NAfter the Bundesrat’s no to the citizen money of the traffic light coalition begins the search for possible compromise lines. The FDP is now focusing on a point from the reform package that has so far hardly been mentioned in the dispute over the objections of the Union parties: the easing of the so-called additional income rules. It is intended to make it more worthwhile for recipients of basic security to work their way out of receiving social benefits – in that the wages they earn themselves are no longer counted as strictly against social benefits as before.
Similar to the party leader before Christian Lindner Jens Teutrine, citizen money expert of the FDP parliamentary group, also campaigned on Monday for a further improvement of these regulations in the mediation process. The Union’s criticism is aimed in particular at the fact that the previous draft law would loosen the sanctions against uncooperative benefit recipients too much; in addition, access to basic income is made much easier, even for wealthy households. At its core, however, this criticism also boils down to the message that work must pay more.
The fact that the previous additional income rules do not make starting work attractive is already evident from the law: anyone who earns something as a recipient of basic security may only keep the first 100 euros monthly wage without being offset; above this, the social benefit is reduced by 80 cents for every euro earned. In economic terms, that’s a transfer withdrawal of 80 percent. From a wage of 1,000 euros onwards, it increases to 90 percent, and from 1,200 euros onwards, one’s own wages are offset against the social benefit in full until it has completely disappeared.
With the traffic light bill, the FDP two changes have already been made: young people from citizen income households who earn some extra money with vacation or mini-jobs should be allowed to keep this money in full in the future; so far it has been added to household income – and then triggers a cut for the whole family. The second change starts directly with the withdrawal of transfers: in the range from 520 euros (the new mini-job limit) to 1000 euros, only 70 instead of 80 percent would be credited to the citizen’s income.
The Ifo Institute also sees this as an important point. That’s what his boss explained Clemens Fuest on Sunday in the program “Anne Will”. And his institute has backed it up with studies. In a report recently prepared for the Bundestag, it writes: “These changes are a step in the right direction, but in our opinion they are not ambitious enough.” A “significant improvement in work incentives and correspondingly lower transfer withdrawal rates” are important.
Transfer deduction makes working more hours unattractive
Another point of criticism, however, is that the crediting of very small additional earnings through the allowance for the first 100 euros is too lenient: This makes it attractive, for example, the citizen’s income with one mini job to combine – but it is not worthwhile to work more hours to earn more money; because then the transfer deduction grabs too much. Beyond 1200 euros, those affected have to increase their own earnings by several hundred euros at once in order to make more money at all.
The official statistics also suggest that this is not just theory. It shows that there are currently 754,000 Hartz IV recipients who are employed and therefore count as so-called top-ups: only 12 percent of them have a full-time job. More than a third, on the other hand, only have a mini-job and another 38 percent work part-time. It also depends on the size of the family, at what level of earnings you can still receive additional Hartz IV. But the assumption is that, especially among the more than 250,000 mini-jobbers, many would work more (and need less money from the state) if it was more worthwhile.
Conflict with other services
A further improvement of the additional income rules would only be the start of a much larger project: a real interlocking of the citizen benefit with the competing benefits child allowance and housing benefit. They are also aimed at working households with low incomes – but even experts can often not really explain why in one case there are only entitlements to Hartz IV and in other cases housing benefit and child allowance flow. For those affected, it becomes even more puzzling to what extent work is also financially worthwhile.
The traffic light also concedes in its draft law that there are problems there: Even after this reform, “considerable potential for improving employment incentives in the lower income bracket” remains, as explained in the explanatory chapter. In a further step, the federal government wants to “launch a reform that specifically “coordinates and, where possible, combines” citizen benefit, housing benefit and, if necessary, other tax-financed social benefits”.