German employers warn of unemployment benefit overhaul

German employers warn of unemployment benefit overhaul |

The German coalition’s proposal to overhaul the unemployment benefits system has caused fierce debate, with the conservative CDU and employer’s associations warning that the proposed benefits would be too high and not incentivise work.

The proposal, which was one of the ruling coalition’s core promises when it came to power last year, would see monthly benefits increase from the current €449 to €503 per person, per month. The benefits come in addition to the coverage of rent, heating, health care and some other in-kind contributions.

“I am greatly concerned for the business environment,” the head of Germany’s employers’ association, Rainer Dulgersaid, said at an event on Monday in Berlin, referring to labour shortages as well as tighter regulations on working conditions, which he said would burden companies on top of the energy crisis. According to him, the proposals may undermine incentives to take up work.

The reform would mark the largest overhaul of the system of unemployment benefits since 2005 when the Schröder administration initiated a major market liberalisation reform. The proposal also reduces conditionality for beneficiaries, allowing more property to be kept without being subtracted from the monthly unemployment benefits.

The conservative CDU, currently in opposition, has also strongly criticised the proposal and could even end up blocking it given that it currently holds enough seats in the Bundesrat, Germany’s second legislative chamber representing state governments.

On Wednesday, government representatives will meet with politicians from the opposition party, CDU, to reach a compromise. Negotiations will be about “the right incentive to return to the labour market,” said CDU party leader Friedrich Merz.

Before the talks, Germany’s Labour Minister Hubertus Heil showed a willingness to compromise, notably on the amount of savings that can be kept even while receiving unemployment benefits. “We are all not dogmatic about this,” he said on Monday.

(Jonathan Packroff |


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