Nearly 5.4 million people in Germany receive Bürgergeld — social benefit payments that cover a wide range of needs, from the unemployed to the working poor to adults with disabilities.

Bürgergeld has been controversial since its inception in 2022, it became a routine talking point for conservatives who opposed its creation.

However, a new study by the Bertelsmann Foundation shows that administration is the main force driving up the cost of welfare, and that too little is invested in getting the unemployed into work.

Up to 70% of the budget may be spent on admin

The federal government deputizes regional and municipal agencies called Jobcenters to oversee who qualifies for Bürgergeld, as well as provide career counseling and shepherd the unemployed into training and education programs. For that, they received €10.7 billion ($11.6 billion) in 2024. However, "in the past 10 years, administrative costs have risen by 39%, reaching 6.5 billion euros," the study found.

"Some Jobcenters spend as much as 70% of their budget" on bureaucracy, it added.

Tobias Ortmann, who worked on the project for Bertelsmann, told DW that major budget reforms and a drastic reworking of the Jobcenters' one-size-fits-all approach are needed to fight the bloat.

"The heterogeneity of benefit recipients must be taken into account so that funds are not only allocated on a flat-rate basis," he said, highlighting that issues like disability, childcare, and a lack of education create a complex web of needs that are not properly being addressed. Ortmann pointed out that until there is a legal framework that recognizes this problem, there is little individual Jobcenters on the ground can do to address it.

Workforce reintegration continues to shrink

Among Bürgergeld recipients are 1.5 million children. Of the remaining 3.9 million, 2.2 million can't work because they are doing some kind of training or are caring for relatives or small children. This leaves 1.7 million recipients who are able to work. However, two-thirds of them have not completed any vocational training. According to the Institute for Employment Research (IAB), only 23% of all vacancies in Germany are suitable for applicants without a degree.

Since the introduction of the current welfare system, "the number of those successfully integrated into the labor market has sunk by about 6%."

Part-time work not paying off

What began as a wish by the outgoing administration of Chancellor Olaf Scholz to replace its much-maligned predecessor known as Hartz IV, Bürgergeld has been sharply criticized by the likely future Chancellor Friedrich Merz and his Christian Democrats (CDU), further complicating coalition talks with Scholz's Social Democrats (SPD). 

"In one of every two companies, workers are saying: I'll just go get Bürgergeld," Merz said ahead of Germany's February federal election, without offering data to back up this statement.

The trope that people are better off on welfare is a common one, but the real picture is more complex.

A single adult with Bürgergeld currently receives €563 a month. In addition, the state covers health and long-term care insurance, rent and heating. With the rising cost of living, this does mean that a part-time job — which can lead to reduced benefit payments — may not be worth it. 

However, study after study by the IAB has borne out that most unemployed people would rather earn a living wage than collect benefits, and that stagnating wages and skyrocketing costs are the larger issue.

Merz accused of pandering to far-right voters

The CDU leader has been accused of using anti-welfare rhetoric to court voters of the far-right Alternative for Germany (AfD). Poised to become the largest opposition party in parliament, the AfD has been increasingly vocal about non-citizens receiving Bürgergeld.

The facts, according to the Federal Labor Ministry, are that in 2024 some 2.64 million people who received Bürgergeld were not German citizens. However, you must be a legal resident in the country to receive the benefits, and much of this group is made up of Ukrainians and other refugees who are either children or do not yet have sufficient language skills to secure employment.

The CDU has promised sweeping cuts to social welfare and harsher sanctions on people deemed fit to work who cannot prove they are actively job-seeking. Indeed, Merz has promised to slash benefits to those people by 100%, despite a 2019 ruling by Germany's high court that cuts of more than 30% are unconstitutional.

Bureaucratic costs outpacing benefit payments

While the Bertelsmann study authors agree that "moderate" sanctions against people who break the terms of their welfare benefits should be carried out more resolutely, the larger issue remains the cost of administering Bürgergeld, not the recipients themselves.

Complaining about bureaucracy is a national pastime in Germany — the country's seemingly infinite layers of paperwork and administrative offices even make it the butt of jokes internationally. Indeed, a 2024 report by the Munich-based Institute for Economic Research (Ifo) estimated that bureaucracy represents a €146 billion hit to the economy.

When it comes to Bürgergeld and the Jobcenters, the experts at Bertelsmann advocate for "a total reform" of how funds are divvied up. People need a "targeted, individual plan" for their reentry into employment, and more money needs to be allocated for this kind of support. To that end, they suggested that lawmakers play a more direct role in how the budgets are spent, rather than simply allocating funds and letting the rest work itself out.

The Bürgergeld system as a whole "has the wrong focus," said Roman Wink, the study's lead author, by viewing the unemployed as a homogenous group. Wink also called for more transparency on how Jobcenters spend their money, saying they should have to prove they are managing their caseloads in an "impact-oriented" way.

Edited by: Rina Goldenberg

While you're here: Every Tuesday, DW editors round up what is happening in German politics and society. You can sign up here for the weekly email newsletter Berlin Briefing.