Germany to cut parental allowance for higher-earning families from 2024
From 2024 onward, families with an income higher than €150,000 will no longer receive parental allowance (Elterngeld) in Germany.
In order to trim its annual budget, Germany's coalition government made the decision on Wednesday along with other cost-saving measures.
Previously Elterngeld was available to families who earned a combined total of €300,000 in taxable income per year, or single parents with an income of less than €250,000.
Family Minister Lisa Paus of the Greens estimated that the move would impact 60,000 families. But she justified the cut, saying it was necessary to avoid dipping into any benefits for lower income families.
READ ALSO: Who is affected by Germany’s proposal to cut Elterngeld eligibility?
The controversial decision would also give the German government €150 million more leeway next year. In 2025, savings of €400 million are expected, followed by €500 million in each of the following years.
The cut has still been heavily criticised, both before and after the it was officially decided on Wednesday.
CSU Secretary General Martin Huber described it as a "slap in the face for many young families", pointing out that young women with a good education would in particular bear the brunt of the decision.
"We must not only take care of those who need (monthly) transfer payments, but of everyone," said Dorothy Bär, the deputy leader of the CDU/CSU parliamentary group.
"High earners should also choose to have children," she added. "The parental allowance also serves this purpose."
Last year, according to Germany’s Statistical Office, 1.8 million in Germany received Elterngeld, the majority of them women (just under 1.4 million).
How does Elterngeld work?
In Germany, those who work less or not at all after the birth of their child receive Elterngeld for up to 14 months. New mothers who are employees also receive fully-paid Mutterschutz, in which the employer pays in full for six weeks before the birth and eight weeks afterwards.
Elterngeld, available to both mothers and fathers, is intended to provide financial support for families and single parents, and to give parents the opportunity to take time for their new child, as the Ministry for Family Affairs wrote.
The amount of Elterngeld depends on how much the respective parent earned before their child’s birth, but is capped at €1,800 per month.
Since its introduction in 2007, Elterngeld has not been increased. Bär also called for it to be heightened for all families in order to keep up with inflation.
READ ALSO: Everything you need to know about parental leave in Germany#
A woman takes several euro notes out of her wallet. Photo: picture alliance/dpa | Jonas Walzberg
Increasing low birth rates
One of the original purposes of Elterngeld, as pushed by the Social Democrats upon its introduction 16 years ago, to try to increase the low birth rate, especially among higher-earning men and educated women.
In 2007, the birth rate in Germany was 1.36 children per woman - one of the lowest in the world - and now stands at 1.46.
The benefit functions primarily as income compensation for the parent who stays at home. For women in particular, it's meant to reduce the risk of financial dependence. At the same time, it's supposed to make make it easier for young families to reconcile family and work.
An incentive was created for the higher-earning parent (usually the man) to also take parental leave. Therefore, the law was seen as an important way to promote a more equal division of childcare.
READ ALSO: More than two-thirds of mothers 'currently employed' in Germany
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In order to trim its annual budget, Germany's coalition government made the decision on Wednesday along with other cost-saving measures.
Previously Elterngeld was available to families who earned a combined total of €300,000 in taxable income per year, or single parents with an income of less than €250,000.
Family Minister Lisa Paus of the Greens estimated that the move would impact 60,000 families. But she justified the cut, saying it was necessary to avoid dipping into any benefits for lower income families.
READ ALSO: Who is affected by Germany’s proposal to cut Elterngeld eligibility?
The controversial decision would also give the German government €150 million more leeway next year. In 2025, savings of €400 million are expected, followed by €500 million in each of the following years.
The cut has still been heavily criticised, both before and after the it was officially decided on Wednesday.
CSU Secretary General Martin Huber described it as a "slap in the face for many young families", pointing out that young women with a good education would in particular bear the brunt of the decision.
"We must not only take care of those who need (monthly) transfer payments, but of everyone," said Dorothy Bär, the deputy leader of the CDU/CSU parliamentary group.
"High earners should also choose to have children," she added. "The parental allowance also serves this purpose."
Last year, according to Germany’s Statistical Office, 1.8 million in Germany received Elterngeld, the majority of them women (just under 1.4 million).
How does Elterngeld work?
In Germany, those who work less or not at all after the birth of their child receive Elterngeld for up to 14 months. New mothers who are employees also receive fully-paid Mutterschutz, in which the employer pays in full for six weeks before the birth and eight weeks afterwards.
Elterngeld, available to both mothers and fathers, is intended to provide financial support for families and single parents, and to give parents the opportunity to take time for their new child, as the Ministry for Family Affairs wrote.
The amount of Elterngeld depends on how much the respective parent earned before their child’s birth, but is capped at €1,800 per month.
Since its introduction in 2007, Elterngeld has not been increased. Bär also called for it to be heightened for all families in order to keep up with inflation.
READ ALSO: Everything you need to know about parental leave in Germany#
Increasing low birth rates
One of the original purposes of Elterngeld, as pushed by the Social Democrats upon its introduction 16 years ago, to try to increase the low birth rate, especially among higher-earning men and educated women.
In 2007, the birth rate in Germany was 1.36 children per woman - one of the lowest in the world - and now stands at 1.46.
The benefit functions primarily as income compensation for the parent who stays at home. For women in particular, it's meant to reduce the risk of financial dependence. At the same time, it's supposed to make make it easier for young families to reconcile family and work.
An incentive was created for the higher-earning parent (usually the man) to also take parental leave. Therefore, the law was seen as an important way to promote a more equal division of childcare.
READ ALSO: More than two-thirds of mothers 'currently employed' in Germany
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