aim to find a compromise by the end of November – otherwise the citizen’s income could fail completely.

Members of the Bundesrat sit in special session on planned citizen’s income. Photo: picture alliance/dpa | Bernd von Jutrczenka

The Mediation Committee of the Bundestag and Bundesrat is a kind of political arbitration body. If a bill passed by the Bundestag does not receive approval in the Bundesrat chamber, a compromise can be sought here.

READ ALSO: 10 golden rules to know if you lose your job in Germany

The 32 members – 16 each from the Bundesrat and Bundestag – will meet, break down the present law into individual parts and find common lines point by point. If it succeeds, which is usually the case, then the bill must be passed again in its new version by the Bundestag and then also by the Bundesrat.

The committee could meet as early as next week and Federal Labor Minister Hubertus Heil (SPD) stressed that he is now counting on a quick mediation. “With good will on the part of all involved,” a compromise could be found and decided at the next Bundesrat meeting on November 25th, Heil said. He stressed that his hand was “outstretched for a solution.”


Trust period – (die) Vertrauenszeit

Protected assets – (das) Schonvermögen

Apartment size – (die) Wohnungsgröße

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Germany’s Scholz weathers shocks in turbulent first year

A war in his backyard, galloping economic crisis, and unhappy partners at home and abroad -- German Chancellor Olaf Scholz has weathered unprecedented shocks in his first year, while struggling to make a mark on the global stage.

Germany's Scholz weathers shocks in turbulent first year

The ex-finance minister took office promising continuity with the era of Angela Merkel, who ended her 16 years as chancellor a widely respected figure.

But Russia’s invasion of Ukraine has forced him to rip up Germany’s post-war axioms and chart out new economic, defence and geopolitical directions for the country that prizes — and is valued for — its stability and predictability.

“We never before had a government faced with such a dramatically worsening situation, when it came to foreign and security policy, but also of course energy policy,” political scientist Ursula Muench told AFP.

Scholz’s coalition of his Social Democrats and partners Greens and liberals FDP had taken office planning ambitious climate policies and budget restraint.

The designated German Chancellor Olaf Scholz (C), co-leader of the Greens and then designated German Minister for Economy and Climate Robert Habeck (L) and the leader of the Free Democratic FDP party and then designated German Finance Minister Christian Lindner (R) pictured in December 2021 in Berlin after leading members of Germany’s social democratic SPD party, the Greens and the FDP sealed their coalition deal to form a new government. (Photo by Tobias SCHWARZ / AFP)

But as Moscow dwindled its energy supplies in the wake of the war, Germany has had to halt its planned nuclear exit, restart mothballed coal power stations while burning through a budgetary hole in a scrum for oil and gas to replace Russian supplies.

And in a turning point for a country whose role on the world stage was still affected by memories of World War II, Scholz announced a historic shift on defence, vowing to re-arm Germany with a massive boost in military spending.

“Going by the dramatic events this year, he did pretty well,” said Nils Diederich, a political scientist at Berlin’s Free University.

Turning point

But Rachel Rizzo, a senior fellow at US think tank the Atlantic Council’s Europe Center, warned that losing momentum was a danger, even if the initial response was “impressive”.

In this file photo taken on June 16, 2022, Ukrainian President Volodymyr Zelensky and Chancellor of Germany Olaf Scholz shake hands after a press conference following their meeting in Mariinsky Palace, in Kyiv. (Photo by Sergei SUPINSKY / AFP)

“I think not being able to follow through with defence and security commitments is a concern,” she told AFP.

Not only is Germany trying to replenish its own military stocks, it is facing intense pressure from Ukraine to deliver what it has to help in the fightback against Russia.

The defence spending is high at a time when the treasury is also being pressed to help cushion a price shock fuelled by the energy crisis.

Huge investments are also required for the export giant to manage an economic transformation of reliance on cheap Russian energy or Chinese components to a diversified approach.

And governing in a three-way coalition means resolving each challenge inevitably involves squabbles that could unravel the fragile partnership.

Scholz’s government has managed to implement part of its programme, including raising the minimum wage and reforming unemployment benefits.

But with myriad crises not going away, the chancellor’s popularity ratings have suffered.

A survey by the Insa institute published Sunday in tabloid Bild showed 58 percent of Germans are dissatisfied with Scholz — compared with just 22 percent a year ago — and 64 percent are dissatisfied with his government, up from 36 percent.

emmanuel macron and olaf scholz

In this file photo taken on May 9, 2022, German Chancellor Olaf Scholz (R) and French President Emmanuel Macron make their way inside after inspecting an honour guard during a welcome ceremony at the Chancellery in Berlin. (Photo by John MACDOUGALL / AFP) 

‘Going it alone’

As well as disagreements at home, there have been tensions with partners abroad.

European Union allies were upset that Scholz announced a massive 200-billion-euro ($207-billion) energy fund without first consulting them, complaining he should have focused on coming up with EU-wide measures.

Tensions have also arisen in the key relationship between Berlin and Paris over issues ranging from the energy fund to German plans for defence procurement.

Unlike Merkel, who, in her time, was widely respected as the voice to reckon with in Europe, Scholz has so far failed to step into the role on the international stage.

Merkel’s departure “has left a void”, said Eric Maurice, from the Brussels office of the Robert Schuman Foundation.

Scholz is “struggling to make his mark at the European level… He is still trying to find his bearings, he does not have Merkel’s experience.”

In this file photo taken on November 10, 2021 then outgoing German Chancellor Angela Merkel and then German Finance Minister and Vice-Chancellor Olaf Scholz attend a press conference to present the annual report of the German Council of Economic Experts (Wirtschaftsweise) in Berlin. (Photo by Kay Nietfeld / POOL / AFP)

The view Scholz was seeking to “go it alone” was reinforced when he made the first visit to China by a G7 leader since the start of the pandemic in November, accompanied by a delegation of German business leaders.

The chancellor faced accusations he was pursuing the same mercantilist, trade-focused foreign policy of previous German governments, which led to economic ties flourishing with authoritarian Russia, but ultimately left Berlin vulnerable.

As Scholz heads into his second year in the job, many of the open challenges will continue to entangle him.

High energy prices will remain a major problem, particularly for electricity-hungry German manufacturers, said Sudha David-Wilp, Berlin office director of US think tank the German Marshall Fund.

“Ensuring German competitiveness because of the increase in energy costs, particularly for industries like chemicals and steel manufacturing, is the big challenge for Scholz,” she said.

The energy fund “is just a short-term fix. No one knows when energy prices are going to come down to pre-war levels”.