Germany is set to phase out Citizen’s Benefit (Bürgergeld), the social welfare program introduced by the previous government, and replace it with a new system called Basic Income Support (Grundsicherung). The reform has been approved by the federal cabinet, marking a decisive step for the coalition government. The move is sensitive for both governing parties. For the Union, it fulfills a key election promise, while the SPD is agreeing to reverse its own previous policy, even facing opposition from its party youth, who attempted a membership petition against the reform. After months of negotiation, the coalition has now agreed on the final details.
Thereform introduces a series of detailed changes to Germany’s social welfare system. Under the new system, monthly payments to recipients can be reduced by 30% for a period of three months if they violate their obligations. This includes actions such as refusing a reasonable job offer or not complying with work-related requirements set by the Jobcenter (employment office).
If recipients miss two appointments at the Jobcenter without a valid reason, their payments are reduced by 30%. If a third appointment is missed, the payments are initially stopped entirely, although housing costs continue to be paid directly to landlords. If the recipient then attends the Jobcenter within one month, the reduced benefits are restored retroactively. However, if the recipient continues to be non-compliant, the entitlement to all benefits is permanently removed.
The reform also expands access to subsidized employment programs. Previously, eligibility for such programs was determined by the length of unemployment. Under the new rules, eligibility is instead based on the duration of benefit receipt. This change allows individuals who were previously excluded, such as women taking care of children or refugees participating in integration and language courses, to access support for subsidized employment, even if they were not formally considered unemployed.
Another significant change concerns hearings before sanctions are applied. SPD Labor Minister Bärbel Bas had proposed mandatory personal hearings (persönliche Anhörung) to ensure that vulnerable recipients, including those with mental health challenges, are not unfairly affected. The coalition compromise instead requires Jobcenters to make a serious attempt to contact recipients and offer them an opportunity for a hearing. If recipients do not take up this opportunity, the sanction process can continue, ensuring that rules are enforced while still providing a chance for recipients to be heard.
The reform also eliminates the previous asset grace period (Karenzzeit). Under the 2023 rules, recipients could keep up to €40,000 in assets during their first year of receiving benefits, plus an additional €15,000 for a partner. Under the new reform, recipients are no longer granted this grace period. While recipients are not required to immediately use their savings, the Jobcenter will assess housing costs for reasonableness, and in some cases, recipients may need to cover part of their rent or move to lower-cost accommodation. Certain assets, including personal vehicles, owner-occupied property, and retirement savings, remain exempt from consideration.
In 2024, about 5.5 million people and their children still living in the same household received Citizen’s Benefit. Of these, nearly 4 million were of working age, including around 800,000 supplementary benefit recipients” (Aufstockende) whose earnings were below the allowance level. Foreign nationals made up almost 48% of recipients. Individuals who lose their jobs typically receive unemployment benefits (Arbeitslosengeld) for one year before transitioning to Citizen’s Benefit.
Total spending on Citizen’s Benefit in 2024 was €51.7 billion, including €29.2 billion for regular monthly payments, €12.4 billion for rent and heating costs, and €3.7 billion for employment integration measures. Similar spending is expected for 2025.
The Union initially projected savings in the billions, but Minister Bas expects no significant savings from the reform alone. For 2026, the Ministry estimates savings of about €86 million. While the reform provides a net relief for public budgets in the first two years, later years may see slight increases due to higher costs for the Federal Employment Agency. The government also hopes that stricter sanctions will encourage employment, projecting that removing benefits from 100,000 recipients could save around €850 million.
Following the cabinet’s approval, the Basic Income Support law is scheduled to come into effect on July 1st of next year, contingent on approval by the Bundestag. However, this date is considered uncertain, as the Federal Employment Agency has indicated that a longer lead time will be required to complete the technical implementation.
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