The introduction of the Bürgergeld (citizen’s income) is considered one of Germany’s biggest social policy mistakes in the last 20 years. This system is widely viewed as unjust and threatens social cohesion, demanding immediate and bold reforms.
The flaws in citizen’s income
The Bürgergeld, alongside the early retirement scheme at 63, stands out as one of the most significant social policy errors Germany has made in the past two decades. It places a substantial burden on the state’s finances and strains the social fabric by fostering resentment and division. More troublingly, the welfare system has created a trap: generous benefits with minimal sanctions clash with a labor market that is increasingly stretched and dysfunctional, where employers are desperately searching for workers to fill positions that seemingly no one wants anymore.
Adding to this challenge is a continuous influx of new potential beneficiaries. With over 300,000 refugees arriving annually, the system—already supporting 5.5 million people—faces an ever-growing demand. Once refugees transition from asylum status to Bürgergeld, particularly in the case of Ukrainians who qualify immediately, they receive benefits that lift them into the middle class. For many, it becomes difficult to achieve the same standard of living through their own income, as the state covers housing and energy costs—two major expenses that define the social issues of our time.
Legal and political hurdles
Complicating matters further, Germany’s Federal Constitutional Court has set stringent limits on reforms through its controversial rulings, making it difficult to simply cut or eliminate benefits. Moreover, there is a noticeable lack of political will to address the ballooning costs of the system, which are expected to reach €50 billion by 2024. The current system operates on the principle of a minimum guaranteed existence, providing assistance, subsidies, and cushioning against hardship. Yet paradoxically, fewer people feel secure or satisfied. On the contrary, a large portion of the German population perceives the Bürgergeld as unfair, undermining their work ethic and moral values.
A call for bold reform
The Bürgergeld is particularly problematic for the Social Democratic Party (SPD), which vehemently opposes any cuts to the program. The SPD spent 20 years trying to dismantle Hartz IV, Germany’s previous welfare system, as part of a political exorcism. Since 2005, the welfare state has expanded with policies like the minimum wage, early retirement at 63, and housing benefits. However, this expansion has coincided with the SPD losing millions of votes in every election, as segments of the working class defected to the far-right Alternative for Germany (AfD).
In its current form, the Bürgergeld system is unsustainable. The irony is that Germany needs another Schröder moment—a reference to former Chancellor Gerhard Schröder’s bold and controversial labor market reforms—and a courageous reformer who is willing to make tough cuts and reverse the system’s logic and mechanisms. Given the current state of the economy, the political effort required for such reforms is likely to be as substantial as it was in 2003.
