Taxpayers' funds should be directed towards employee wages
Germany Pursues Basic Security and Pension Reforms to Address Welfare Dependency
Germany is embarking on a significant overhaul of its basic security and pension systems, with the primary aim of strengthening the social safety net while addressing welfare dependency among employed foreigners. The reforms, which have been motivated by rising numbers of welfare recipients and an overstretched pension system, are currently the subject of intense political debate.
According to the Institute of the German Economy (IW), approximately 80,000 of the 800,000 "Onstocker" (employed individuals receiving top-up social benefits such as Bürgergeld) are fully employed and subject to social insurance, while over 500,000 work part-time or low-income jobs. This situation has prompted calls for reform from various quarters, including labor market expert Holger Schäfer, who attributes the increase in "top-up recipients" to foreigners finding jobs that did not cover their household needs.
Holger Schäfer is not alone in his views. Dirk Wiese, parliamentary manager of the SPD parliamentary group, has emphasised the need for a higher minimum wage to help people get by on their wages despite working. Kai Whittaker of the Union believes that those who work more should not be punished by the system and should receive more in their wallets.
The proposed reform measures aim to reduce the number of low-income working foreigners who receive supplemental social security while improving their employment prospects. These measures include expansion and reform of occupational pension schemes, extension of statutory pension protections, labor law adjustments, and potential reforms to basic security legislation.
The expansion of occupational pension schemes would enable more employers to offer pension plans via social partner models and facilitate opt-out pension contributions without mandatory collective bargaining agreements. This aim is to strengthen social security for workers, including foreign employees, and reduce future dependency.
Statutory pension protections would be extended, such as guaranteeing a minimum pension level of 48% of average income until at least 2031, with possible contribution rate increases to maintain funding. Labor law adjustments, like more flexible parental leave notification and expanded maternity protections, indirectly support employment stability.
Reforms to basic security legislation could tighten eligibility or incentivize employment among foreign recipients of Bürgergeld to reduce welfare dependency. However, specific legal proposals remain limited in public sources as of mid-2025.
The coalition agreement of the federal government includes reforming unemployment benefits into "a new basic security for job seekers". The figures used in the report were sourced from the Federal Employment Agency.
Despite the ongoing debates, it is clear that Germany's 2025 basic security and pension reforms seek to strike a balance between strengthening the social safety net and addressing welfare dependency among employed foreigners through pension system enhancements, labor law reforms, and potentially adjusting welfare access criteria to encourage employment and self-sufficiency. However, political disagreements continue to shape the pace and scope of these reforms.
In the context of Germany's pursuit of basic security and pension reforms to address welfare dependency, calls for business and finance adjustments have emerged. For instance, Kai Whittaker of the Union suggests that the system should not penalize those who work more and should instead reward them with increased earnings, pointing towards potential solutions in the labor market. Additionally, as part of the 2025 reform package, the government proposes to reform unemployment benefits into a new finance mechanism that provides a basic security for job seekers, highlighting the intertwining of business, finance, and social welfare in the reform process.
