Citizens’ benefit recipients should receive 1,000 euros if they work for twelve months. At first glance it’s a crazy idea – but many renowned economists support the measure.
Long-term unemployed people who stay in a job subject to social security contributions for more than twelve months should receive a one-off 1,000 euros from the state in addition to their salary. This is what the Federal Cabinet decided. But many parliamentarians from the traffic light parties are now criticizing the project; It is unclear whether it will actually be implemented as planned on January 1, 2025.
The criticism makes sense at first glance: Why should someone receive more money for the same work – and this is financed by taxpayers who do not receive a bonus? The concept was thought up by labor market researcher Enzo Weber, and he justifies the unequal treatment in the “Bild” newspaper as follows: The effect he imagines: long-term unemployed people should get back into work. So far, according to Weber’s argument, the incentives for this have been too low. Anyone who finds a job often receives low wages and therefore has hardly any more money at their disposal than if they were not working.
One possibility would be to continue paying some social benefits even with higher salaries, so that the person with a new job would end up with more in their wallet. But this would increase the costs in the long term and permanently. The 1,000 euro bonus is intended to motivate unemployed people to stay in a job without the state having to permanently pay additional money (and thus subsidize poor salaries). The bottom line is that the state saves over 25,000 euros per person per year, says Weber.
Other economists are also in favor of the citizen’s money bonus
Weber receives support from renowned labor market economists. Holger Schäfer from the employer-related German Economic Institute writes: “If start-up financing were to improve the employment of citizens’ benefit recipients, it would make sense to put aside legitimate regulatory concerns.” A dubious bonus is better than continuing to pay citizens’ money. But he also warns that the bonus must be closely scientifically examined after its introduction – it is still unclear whether it would actually have the effect.
Simon Jäger from the Massachusetts Institute of Technology (MIT) also supports the introduction of the bonus. He said: “Above all, it is a measure for which there is very good evidence from other areas. There have been experiments on such start-up financing for 40 years, for example in various states in the USA.” It shows that start-up bonuses have led to a significant increase in job acceptance.
Source: Stern
I have been working in the news industry for over 6 years, first as a reporter and now as an editor. I have covered politics extensively, and my work has appeared in major newspapers and online news outlets around the world. In addition to my writing, I also contribute regularly to 24 Hours World.
