German government announces unemployment benefit cuts

Germany’s CDU/CSU-SPD government has announced that it will cut funding for Bürgergeld and other unemployment benefits by between one and two billion euros.

Merz announces unemployment benefit cuts

Speaking in his summer interview with broadcaster ARD, German Chancellor Friedrich Merz (CDU) has announced that his CDU-SPD coalition government will significantly cut funding for unemployment benefits.

While the details still have to be ironed out, Merz said significant cuts to the long-term unemployment benefit, Bürgergeld, are likely, alongside cutting support payments for rental costs. "It should be called basic security (Grundsicherung) and no longer citizens' money (Bürgergeld),” Merz told ARD presenter Markus Preiss.

Bürgergeld was introduced by the SPD-FDP-Greens coalition in 2022 and replaced the Hartz IV unemployment benefit. Hartz IV infamously sanctioned job seekers who couldn’t sufficiently prove to the job centre (Arbeitsamt) that they were looking for work.

When Bürgergeld was introduced, certain sanctions were scrapped. The new system was presented as more compassionate to job seekers, but a 2023 study found many Bürgergeld recipients were still struggling to cover their electricity bill.

Reintroducing additional Bürgergeld sanctions is now on the cards. Speaking in the Bundestag in June, Federal Labour Minister Bärbel Bas (SPD) said unemployment benefit reforms will likely involve sanctioning benefit recipients who miss job centre appointments.

Details of Bürgergeld cuts still unclear, criticism spreading

Bas said that the coalition government will now debate the details and present a draft of the unemployment benefit budget cuts when parliament returns from the summer recess. 

The plans have already been criticised from within the SPD, the Left Party (Die Linke) and the Greens. SPD parliamentary leader Dagmar Schmidt called the cuts “callow”. Schmidt pointed out that the Arbeitsamt already has limits on the rental costs which it covers for Bürgergeld recipients. 

These limits differ from city to city. For example, Bürgergeld recipients in Berlin living in a three-person home receive a maximum of 669 euros in rental support in 2025. The average rent for a WG-Zimmer in Berlin in 2025 is 650 euros per month.

“Instead of increasing homelessness [...] we need to limit escalating rents with the rent brake and invest in affordable housing,” Schmidt added. Sahra Mirow (Die Linke) is in agreement. “A cap on rent support payments will not get to the root cause,” Mirow said, also calling for a rent cap and greater social housing provision. 

Speaking to RedaktionsNetzwerk Deutschland, Greens parliamentary leader Kassem Taher Saleh said the federal government should present more concrete ideas on how it will make housing affordable rather than generating fear.