Proposed Directive on Commission's Suggestion for Regulatory Measures
In a move aimed at addressing economic challenges and streamlining social systems, a government commission has been established to propose reforms in unemployment benefits, housing benefits, and child supplement by the end of 2025. The commission's work is part of an ongoing discussion on reforms of the welfare state.
The Bavarian Minister-President, Markus Söder, is advocating for "hard reforms" in social policy, with the CSU leader suggesting fewer benefits and more incentives to work. Söder reaffirmed his demands for savings in unemployment benefits and subsidies for heat pumps, and he proposed tightening the reasonableness rule for job offers and stricter rules for housing benefit and asset protection.
The black-red coalition is aiming for several laws for reforms of the social systems in the fall, with the proposed reforms expected to be implemented from the beginning of 2026, as announced by the Ministry of Social Affairs. The commission's focus areas are unemployment benefits, housing benefits, and child supplement.
SPD co-party leader and Federal Finance Minister Lars Klingbeil supports certain tightening of unemployment benefits. Klingbeil emphasizes the need for fairness, stating that people should make an effort. He also suggests stopping benefits for those caught working black and proposes increasing pressure on "total refusers" and tightening sanctions.
The debate over social policy reforms is taking place against difficult economic and financial conditions. Chancellor Friedrich Merz (CDU) has made announcements for sweeping social reforms, straining the fresh agreements for more unity in the coalition.
Partly conflicting views from the Union and SPD are present in the debate over social policy reforms. SPD leader Barbara Bas contests the claim that the welfare state can no longer be financially sustained, calling it "bullshit". Bas emphasizes the importance of maintaining a welfare state that continues to help those in need.
The commission's proposals are aimed at addressing issues such as "total refusers" and working black. Among suggestions are combining child supplement with housing and child benefits into a "child basic security light," automatic calculation and payment, and better coordination to allow families to keep more earned income.
Söder believes that the welfare state needs a fundamental update to remain competitive. He proposes bundling and digitalizing unemployment benefits, housing allowance, and child supplement, aiming to reduce bureaucracy, shorten processing times, and increase work incentives.
In summary, the German government is working on proposals for reforms in unemployment benefits, housing benefits, and child supplement. The reforms aim to streamline social systems, increase work incentives, and address issues such as "total refusers" and working black. The proposed reforms are expected to be implemented from the beginning of 2026 and could save many billions. The debate over these reforms is ongoing, with conflicting views from the Union and SPD.
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