Citizens' allowance is becoming a money pit worth billions: First forecast for 2024 is frightening

RUHR24 Citizens' allowance is becoming a money pit worth billions: First forecast for 2024 is frightening RUHR24 editorial team • 11 hours • 3 minutes reading time MARKETS TODAY The citizens' allowance is costing the state significantly more than expected. There is talk of additional expenditure of over nine billion euros. There is little improvement in sight. Dortmund - Since January 1, 2023, unemployed people in Germany have been receiving citizens' allowance instead of unemployment benefit II. The state benefit is highly controversial and is causing additional costs running into billions for health insurance companies, among others. But they are not the only ones groaning because of the citizens' allowance. According to a projection, the financial burden on the state is also much greater than expected. Citizens' allowance is becoming a money pit: Heil miscalculates by tens of billions Because the first months of 2024 will exceed the citizens' allowance budget estimated by Federal Labor Minister Hubertus Heil (SPD). Data from the Federal Employment Agency (BA) shows that the costs for the state amounted to 3.9 billion euros in both January and February. If this level is maintained, this means total expenditure of 46.8 billion euros for 2024. Originally, Labor Minister Heil had only planned 37.6 billion euros for the year. Accordingly, the traffic light coalition would have to expect 9.2 billion euros in additional expenditure for the citizen's allowance (more political news at RUHR24). Citizen's allowance will cost the state over 9 billion euros more - little improvement in sight In view of the 2025 federal budget, in which numerous ministries already have to expect cuts, the precarious financial situation with the citizen's allowance could make the situation even worse. And the number of citizen's allowance recipients, which has stagnated for a year, does not promise any improvement for the time being. The number of citizen's allowance recipients entitled to regular benefits has remained fairly constant at around 5.5 million since February 2023. But it is also clear that measures have had little to no effect. The "Job Turbo" launched in autumn 2023, which was primarily intended to get refugees into work quickly, is even causing "reverse discrimination" in some cases, according to critics. Citizen's allowance for Ukrainians - proportion of working refugees stagnates despite Job Turbo A look into the past - when there was still unemployment benefit II or Hartz IV - also reveals that the number of employable benefit recipients has increased significantly. In other words, the proportion of people who could actually go to work. In May 2022, the BA still counted around 3.5 million, but the figure has now reached over 4 million (May 2024). However, it should be noted that the number of refugees from Ukraine in Germany is continuously increasing and they are immediately entitled to citizen's allowance, which the Bavarian Interior Minister obviously dislikes. According to the Central Register of Foreigners, there are now almost 1.2 million Ukrainian refugees in Germany (as of April 2024), as a request from the Integration Media Service at the Federal Ministry of the Interior (BMI) shows. According to the Federal Ministry of Labor and Social Affairs (BMAS), only 21 percent of Ukrainian refugees of working age were employed in February 2024. Of the 730,000 people of working age, 119,000 were in employment subject to social insurance contributions and a further 37,000 were in a mini-job. According to Focus, Heil announced in November that the Jobturbo would place around 200,000 Ukrainians from language courses directly into jobs. Citizens' allowance: Federal Ministry of Labor contradicts forecast for 2024 The BMAS, meanwhile, contradicts the forecast for 2024. A spokesman for the Federal Ministry says: "Extrapolations based on any figures collected in two winter months (January 2024 and February 2024, editor's note) are by no means serious." One thing is certain: the number of employable unemployed is higher than it has been since Corona and politicians - especially Labor Minister Hubertus Heil - have to come up with something to change that. Heil recently announced a zero increase in citizens' allowance for 2025. Note: This article was first published on June 7, 2024 and subsequently updated.