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Why more and more people in Germany can't afford to live on their salary

2025-07-10 19:58:43Kosova&Bota SHKRUAR NGA BEN KNIGHT
Why more and more people in Germany can't afford to live on their salary
Illustrative photo

German politicians often say that "work should pay." But more and more full-time workers are dependent on state benefits. The new minimum wage increase will not make any difference.

When German Chancellor Friedrich Merzdol took to the Bundestag floor recently to present what he called one of the government's next top priorities: the reform of "Bürgergeld" (citizens' benefits).

He also highlighted a well-known phrase about work that conservatives often use: Work should be well paid. Merz wants to ensure that German citizens are convinced again that work is worthwhile and should be well paid.

The “Bürgergeld” was approved by the previous government and has since been frequently criticized by the CDU/CSU. In 2024, around 826,000 employees were dependent on social benefits or “Bürgergeld”.

That's about 30,000 more employees than in 2023 – the first time the number of employees receiving additional assistance has increased since 2015, when more than a million refugees from Syria entered the country.

This was, perhaps not coincidentally, also the year that Germany introduced its first basic minimum wage. Even then, more than a million workers were dependent on state benefits. These additional benefits cost the state almost seven billion euros in 2024, significantly more than the 5.7 billion the state paid for these purposes in 2022.

The government published the data at the request of Left Party MP Cem Ince, who told DW: "It is unacceptable that hundreds of thousands of people are dependent on benefits, despite being employed. This means that we are supporting low wages with tax money."

Minimum wage increase

Ince says the minimum wage in Germany is simply too low. Even though the previous government increased the minimum wage to 12.82 euros, it is not enough.

Last week, the State Commission for Determining the Minimum Wage, which consists of representatives of employers' associations and unions, announced that the minimum wage will increase in two stages: to 13.90 euros on January 1, 2026, and then to 14.60 euros a year later. The SPD had been demanding an increase to 15 euros, but it was rejected.

Helena Steinhaus, founder of the campaign group “Sanktionsfrei” (Sanctions Free), which supports people on benefits, says these small increases in the minimum wage are not enough, given the prices and rents in recent years. For example, the average rent for an apartment in Germany rose by 4.7 percent last year, while in Berlin it rose by an average of 8.5 percent.

The problem of short-time work

However, some economists argue that the level of the minimum wage has little to do with the number of employees who need benefits. "It should be noted that most of these people are not working full-time. Many of them are in training or working part-time," says Holger Schäfer, an economist at the German Institute for Economic Research (IW) in Cologne.

"The minimum wage for an hour of work doesn't help here. The reason these people can't live on their income is not the low hourly rate, but the low number of hours worked."

The figures confirm this: according to the latest data from the Federal Employment Agency, out of 826,000 workers receiving benefits, only about 81,000 work full-time.

Even the Minister of Labor, Bärbel Bass, recently warned about the problem of massive fraud related to short-time work and state benefits. Intermediaries are bringing workers en masse from the poorest EU countries, such as Romania and Bulgaria, employing them part-time and at minimum wage. They are then collecting benefits from state assistance that is paid if people cannot cover the minimum living wage through their salary.

This is a scam, because EU citizens cannot simply come to Germany and claim social assistance, but in this case they are registered as employees.

However, this is no excuse for low wages, insists opposition MP Ince. “The fact is: the current minimum wage is a poverty wage!” he says.

Growing poverty

However, as Steinhaus points out, the reason many people only work part-time is simple: they have children or relatives to care for. The IW Institute estimated last year that 306,000 children under the age of three in Germany do not have a place in a nursery or kindergarten, even though they have a legal right to one.

A 2021 study by the Institute for Employment Research (IAB) showed that the more children workers have, the more likely they are to need state assistance. Ince, a left-wing MP, argues that greater state investment in increasing the number of kindergarten places would “enable many people to escape the part-time work trap.”

Companies and farmers have warned of the problems the new minimum wage could bring, saying they cannot pay seasonal workers the minimum wage.

Steinhaus doesn't buy these arguments. "Employers' associations have been talking about this argument for ten years, but it's never been proven to be true," she said.

"Of course, there are some companies that have a hard time when the minimum wage increases, but many companies benefit from the fact that they can hire people cheaply."

The Chancellor and welfare reform

Economist Schäfer also believes that the recent increase in the number of citizens needing help to survive is relatively small and that the overall trend has been downward since 2015. The increase last year, he argues, probably has more to do with general economic conditions in the labor market.

Meanwhile, Chancellor Merz is likely to press ahead with his plans to reform the welfare benefits system so that more people can enter the full-time job market.

“Unfortunately, Merz's arguments about work are wrong,” says Steinhaus. “When he says, 'work must be paid,' he means reducing welfare benefits. But the living wage does not depend on how much poor workers earn. They should earn more, there is no doubt about that. But simply reducing benefits is counterproductive and creates competition among the poorest.”/ DW


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