Germany plans to raise Hartz IV and child benefits amid rising inflation

As well as significantly increasing unemployment benefits, the German government has signalled its intention to raise child benefits in response to high inflation in the federal republic. Family Minister Lisa Paus said the intention was to relieve poorer families from rising energy bills. 

Germany to increase Hartz IV benefit payments

The hike in Hartz IV (basic subsistence) benefits was announced last week by Federal Labour Minister Hubertus Heil, who said that “there will be a significant increase in the standard rates at the beginning of next year”, as part of a major shakeup of the system that will see the Hartz IV benefit replaced with a new “citizen’s allowance”.

Heil explained that the previous mechanism for calculating subsistence benefit rates lagged too far behind price development, leaving recipients struggling to make ends meet. He did not reveal exactly how much extra money would be offered, but suggested to Berliner Morgenpost that it would be “around 10 percent”, or 40 to 50 euros more per person per month.

The draft law for the new citizen’s allowance is currently being drawn up and should be released sometime over the summer. The intention is to make the system less bureaucratic and ensure that people are reliably protected from poverty. 

Family Minister calls for child benefits to be increased

On top of this, Federal Family Minister Lisa Paus promised extra relief for families, and suggested that as well as increasing Hartz IV standard rates, the government could raise child benefits in line with inflation to “support [poorer] families in a targeted manner.”

Long-term, the traffic light government is planning to bundle together the various financial incentives available to parents in Germany - including child benefits, allowances and maintenance payments - to create a new “basic child security”, which should be paid out from 2025.

“In the short term, we will primarily be talking about adjusting child benefits,” Paus said, adding that she expected the government to discuss policies on taxation and higher standard child benefit rates in the autumn.