Savings plan: The government's citizen's money reform saves millions

Berlin. According to the Federal Government, public budgets are currently achieving savings in the millions as expected as a result of the latest citizen's benefit reform. The Ministry of Labor estimates the costs of basic security in the past few months to be “around 100 million euros less than in the same month last year,” as a spokeswoman in Berlin said.

According to the draft budget for 2027, the federal government will spend a total of 50.8 billion euros on basic security for job seekers. The “Süddeutsche Zeitung” had reported that the costs for basic security including rents remained at the same level as in the previous year, even after the start of the reform.

For example, Friedrich Merz - already CDU leader at the time, but not yet Federal Chancellor - said in an interview in December 2024 after the then traffic light coalition broke up: "We will turn this system upside down. Tens of billions will be saved." Deputy government spokesman Steffen Meyer emphasized that the government remains convinced of the reform. The goal is to get people into work. This can save money. But it is too early to take stock.

The spokeswoman for the Ministry of Labor, which is now led by Alexander Schweitzer (SPD), referred to what she said was realistic information in the draft law about the follow-up costs. Accordingly, the government expects savings of 86 million euros this year and 70 million euros for 2027 at the federal, state, local and federal employment agencies (BA). In the following two years, however, there will likely be a total of 19 million euros in additional costs due to higher BA expenses.

The ministry also attributes the savings achieved to the fact that, as a result of the so-called “job turbo”, Ukrainians and other people coming from abroad are placed in work more quickly. The costs for accommodation are generally capped.

However, the spokeswoman pointed out limits: Of the approximately 5 million people with basic security, 1.4 million are children. Many of the other 3.7 million people are supplementers who are already working. “These are family members or single parents with small children.” Higher savings worth billions are only possible “with a massive increase in the number of employees”.

The reform was passed in the summer and the name “citizens’ money” was abolished. Cuts were made primarily for those who evaded job placement efforts. The reform was primarily a Union concern.

The government has been preparing new welfare state reforms for months. “It’s about making the welfare state more citizen-friendly and efficient and also partly more digital,” said the ministry spokeswoman. This second step is also not primarily intended to “save huge amounts”. The cabinet also launched an “action plan against abuse of social benefits” in September. Here, the implementation is taking place “in legal and sub-legal measures,” said the spokeswoman.