According to a new study by the Institute of German Economy (IW), the standard rate for basic income support (Bürgergeld) is unlikely to be increased for a second consecutive year in 2026. The findings, reported by “Welt am Sonntag” suggest a potential stagnation or even reduction in the rate.
The study’s author, Stefanie Seele, explained that the previously implemented adjustments, intended to protect recipients from inflation, may have inadvertently overcompensated. The reform of the adjustment mechanism in the Bürgergeld law in 2023 doubled the link between the standard rate and the previous year’s price development. This approach, while aiming to provide inflation protection, can distort the impact of short-term price fluctuations and fails to account for anticipated inflation.
This mechanism resulted in an underestimation of price development in 2023 and, conversely, a disproportionate increase in 2024 relative to the slowing inflation rate. Calculations by the Institute for Employment Research (IAB) last year also suggested that the current level of basic income support could, theoretically, be too high.
The potential outcome has drawn criticism from political figures. Timon Dzienus, spokesperson for the Green Party’s Committee on Labour and Social Affairs, argued that the standard rate shouldn’t be treated as a political tool, emphasizing its role in securing basic needs. Dagmar Schmidt, Deputy Chair of the SPD parliamentary group, echoed this sentiment, stating that the official calculations and potential adjustments will be closely monitored.
Verena Bentele, Chair of the social welfare association VdK, deemed a further stagnation unacceptable, asserting that the standard rate is fundamentally too low. However, Seele believes the new calculation method aims to prevent the standard rate from becoming a recurring point of contention. IW proposes a revision of the progress mechanism to expedite reactivity to price developments.
One potential solution suggested by the IW involves utilizing the average of Consumer Price Index forecasts for the subsequent year. This would enable adjustments to react promptly to current price developments and in smaller increments, but on a more regular basis. This approach, according to Seele, would help to avoid excessive adjustments like those experienced in 2024 and subsequent stagnation periods.