After it was blocked by the CDU / CSU faction last week, the historic Bürgergeld reform to social security payments has now passed through the German parliament and will be introduced in the new year.

German parliament passes Bürgergeld unemployment benefit reform

It's been a rocky road, but the German Bürgergeld (citizens’ income) reform has now passed through the Bundestag and Bundesrat. According to initial plans the social reform will be implemented from January 1, 2023.

By introducing a Bürgergeld, the German government will replace the Hartz IV unemployment benefit (Arbeitslosengeld II) - which was also implemented by the SPD back in 2002. Upon the reform passing, Chancellor Olaf Scholz told Focus magazine, “This reform is a milestone for social politics in Germany.”

What will the new Bürgergeld look like?

Last week, the reform failed to pass through the Bundesrat on its first try after being blocked by the CDU / CSU faction of the German parliament. Following this, the traffic-light coalition and CDU / CSU were required to reach a compromise on the reform, which was agreed upon on Wednesday.

Under this compromise the originally planned six-month “period of trust” will now be abolished. The trust period was suggested by SPD Labour Minister Hubertus Heil to give recipients a grace period during which benefits could not be cut. However, benefits can now be cut from the first day they are received, first by 10 percent, and then up to 30 percent if the recipient does not accept reasonable offers of jobs.

The compromise also adjusted the amount of savings recipients are allowed to have without it impacting their benefits entitlement. Originally, the traffic-light government wanted to allow people to have up to 60.000 euros in savings, but this has now been reduced to 40.000 euros. This is intended to stop people who lose their job from having to drain their bank savings to stay afloat. For each additional house member the amount will be 15.000 euros, where Heil originally planned for the threshold to be 30.000.

A fundamental change to the system will see claimants receive 50 euros more per month. The amount that unemployment recipients receive is not standard, but rather calculated based on the number of hours they worked in their previous job and how much they were paid.

A  major change is the scrapping of the so-called "placement priority" upon which Hartz IV was founded: the priority for recipients to re-enter work regardless of the temporary or long-term nature of the new job. Come January 1, 2023 an emphasis will be placed on finding new, long-term employment contracts for those who are unemployed. Recipients will also be eligible for further financial support if they would like to attend courses in further education to increase their chances of finding long-term employment.