A new analysis reveals a notable shift in the landscape of German social welfare, with the number of individuals supplementing their income with citizen’s allowance (Bürgergeld) rising for the first time since 1990. According to a recent, unpublished report by the Institute for Economic Research (IW Köln), approximately 30,000 more individuals are relying on the allowance to top up their earnings, reversing a long-term decline. In 2010, the number stood at 1.4 million, shrinking to below 800,000 by 1990.
The increase is predominantly driven by a rise in foreign nationals receiving the allowance alongside employment. Data from the Federal Employment Agency, analyzed by IW, indicates that roughly 21,000 more employed individuals claiming citizen’s allowance are of foreign origin between November 1990 and November 1991. Conversely, the number of German citizens receiving the allowance has decreased by almost 7,000.
Holger Schäfer, a labor market researcher at IW, suggests that many foreign nationals may have secured employment despite it not fully covering their household needs. He characterized this as a measure of success, demonstrating that individuals are generating some income independently rather than being entirely reliant on the allowance.
However, the findings also underscore a need for reform within the citizen’s allowance system. The analysis suggests that transitioning from part-time or minimal employment to full-time positions is not currently incentivized. This is reportedly due to the financial disincentive; individuals who increase their working hours often have to surrender a significant portion of their incremental earnings.
Opposition figures echoed these concerns, arguing that the current system penalizes those who work. They advocate for reforms regarding supplemental earnings limits and clawback rates within basic income support, aiming to make work more financially rewarding and encourage individuals to move away from reliance on government assistance.
The complexity of individual circumstances also plays a pivotal role. While 800,000 individuals are relying on supplemental income, a significant portion (80,000) are full-time employees who still require assistance. This is primarily due to a high number of dependents within their household, often single parents or families with children, which elevates their essential needs requirements for eligibility.
The Social Democratic Party (SPD) acknowledged the difficulties faced by many employed individuals, emphasizing the need for a higher minimum wage to enable full-time workers to earn a livable income. The party also pledged to address the perception that it prioritizes those who are not working, reaffirming its commitment to supporting employed individuals through better wages and targeted support.
The German government is currently planning a broader reform of citizen’s allowance, aiming to reshape it into a new basic income support system. This reform includes strengthening job placement services, improving support for job seekers and potentially tightening participation requirements and sanctions. Currently, approximately 5.5 million people in Germany receive citizen’s allowance.