Chancellor to Unveil Proposed Changes in Citizens' Allowance Benefits

In a significant development, the Federal Minister of Labor, Barbara Bas (SPD), is set to present a proposal for reforming unemployment benefits in the coming days. This announcement comes following the revelation that the federal government has managed to save 460 million euros in expenses for the current year, bringing the total to 502.5 billion euros.

The savings are not limited to unemployment benefits, as Federal Chancellor Friedrich Merz (CDU) has expressed concerns about the spending burden of the welfare state. Merz, along with Bas, aims to agree on key points for such a reform this year. However, the two have previously expressed opposing views on this matter.

The proposal, as outlined by Economics professor Enzo Weber from the Institute for Employment Research (IAB) of the Federal Employment Agency, involves the replacement of unemployment benefits with a basic security system. This system would feature different waiting periods, feasibility rules, and a focus on mediation.

However, Weber has expressed doubts about the feasibility of achieving significant savings on unemployment benefits. He believes that savings would only be possible with more economic growth and fewer unemployment benefit recipients. Thorsten Frei, the CDU politician and Chancellor's Office Minister, however, considers the five billion euros in savings on unemployment benefits targeted by Merz to be very realistic.

The plan to reform unemployment benefits has been urged by Frei, who has called for swift action in this regard. It is worth noting that the budget for the current year has been set and can be approved in the Bundestag.

It is important to clarify that the amount that can be saved in unemployment benefit payments depends on various factors, including rules regarding advance payments of health insurance contributions, church tax deductions, and charitable donations, which can reduce taxable income. Unemployment benefits typically amount to about 60-67% of the previous net income, and savings primarily arise from tax and contribution reductions rather than direct cuts in unemployment benefit payouts.

The proposal also includes the possibility of new loans, with almost 82 billion euros planned. However, there are still billions in loans from special funds for the military and infrastructure, resulting in anticipated debts of more than 140 billion euros in total.

Bas has dismissed Merz's concerns about the spending burden of the welfare state as "bullshit." Despite this, the reform of unemployment benefits remains a key point of discussion in German politics. The outcome of these discussions will have significant implications for the country's economy and its citizens.