Söder advocates for a comprehensive overhaul of the existing social welfare system

In the face of challenging economic and financial conditions, a government-appointed commission begins work today on reforming the areas of unemployment benefits, housing benefits, and child supplement, with proposals due by the end of the year for implementation from 2026.

The commission's work is in response to ongoing discussions on reforming the welfare state. Chancellor Friedrich Merz (CDU) and Federal Finance Minister Lars Klingbeil (SPD), co-party leader, have both called for extensive social reforms.

Klingbeil advocates for stopping unemployment benefits for individuals caught working under the table and supports certain tightening of unemployment benefits, including increased pressure on "total refusers" and stricter sanctions. Söder, the CSU leader, shares similar views, calling for fewer benefits, more incentives to work, stricter enforceability of job offers, and tougher rules on housing benefits and asset limits to save billions.

Söder believes the current form of the welfare state is unfair and requires a "fundamental update" to maintain competitiveness and continue providing aid to those in need. He is also advocating for cuts to unemployment benefits and subsidies for heat pumps.

However, SPD leader Barbara Nas disagrees with the notion that the welfare state is financially unsustainable, stating it as "nonsense". The discussion on social reforms is ongoing between the SPD and CDU, with both parties advocating for changes, but sometimes having differing views on the specifics.

The black-red coalition is planning social system reforms this fall, targeting several laws. The debate on social reforms is occurring against the backdrop of a need for labor market integration. The commission's proposed reforms aim to enhance labor market integration through incentives like training and closer case management.

The Bürgergeld is planned to be restructured into a "New Basic Security" emphasizing “promote and demand” to support those willing to work. Changes to housing benefits (Wohngeld) and the child supplement (Kinderzuschlag) will also be addressed, focusing on tax-financed support, with specific provisions such as Ukrainian refugees receiving different aid from April 2025.

The commission's proposed reforms are expected to include stricter sanctions for non-compliance with job-seeking requirements, shorter or eliminated grace periods regarding assets and housing, and stronger measures to prevent benefit abuse in unemployment benefits (Bürgergeld). These reforms are aimed at ensuring that the welfare state remains sustainable and effective in supporting those in need while promoting a culture of work.