German Chancellor Friedrich Merz (Christian Democratic Union, CDU) is ramping up pressure on his coalition partner, the Social Democratic Party (SPD), to consent to cuts to the country’s burgeoning social welfare system.
In a TV interview shortly before a coalition meeting on September 3, Merz demanded that SPD labour minister Bärbel Bas clear the path to savings in Germany’s Bürgergeld, or unemployment payment system.
“Let me put it this way: I remain firmly convinced that 10 per cent savings can be achieved in this system,” Merz said.
“That amount must be possible. If we no longer dare to save ten per cent in a transfer system that is heading in the wrong direction, then we are failing in this task. That must be the minimum target.”
The Bürgergeld scheme is expected to cost Germany €50 billion this year – savings of 10 per cent would therefore lighten the federal budget by about €5 billion.
Merz added that he would expect his crackdown on illegal migration to account for part of the envisioned savings.
At the time of writing there was no reaction from Bas.
In the past the SPD has brushed off Merz demands for welfare reform.
After the Chancellor warned on August 23 that the German welfare state could no longer be financed, Bas replied: “This debate that we can no longer afford these social security systems and this welfare state is – and I apologise in advance for the expression – bullsh*t.”
Later on September 3, the leaders of CDU and SPD were set to meet to discuss major government projects over the coming months. In light of Germany’s continuing economic malaise, demands for radical reforms are growing louder.
Earlier on the same day, Christian Sewing, president of the German Banks Association, joined the chorus demanding structural reforms to fight overbearing bureaucracy, high energy prices and expensive social systems.
“That is why we urgently need the promised autumn of reforms – and we need them to be worthy of the name”, Sewing said at a conference in Frankfurt.
The Bürgergeld scheme was introduced under Germany’s left-wing predecessor government on January 1, 2023. It replaced the more frugal Hartz IV system of welfare for the unemployed.
Hartz IV – which was introduced under then-chancellor Gerhard Schröder (SPD) in 2005 – has been credited with bringing down Germany’s unemployment rate from 12 per cent in 2005 to 5 per cent by 2019.
Conversely, the Bürgergeld scheme has been widely criticised as being overly generous and disincentivising people from seeking employment.
Germany’s unemployment numbers have been on the rise steadily since it was introduced.
