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Zero increase: Why the citizen’s allowance will not be increased

Citizens’ allowance

The citizen’s allowance will not be increased next year.

Source: dpa

The more than five million recipients of citizen's allowance will have to make do with a zero increase next year. Federal Labor Minister Hubertus Heil (SPD) issued a corresponding legal regulation in the formal vote of the federal government. The most important questions and answers:

Why won’t the citizen’s allowance be increased next year?

The zero increase on January 1 is due to the official data on low inflation and the legal mechanism adopted in 2022 with the approval of the Union, Heil explained. “There is an adjustment mechanism that the German Bundestag has firmly adopted – with the votes of the CDU, CSU, FDP, SPD and Greens, by the way.”

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Experts such as Enzo Weber from the Institute for Employment Research (IAB) had already determined in January that there would probably be a zero round of increases in 2025 – the aforementioned adjustment mechanism. In two steps, inflation will be included in the new standard rates, first in the previous year and then in the most recent recorded quarter.

Did Heil give in to pressure from the FDP?

No. According to labor market researcher Holger Schäfer from the German Economic Institute (IW), the freeze is based “solely on the application of the current rules for adjustment and is not the result of current political decisions.”

The FDP is claiming credit for the move to a zero increase: “Those who go to work must always have significantly more money in their pockets than someone who lives off taxpayers' money,” says FDP Secretary General Bijan Djir-Sarai. “The fact that the Minister of Labor is now complying with our request not to increase salaries next year is a first important step in this direction.”
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How high is inflation currently?

In August, consumer prices rose at a slower rate than they have in more than three years. Inflation was 1.9 percent compared to the same month last year. Energy was cheaper than a year ago – prices for services rose at an above-average rate. Price pressure is easing after years of high inflation rates. However, economists fear that inflation rates will rise again towards the end of the year.

Inflation in Germany (including food and energy)

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How much is the citizen’s allowance currently?

On January 1, the citizen's allowance – colloquially known as Hartz IV before the reform – rose sharply, by twelve percent.
  • Single people received since then 563 euros a month.
  • Adultdie with a partner or a partner live together, come to 506 euros.
  • fur Children and Young people the rates are between 357 and 471 euros.
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Who is entitled to citizen’s allowance?

According to Labor Minister Heil, 5.4 million people are affected, as he said on RTL and ntv. Among them are many children or sick people who are not available for the labor market. 20 percent need additional benefits despite being in work. 1.7 million people need to be brought into work, two thirds of whom are long-term unemployed without completed vocational training. Many Ukrainians also need to be brought into work despite successes.

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What could happen next with the Citizens’ Allowance?

Labor Minister Heil confirmed that the traffic light coalition wants to tighten up the sanctions. In future, anyone who works illegally despite receiving benefits will be severely sanctioned. According to the federal government, the changes to the citizen's allowance could come to the cabinet in October. This also includes more work incentives for refugees.

The CDU will also significantly tighten the rules on citizen's allowance. Secretary General Carsten Linnemann is aiming for greater benefit cuts for those who refuse to work or attend appointments than the current 30 percent. Instead, basic security must be cut completely.
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Source: dpa

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