Employment Promotion

The Citizen's Benefit Act (Bürgergeld-Gesetz)

With the Citizen’s Benefit Act, Germany has brought basic income support for job seekers up to date:

Provision of reliable protection in times of crises.

  • As from 1 January 2023, the standard needs rates have increased more than ever before. The prices for the most important things in daily life, such as food, electricity and heating, have been rising for months. For this reason, it is not only the development of prices and wages, but also the current inflation that is taken into account to a bigger extent now, so that the constitutionally guaranteed subsistence level can be ensured.
  • People in need of assistance - because they have to pay high additional costs for heating - can count on the costs being taken over, provided they are reasonable. An application for a refund of these costs may be filed up to three months after the due date of the additional payment claim.

Creating new job opportunities by skills development and coaching.

  • As for labour market integration, we do not want to place recipients of benefits into just any job as quickly as possible any longer. The focus is now on initial and further training, offering long-term prospects for job seekers. To this end, we have abolished the priority of job placement.
  • It requires a lot of strength to complete a further training course and this may sometimes result in a longer dependency on benefits. The new regulations will allow integration experts to make better offers from July 2023 onwards, thus aiming to motivate beneficiaries to go the extra mile:
    • Anyone taking up further training leading to a certificate, will receive a further training bonus (Weiterbildungsprämie) for successful intermediate and final examinations. In addition, they will obtain a monthly further training benefit (Weiterbildungsgeld) of 150 euros.
    • Persons in receipt of benefits get more time to learn. If necessary, persons in receipt of benefits may also catch up on their vocational qualifications within a more generous time frame.
    • Trainees who need to improve their reading, math or IT skills, may catch up on them more easily.
  • Sometimes, support that is more intensive is needed, which "accommodates" the needs of the person receiving benefits - also geographically. Therefore, holistic support (coaching) will be introduced as a new offer. Coaching is a measure that provides support to persons with problems; it strengthens their self-confidence and helps them to return to working life after having been out of work for a long time already. Coaching may also be provided as an outreach service or as a service accompanying training or employment.
  • Time limits that used to apply in the social economy have been lifted. Persons who have drawn benefits for a long time already, should have a chance to find a job with compulsory social security coverage, a “genuine job”. This helps job centres to plan reliably.
  • Especially in times of skills shortages, one is never too old to find a job. Therefore, it is all the more important now that elderly beneficiaries are not referred to the pension insurance prematurely.

Allowing for more cooperation and trust.

  • The cooperation plan (Kooperationsplan) is the basis for trusting cooperation and is the guiding principle in the integration process. The applicant and the case manager at the job centre develop the cooperation plan together; it is easy to understand and does not contain any information on the legal consequences of non-compliance. This eases the workload of the job centres, strengthens the cooperative nature of the counselling interview and fosters trust. The first invitation to draw up the cooperation plan is therefore not binding.
  • The cooperation plan replaces the current job integration agreement, which was legally overloaded and prone to errors and unnecessarily put pressure on beneficiaries, from July 2023 onwards.
  • The new arbitration procedure emphasizes that beneficiaries and job centres meet on a level playing field. Should conflicts arise in drawing up the cooperation plan, arbitration may be helpful. To this end, already existing and tested conflict resolution mechanisms can be used or new ones created.
  • In the citizen's benefit system the following rules apply: As from 1 January 2023, a reduction of benefits due to non-compliance and failure to report is possible from day one of benefit receipt, the previous moratorium on sanctions has expired end of 2022.
  • As for failure to report, the standard needs rate is reduced by 10 per cent for one month. As for non-compliance, the first breach of duty leads to a benefit reduction of 10 per cent for one month, in a second step, i.e. in case of a second breach of duty, the benefit is reduced by 20 per cent for two months and in a third step it is reduced by 30 per cent for three months.
  • With the introduction of the citizen's benefit scheme, excessive benefit reductions belong to the past. It will always be examined exactly in what cases a benefit reduction is justified and special hardship must be taken into account. Accommodation and heating costs will continue to be covered; young people receive an invitation for a counselling interview and need not be afraid of higher benefit reductions. In this way, we implement the requirements set out by the Federal Constitutional Court.

Offering security, paying more respect for a lifetime of work.

  • The lessons learnt from the corona pandemic are reflected in the Citizen's Benefit Act: The actual costs for housing will be paid for a period of 12 months. Heating costs will only be paid if they are adequate in order to encourage energy savings behaviour. When people move house during the grace period, the actual housing costs are paid, provided the job centre has given its consent beforehand.
  • During the grace period, assets in the amount of 40,000 euros for the first person in the claimant's household and 15,000 euros for any further person are exempt assets. This will make procedures easier for the job centres and persons facing special hardship may keep their home and savings for one year and can focus on their job search or training for a qualification. For the chances of finding a new job are best at the beginning of the period of receipt of benefits.
  • After the end of the grace period, 15,000 euros are protected assets. The rules for owner-occupied residential property have been improved and the exemption of pension savings have been improved and simplified. This prevents citizens from ending up in a type of downward spiral only because they are temporarily dependent on state support.
  • Inheritances are no longer taken into account as income. Small inheritances are thus preserved within the framework of the assets exemption.
  • In the case of self-employed persons, alternative forms of investment are also recognized as retirement savings to an appropriate extent and are not taken into account as assets.
  • In the case of owner-occupied homes, a larger floor area is now recognized. Particularly difficult personal circumstances are taken into consideration.

Work pays, always. And also while receiving citizen's benefit.

  • Young people may keep income they earn as pupils or university students as well as training pay up to the marginal income limit (currently 520 euros). Pupils’ income from holiday jobs is completely disregarded.
  • And young people who work as a volunteer for the Federal Volunteer Service (Bundesfreiwilligendienst) or as a volunteer during a voluntary social year (Freiwilliges Soziales Jahr - FSJ) benefit from higher exempted amounts - just as young persons in the transition period between school and training.
  • If possible, young people should start their adult life without debts. Therefore, they will now only be liable for potential debts due to overpayments they received as minors if they possess more than the exempt assets of 15,000 euros. So, as a rule this is enough to allow them to also keep their savings from holiday jobs.
  • People who work more may also keep more of their earnings: People in employment earning between 520 and 1,000 euros may keep 30 per cent of this amount (previously 20 per cent). This means that at the end of the day, they will have up to 48 euros more in their purse than under the old scheme.
  • Volunteering is recognized more highly. As in tax law, expenses allowances are considered annually. This means that expenses allowances are not considered as income as long as they do not exceed the annual exempt amount of 3,000 euros.

Making sure that processes become more user-friendly and less bureaucratic.

  • As had been demanded for a long time, the new Citizen's Benefit Act has introduced a de minimis limit of 50 euros for the recovery of overpayments. This means that job centre employees no longer have to reclaim tiny amounts of money. This saves a lot of work for the job centres.
  • Families, in particular, need special support. Maternity benefit will no longer be considered as income; this will also simplify administrative processes.
    As for persons in rehabilitation, the following applies: They receive all benefits from a one-stop-shop. Medical rehabilitation patients no longer have to apply for transitional allowance, instead, they will continue to receive citizen's benefit.
  • Citizen's benefit can also be applied for online.
  • The introduction of the grace period and the simplified asset test make processes easier to handle for the job centres.

Further Information