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

The German Bundestag is poised to get rid of the controversial long-term unemployment benefit Hartz IV and replace it with the so-called Bürgergeld. Here's what we know so far.

A person at a job interview in Germany.
A person at a job interview in Germany. Photo: picture alliance/dpa/dpa-tmn | Christin Klose

What’s happening?

The German Bundestag starts debating Thursday on a big shake-up of unemployment support from next year. 

Parliamentarians are considering a proposal from Labour Minister Hubertus Heil, of the Social Democrats (SPD), to reform the controversial Hartz IV unemployment benefit or Arbeitslosengeld II – a programme for the long-term unemployed that the SPD themselves came up with in 2002. 

The plan is to switch to a benefits system based on encouragement rather than sanctions. It will be called Bürgergeld, or ‘citizens’ allowance’ .

The term Hartz IV has long been a major problem for large parts of the SPD. Many people associate the reforms passed in 2005 under Chancellor Gerhard Schröder to be at odds with the Social Democrat’s philosophy of a caring welfare state. 

Here’s a look at the draft plans, what they mean, and the amount of support planned. 

More fairness

The aim of Bürgergeld will be to reform the system to make it fairer to claimants, meaning people will be treated less harshly than under Hartz IV. It will be given to all those who currently receive Unemployment Benefit II or Hartz IV – around 3.5 million people in Germany.

Job centres are to be more generous in dealing with benefit recipients, so that the unemployed can focus on getting back into the labour market as quickly as possible. This means a recipient might be encouraged to take the time to finish an apprenticeship in order to qualify for better paying work, for example.

The government’s proposal provides for an increased rate of support of €502 per month for single people, up from the current €449. Partnered people would receive €451. Benefits would also be available for unemployed people with children, with €420 provided for a child aged 14-17, €348 for 6-13 year-olds, and €318 for children aged 5 and younger. Parents with a teenager working a part-time job earning up to €520 a month would also no longer see their benefits reduced.

In the first two years of receiving Bürgergeld, benefit recipients would also be allowed to stay in their homes without worry – these will not be included in the calculations of what people can receive. 

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

Furthermore, assets of up to €60,000 would not be touched by the state. The concern of many people that they would have to give up their homes or use up their savings if they were unemployed for a longer period of time could therefore be eliminated – at least for the first two years. After that, as before, there could be checks on whether people’s housing situation is suitable (or if it is deemed too big). After the first two years, assets of up to €15,000 would also not be touched by the state.

Reform of sanctions

Sanctions are a big part of the current Hartz IV system, which links the right to receiving welfare payments to certain obligations, like actively looking for work and applying for roles that the job centre recommends. 

If a benefits claimant doesn’t meet these obligations, they get sanctioned with a cut to their welfare payments. 

In the past, there has been massive criticism of these financial punishments that Hartz IV recipients had to fear if, for example, they did not keep to agreements with the job centre.

Labour Minister Hubertus Heil unveils the Bürgergeld plans on Wednesday.

Labour Minister Hubertus Heil unveils the Bürgergeld plans. Photo: picture alliance/dpa | Christoph Soeder

The new system will limit the sanctions to some extent. Heil’s proposal provides for a new regulation which would mean sanctions could not be introduced during a six-month ‘period of trust’ from the time of receipt of Bürgergeld. Payments would not be docked during this period.

After this point, sanctions could come in, but there is likely to be a change of culture. For instance, appointments at the job centre will remain compulsory, but are to become more flexible and informal.

Only those who do not cooperate with the job centre at all will have to fear negative consequences, the government says. “For people who chronically do not keep appointments, there can still be legal consequences,” said Heil.

More opportunities and incentives for further education are also part of Heil’s proposal for reforming the unemployment support system. Among other factors, people will be given more time to acquire a vocational qualification: three years instead of the previous two, under the plans.

READ ALSO: Germany’s plans to ditch sanctions for the unemployed

What’s the reaction?

So far, the Free Democrats reject a change in the calculation formula for monthly payments. “Instead, we have to improve the additional income possibilities,” FDP leader and Finance Minister Christian Lindner told RTL. The pro-business FDP also isn’t happy with easing the sanctions situation.

But social organisations welcomed the changes.

Yasmin Fahimi, chairperson of the German Federation of Trade Unions, said Bürgergeld had “what it takes to largely overcome the old Hartz IV system”.

However, Fahimi called for an inflation-busting increase in the standard rates. 

READ ALSO: Why are Germany’s Hartz IV benefits so controversial?

How will it be paid for?

Heil has so far remained vague about how Bürgergeld would be funded. 

The government has been hemorrhaging money in the past years due to the Covid pandemic, rising inflation and subsequent measures to help the population and as a result of Russia’s war on Ukraine.

If the Bundestag and Bundesrat pass the reform soon according to plan, it will come into force on January 1st 2023. 

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WORKING IN GERMANY

How generous is Germany’s unemployment benefit system?

Germany is often ranked among the top countries for the best unemployment benefits. What are the conditions for getting financial support if you find yourself without a job - and how much can you expect to receive?

How generous is Germany's unemployment benefit system?

If you lost your job – or walk away yourself – there are a few steps to take to ensure that you receive financial support during your unemployment.

How to register

To receive relief when you are unemployed, you must register at the Federal Employment Agency. Once your case is reviewed to ensure you are eligible you can begin receiving unemployment benefits. 

You must visit the Federal Employment Agency (BA, or Bundesagentur für Arbeit) in person or online at the earliest three months before your employment ends.

READ ALSO: What happens to your residency permit if you lose your job in Germany?

If your employer does not provide you with advance notice of your contract termination, then you need to visit the Agency three days after you know of your unemployment. You do not need an appointment. 

There are strict protections against unlawful termination of employment, but not all employers are aware of the rules. If you find yourself unlawfully terminated you may be entitled to a severance payment

If you register too late you could receive a Sperrzeit, or disqualification period which would decrease your unemployment benefits. 

Is unemployment available after quitting your job?

Yes, but you may have to wait for those benefits to kick in. For individuals who resign to find employment elsewhere and need unemployment benefits while looking for their next step, you can also visit the Federal Employment Agency in person or online at the earliest three months before your employment ends. 

The BA will require you to wait three months after your notice period before you can receive benefits, so it is advantageous to schedule an appointment before you leave the job.

This period can be waived if you can show that your job took a toll on your health (with a doctor’s note), your new employment contract was canceled, and / or you can prove you resigned without notice because of employer misconduct like not receiving pay. 

What unemployment benefits are available?

There are two types of unemployment benefits available in Germany. 

  • Unemployment Benefit 1 is an insurance-based benefit available if you contributed to the unemployment insurance system during your employment. You will receive benefits according to your contributions to the system while employed. 
  • Unemployment Benefit 2 or Bürgergeld is a benefit for individuals and families facing financial hardship because of unemployment or low income. This benefit is funded by federal taxes.

READ ALSO: Bürgergeld: Germany’s monthly unemployment benefit to rise by 12 percent

A woman clicks on an online application for Bürgergeld

A woman clicks on an online application for Bürgergeld, Germany’s long-term unemployment benefit. Photo: picture alliance/dpa | Carsten Koall

Eligibility for unemployment

Regardless of which unemployment benefit you are eligible for, you must be a legal resident of Germany, registered as unemployed, actively looking for a job, and between the ages of 15 and 65.  

To be eligible for Unemployment Benefit 1, you must have been employed and contributed to the unemployment insurance system for at least 12 months in the past two years before becoming unemployed.

You may also be eligible for this benefit if you raised a child until the age of three, received sick pay, voluntarily signed up for unemployment insurance while freelancing, or completed voluntary military service, federal volunteering or youth service.

To be eligible for Unemployment Benefit 2, expats who are facing financial hardship must meet the means test criteria set by the job centre. Foreigners must also fulfill at least one of the following scenarios:

  • Registered resident in Germany for at least 5 years
  • Previously received Unemployment Benefit 1, but benefits ran out
  • Worked in Germany for three of the last six months, and are not entitled to unemployment benefit 1

What is covered by unemployment benefits?

Unemployment Benefit 1 is based on previous earnings so it partially covers living expenses and housing. Recipients will also remain covered by health insurance. 

Unemployment Benefit 2 covers essential living expenses including food, clothing, 

It covers rent and heating costs up to the rate set by each state and recipients receive 

Both categories can receive job-seeking assistance, free professional training and counseling to improve job opportunities. 

How much money will I get?

Recipients of unemployment benefit 1 can expect to receive 60 percent of their gross income, or 67 percent if they have children. It is important to note that the money you receive is taxable. Germany also ignores gross income above €90,600 when deciding benefits. 

Bürgergeld recipients can expect up to €563 per month along with the payment of other living expenses and housing. Local authorities set rates for “reasonable” accommodation costs based on the region’s cost of living. Check with your local ‘jobcentre’ to determine what the allotment will be.   

The jobcentre in Berlin Mitte.

The jobcentre in Berlin Mitte. Photo: picture alliance/dpa | Philipp Znidar

How long do unemployment benefits last?

For those receiving Unemployment Benefit 1, assistance typically lasts between 6 to 12 months. If you are over 50, the benefits can last up to 2 years. Still, you could receive less unemployment benefits if you face a Sperrzeit or assistance disqualification period. 

Changes proposed to Germany’s system

And Germany’s unemployment system may face another shakeup. 

That’s because the CDU proposed several changes to Bürgergeld, Germany’s long-term unemployment benefit. The center right party said in a statement it wants to “abolish it in its current form” and rename the program to “Neue Grundsicherung” or New Basic Security. 

What are the proposed changes?

Under the current proposal, stricter sanctions would be established to reduce benefits if appointments at the jobcentre are missed with no excuse or recipients refuse employment. 

The CDU resolution also intends to prevent Totalverweigerer (complete refusers), unemployment recipients who are able to work but refuse to do so, from receiving any benefits. 

Germany’s Constitutional Court decided in 2019 that a 100 percent cut was not constitutional. But the country’s highest court found that a 30 percent cut in benefits could be permissible but anything higher than 60 percent was unreasonable. It is unclear how the CDU plans to clear this hurdle when implementing the plan. But for “total refusers” it may be permissible to fully cut benefits

The SPD and the Green party rejected the CDU initiative. SPD leader Lars Klinbeil rejected the plan in a statement to Tagesschau

“The amount of citizens’ money is determined by a constitutional court decision. This has now been implemented, with the consent of the Union, by the way,” he said. “We need to have other debates than attacks on the welfare state.”

The federal and state governments also met to discuss potential changes to refugee policy. 

New Ukrainian refugees may also no longer receive Bürgergeld, instead the group will receive monetary assistance through the Asylum Seekers’ Benefits Act, according to a recent CSU proposal. 

Under this proposal a single asylum seeker would be entitled to a maximum of €460 in monthly assistance through the Asylum Seekers’ Benefit. This represents a slight decline from the €563 Ukrainian refugees could receive previously through Bürgergeld. 

In 2023, nearly 6 million people received Bürgergeld benefits. There is no national data on how many benefit recipients fall under the “complete refuser” category. 

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