Cost explosion and missing solutions for 2025 – Nachrichten AG

The debate about the citizen's allowance is becoming increasingly heated, and the challenges it brings cannot be ignored. Hubertus Heil, the Federal Minister of Labour and Social Affairs, recently confirmed that there will be no increase in the citizen's allowance in 2025 – a statement that is being described as both a well-known fact and a cause for new debate. Previous cost control measures have shown little success, which leads to the urgent need for an honest analysis of the entire system.

In 2022, inflation hit hard and the standard rate for the citizen's allowance had to be increased accordingly – by an impressive 24 percent within two years. This figure is unattainable for many employees and calls into question the reality of the labor market. However, Heil cannot adjust the amount of the citizen's allowance at will, as this is subject to legal requirements. Part of the problem lies in the method used to calculate inflation, which influences the amount of the citizen's allowance. Here, the value of the second quarter of the previous year is used, which leads to a situation in which the standard rate remains high even if the inflation rate is reduced.

Criticism of the system and the rules

This discrepancy leads to a challenging situation: the current level of the citizen's allowance is considered to be too high. This is not only the opinion of critics from the opposition or social associations, but is also proven by the Institute for Employment Research (IAB). The scientists emphasize that the adjustments in the coming years will no longer keep up with the attacks of inflation, which could de facto represent a cut. This “zero round” could theoretically even last two years in a row without any adjustment being made.

However, a proposal by the FDP to deduct 14 to 20 euros from citizens' allowance recipients this year shows the discrepancy between political debate and realistic savings opportunities. This measure would hardly be effective and would not significantly increase incentives to work. The real resources should have been focused on the minimal reduction in the number of recipients, which has increased to over 5.5 million in recent years – not least due to the admission of refugees from Ukraine.

So far, the traffic light coalition has failed to counteract an increase in the number of recipients. Minister Heil is pinning his hopes on falling numbers of benefit recipients, but in reality this is met with dwindling resources and doubts about the political decisions made. Instead of taking concrete steps to save money, Heil is choosing an optimistic approach that seems impractical.

The voices saying that the Citizen's Allowance and the measures associated with it are working well seem increasingly unrealistic. A study by the IAB in the summer suggests that the system has reduced the incentives to take up work. The question remains whether the traffic light coalition is actually capable of creating a working environment that encourages people to return to the primary labor market.

In the end, the optimistic-sounding policy falls by the wayside. Instead of having the courage to admit the flaws in the system and honestly question the concept of citizen's income, a deadlocked course seems to be prepared for ineffective solutions. A more realistic picture of the situation will be essential for the future-proof development of the welfare state.