Germany: The timely implementation of the new support allowance by the Federal Employment Service is up in the air

The Federal Employment Agency (BA) doubts that the new allowance under the title “citizen’s income” can start in January next year, as planned by the federal government, according to Handelsblatt.

Renaming the IT systems alone – the terms “Arbeitslosengeld II” (unemployment benefit II) and “Sozialgeld” (social benefit) will be replaced by the term “Bürgergeld” (citizen’s income) – would already cause a significant effort and could implemented only gradually, according to the Nuremberg-based organization’s announcement on the proposed law, which the Federal Ministry of Labor published on its website.

Already now, the “work centers” of the federal employment service face special challenges from caring for Ukrainian refugees. In addition, the development of energy and consumer prices is expected to lead to an increase in the number of benefit recipients, whose unemployment benefits or income must be supplemented. In this mixed situation, the smooth implementation of the introduction of the Citizen’s Income Law on January 1, 2023 is not possible, the statement continued. “In this context, BA supports the introduction of Citizen’s Income on 1 July 2023.”

The “citizen’s income” will reform basic benefits for jobseekers, colloquially known as Hartz IV.

Among other things, a two-year waiting period is foreseen, during which the assets of the beneficiaries of benefits will not be affected, as long as they do not exceed the amount of 60,000 euros. The adequacy of their housing will also not be checked. In addition, the “job centers” should no longer place the beneficiaries of the “citizen’s benefit” in the first available job, but will offer them more opportunities, for example, to obtain professional qualifications.

The Federal Employment Service welcomes the two-year waiting period and the planned increase in minimum assets, “as they relieve citizens of the burden of securing a livelihood, especially in transitional periods”. This will allow us to focus on the specific integration steps that need to be taken.

The Nuremberg-based organization considers the funding provided in the government’s 2023 federal budget plan insufficient. If the budget remained at the planned level, the newly created incentives to promote continuing vocational education and training could not be offered with hopeful way. Support for the long-term unemployed could also not be maintained at the current level.

The Confederation of German Employers’ Associations (BDA) had strongly criticized the planned social reform. Because assets and housing will not be affected at first, the citizen’s income will become “a largely unconditional basic income” within the first two years, according to the association’s announcement. In view of the shortage of labor and skilled workers, this is a “fatal mistake”. The proposed regulations “are massively at odds with the fundamental principles of the welfare state”, criticizes the BDA. Its CEO Steffen Kampeter spoke of a “declaration of state bankruptcy”.

Criticism is also leveled by the municipalities, which operate the job centers partly jointly with the BA and partly alone. The citizen’s income would systematically reduce incentives to work. “This can no longer be explained to workers in the lower income groups,” the German Association of Regions said in a statement. The fact that during the first two years the assets are only calculated from 60,000 euros “is not compatible with the meaning and purpose of a tax-funded minimum living guarantee”.

Both the Landkreistag and the BA accuse the federal government of knitting the law with a hot needle. The associations had 14 days to submit their comments. This deadline, especially during the summer holidays, is “unreasonably short” for such an important and, at 125 pages, very extensive piece of legislation.