Why the citizen’s allowance cannot simply be reduced

Even Lars Klingbeil can no longer count on one hand how many times the traffic light coalition has resolved to quarrel less in public. The SPD chairman called the latest “performance” about the 2025 federal budget “completely unnecessary”. His word for Sunday: Enough of the theater, for real. But the next argument was already looming, a revival of a traffic light classic: the dispute about the citizens’ allowance.

After the long-running discussion about tougher sanctions for so-called total refusers, the FDP now wants to increase the amount of the benefit for all recipients. Perhaps this would make it possible to close part of the budget gap for 2025 in a constitutional manner. That seems to be the assumption, which is causing discontent among the coalition partners, especially in the SPD, but which also raises a practical question: Can you just reduce the citizen’s allowance?

“How the citizen’s allowance is adjusted annually is regulated by law”

The citizen’s allowance is “currently 14 to 20 euros too high per month,” said parliamentary group leader Christian Dürr in the “Bild” newspaper. He proposes a “downward adjustment” because inflation has not risen as much as expected. This would both relieve taxpayers of up to 850 million euros and increase work incentives, says the FDP man.

Dürr was referring to the so-called adjustment mechanism, which adjusts the standard rates to prices and wages on an annual basis. This mechanism recently led to a comparatively high increase in the citizen’s allowance of twelve percent, as both the price and wage increases from 2023 and the price increases assumed for 2024 were taken into account. Single citizen’s allowance recipients now receive 563 euros a month, i.e. 61 euros more. In 2025, however, recipients will have to prepare for a zero increase because price increases are currently declining.

This all sounds rather complicated and suggests that it would be unlikely that the citizens’ income could be reduced in one fell swoop.

This would require changing the “Standard Needs Determination Act”, which regulates how the monthly flat rate – i.e. the payment of the citizen’s allowance – is calculated. Numerous factors are taken into account, not least that a “humane minimum subsistence level” is guaranteed. This is the requirement that the Federal Constitutional Court has instructed the legislature to follow.

In 2010, the Karlsruhe judges ruled that standard benefits must not only secure physical existence, but also a minimum level of social participation. The extent of the entitlement must therefore be determined in a factual and realistic manner, based on reliable figures. In case of doubt, a reduction in the citizen’s allowance would therefore have to stand up to the Federal Constitutional Court, or the question: is the “humane minimum subsistence level” still guaranteed?

The office of Labor Minister Hubertus Heil (SPD) did not directly address the FDP’s proposal. When asked, a spokesperson pointed out that the standard benefit levels will be updated on January 1, 2025, in accordance with legal requirements. “Within the framework of the update regulation, there is no scope for decision-making regarding the resulting amounts.” The following applies: If the update results in amounts that are below the applicable standard needs, the amounts will be updated at the current level through a legal property protection regulation.

So the fact remains: the citizen’s allowance cannot be reduced at will, especially not in passing.

And then there are the coalition partners, who are not very keen on the FDP proposal. The proposal is causing particular anger in the SPD, which wanted to shake off the trauma of the Hartz IV years with the social reform. This is especially true as the citizen’s allowance is already under heavy fire from the opposition – and now its own coalition partner is upping the ante.

“It would be very helpful if, after almost three years, we could finally settle into our role as part of a government coalition and thus into a community of responsibility,” says Martin Rosemann, spokesman for labor and social affairs in the SPD parliamentary group. He does not believe in “constantly causing uncertainty with completely half-baked ideas that are far removed from reality.”

Rosemann complains that FDP parliamentary group leader Dürr leads a government faction that has decided on the adjustment mechanism, in which inflation is “rightly” taken into account more quickly than before. “I am not aware of any proposals for a further reform of the adjustment mechanism from the FDP parliamentary group,” says the Social Democrat caustically.

The Greens are being cautious in their rhetoric, perhaps in an attempt to avoid being associated with the latest traffic light dispute. However, Beate Müller-Gemmeke, a specialist politician for labour and social affairs, leaves no doubt about her party’s position. “How the citizen’s allowance is adjusted annually is regulated by law,” Müller-Gemmeke told the starShe also points out that the FDP and CDU have agreed to the mechanism. “There is no reason to change that in any way.”