German chancellor Olaf Scholz won power in 2021 with a simple campaign promise: greater respect for the traditional working-class voters of his Social Democratic Party.
His new government delivered quickly on its welfare promises — a higher minimum wage and generous retirement rules for long-time workers — but a revolt is building over its third reform, of the dole system.
Two years ago the SPD-led coalition abolished the previous, little-loved system, which was introduced by Scholz as federal labour minister in 2005.
Its carrot-and-stick approach to the jobless — including payment cuts for jobseekers who refused work — was viewed by many as humiliating.
So unpopular was the new dole system that, nine months after its introduction in January 2005, it contributed to the premature demise of the then SPD-led government.
In July 2022 the new system — called Bürgergeld or the citizens’ allowance — was introduced with the promise of a “humane subsistence minimum”.
Two years on, criticism is growing that the new regime marks an over-correction, with fewer jobcentre checks and barely any sanctions. There is growing concern, too, over cost: 5.5 million recipients at present cost nearly €46 billion annually, nearly 6 per cent of the total federal budget. Inflation-fighting increases in the last three years have seen the basic payment rise by 26 per cent to €564 a month.
Add in housing and other entitlements and the gap between welfare and entry-level employment is shrinking, or already negligible, given average wages have risen by just 12 per cent since 2021.
An added pressure point: more than 700,000 Ukrainian citizens in Germany who are automatically entitled to the full jobless payments without having paid into the system.
As well as the cost, and the new arrivals, experts take issue with how the new system manages people who could work but don’t, in particular an estimated 260,000 long-time dole claimants aged between 25 and 45.
“They fulfil all criteria for gainful employment, at this scale, things are not sustainable,” Frank Jürgen Weise, former head of Germany’s federal job agency, told Der Spiegel magazine.
Exactly two years after exorcising its 20 year-old-welfare demons, the SPD finds itself tied up in knots once more over how generous — or stringent — it should be with the unemployed.
“The name Bürgergeld or citizens’ allowance creates the wrong perception as if it is some sort of basic income, open to all,” one senior SPD politician told The Irish Times, “so we need to at least change the name”.
Two decades after Scholz’s last dole reforms cost him his ministerial job, the chancellor dismisses talk of deja vu and insists the new system can be reformed.
“Germany is struggling with a shortage of skilled workers, so it’s important to reintegrate into the labour market recipients of the citizen’s allowance,” he said, promising rules reform last week.
The window for change is small, given the SPD is expected to fare badly in three state elections this coming September, in advance of federal elections a year later.
Last month the party chalked up its worst election result, with just 13.9 per cent of the vote, in the European elections, and only 27 per cent of voters say the SPD is Germany’s most competent party on social justice matters.
The opposition Christian Democratic Party is hopeful history will repeat itself next year and that dole frustration will mean voters, as they did in 2005, hand it back the chancellery next year.
“Statistics show that there is a six-figure number of people not prepared to take on work,” said Carsten Linemann CDU general secretary. “If someone is fundamentally not prepared to work, then the state must assume they are not in need.”
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