Officially calculated subsistence level: Facts and figures on citizen’s allowance

Germany is implementing a freeze on citizen's income and social assistance: the monthly payments to recipients of basic benefits will not increase in the coming year. How many people are affected? What amounts are involved?

The more than five million recipients of citizen's allowance in Germany, including adults and children, will have to make do with the same standard rates next year as before. Federal Labor Minister Hubertus Heil announced a “zero increase” in the “Frühstart” program on ntv. The legally regulated benefits for those in need, for whom the payments are intended to ensure a dignified life at the subsistence level, will therefore remain unchanged for the time being.

If inflation is high, the standard rates must also be adjusted accordingly, explained the SPD politician. However, the inflation rate has recently fallen sharply. Therefore, the legal mechanism is such that there will be no increase in the citizen's allowance at the beginning of 2025. “That is also right,” said the minister. This has nothing to do with the debates of the past few months, emphasized Heil. “There is an adjustment mechanism that the German Bundestag has firmly decided on – with the votes of the CDU, CSU, FDP, SPD and Greens, by the way.”

According to the current standard rates, adults living alone and single parents will continue to receive 563 euros per month for living expenses in 2025. Couples in shared communities of need – usually also in one household – will receive less per capita, namely 506 euros. Children will be graded according to age groups, from 471 euros to 357 euros. Adults in reception facilities and accommodation will have to make do with 451 euros per month.

The standard rates in question apply to the so-called citizen's allowance as well as to social assistance. People in need of assistance who cannot work due to age or illness are entitled to social assistance – including state aid payments for living expenses or basic security in old age and in the event of reduced earning capacity.

In Germany, all those people who “cannot find work despite extensive efforts or who earn so little from their work that their livelihood is not secured” are entitled to citizen's allowance, according to the Federal Ministry of Labor. In addition to monthly payments for living expenses, this also includes the assumption of rent and heating costs.

According to data from the Federal Employment Agency (as of May), around 5.5 million people are affected in Germany. Among them are many children or sick people who are not available for the job market, as Heil said on ntv's “Frühstart”. 20 percent of those receiving citizen's allowance would need additional benefits despite being in work. 1.7 million people would need to be brought into work, two thirds of whom would be long-term unemployed without completed vocational training. Many Ukrainians would also need to be brought into work despite successes.

“Anyone who is in an emergency situation and cannot provide for themselves is entitled to state benefits,” Heil's ministry summarizes the initial situation. With the “Hartz IV” reform and the introduction of the citizen's allowance, it was legally established that the amount of the payments must be reviewed annually and adjusted if necessary.

The basis for calculating the adjustments was the average price and wage development, which is recorded in a mixed index by the Federal Statistical Office. When the citizen's allowance was increased for 2024, which was decided on in late summer 2023, the outlook for inflation still seemed bleak.

Monthly payments rose by more than twelve percent at the beginning of 2024 compared to the previous year. Only later did it become clear that statisticians had overestimated inflation compared to the actual development. A zero increase had therefore already become apparent at the end of last year.

Citizens' allowance has only been available in Germany since the beginning of 2023. Before that, the payments as part of the basic security for people who were actually able to work were known as “unemployment benefit II” and were colloquially referred to as “Hartz IV”.

The calculation for 2025 reflects the actual price development. Looking at the typical expenses of citizens' allowance recipients – measured by the income and consumer sample of the statistics office and the resulting update of the standard requirement – the officials in the Ministry of Labor calculated a theoretical standard rate of 539.25 for a single adult for 2025.

Why is the citizen’s allowance not reduced?

The Citizens' Allowance Act does not provide for a downward adjustment. Recipients of state benefits are expressly protected from cuts as a result of a recalculation. If it subsequently turns out that the increase was too high, the current amounts will remain.

Heil's draft regulation states: “The continuation of the standard benefit levels with these rates of change results in euro amounts that are lower than those for 2024. Therefore, Section 28a Paragraph 5 of the SGB XII (Property Protection Regulation) is to be applied, according to which the euro amounts for 2024 will also remain unchanged in 2025.”

In theory, a cut could ease the burden on the state treasury. The draft for the state in 2025 estimates 25 billion euros for the citizen's allowance payments. A reduction in the monthly payments by a good four percent could mathematically save a good one billion euros.

However, Labor Minister Heil had considered it a success in the budget dispute that no benefit cuts were planned. Nevertheless, he is expected to make do with 4.7 billion euros less in cash benefits in the Citizen's Allowance in 2025 than this year – not through cuts, but by reducing the number of Citizen's Allowance recipients.

Heil confirmed that the parties in the traffic light coalition want to tighten up the rules. In the future, anyone who works illegally despite receiving benefits will be severely sanctioned. “It is a learning system,” Heil explained. However, further development should not be discussed ideologically. Planned changes to the citizen's allowance could be presented to the cabinet as early as October, according to government sources. This is also expected to include more work incentives for refugees.

The German Trade Union Confederation criticizes the planned freeze. As long as rents are often barely affordable and the minimum wage is only increased by a few cents, in addition to more collective bargaining, a higher minimum wage and rent caps, there is also a need for a citizen's allowance that really guarantees the minimum subsistence level, said DGB board member Anja Piel on RTL/ntv.