German Citizen Allowance Bill Rejected in Senate... To Be Coordinated by Mediation Committee

[Photo by EPA Yonhap News]

[Asia Economy Reporter Park Byung-hee] The German Federal Council rejected the labor reform bill proposed by the Olaf Scholz coalition government, which aimed to transform the unemployment benefit system into a citizen's allowance and significantly increase the amount of benefits, AP reported on the 14th (local time).

On the same day, the German Federal Council voted down the labor market and social reform bill that would convert Germany's unemployment benefit system, known as Hartz IV, into a citizen's allowance. This bill was a key pledge of the Scholz coalition government that took office last year.

Among Germany's 16 states, Bavaria, governed by the opposition Christian Democratic Union (CDU) and Christian Social Union (CSU) alliance, opposed the bill, while other states where the CDU participates in the state government abstained. Representatives from Baden-W?rttemberg and Bavaria, where the CDU is part of the state government, demanded amendments to the bill.

The German Federal Council has a total of 69 seats, with each of the 16 states allocated between 3 to 6 seats based on population. The Federal Council gives the final approval on bills passed by the Federal Diet.

The Scholz coalition government, composed of the Social Democratic Party, the Green Party, and the Free Democratic Party, secured a majority in the Federal Diet after winning last year's general election, but the Federal Council is still led by the opposition CDU/CSU alliance.

The labor market and social reform bill passed the Federal Diet in October but ultimately failed to clear the Federal Council. AP explained that the rejected bill will be sent to a mediation committee to resolve and coordinate differences between the Federal Council and the Federal Diet, but it is unclear what kind of compromise will emerge.

German Labor Minister Hubertus Heil said, "Compromise is possible," adding, "We will immediately activate a mediation committee consisting of 16 members from the Federal Diet and 16 members from the Federal Council, with equal representation."

For the German government to introduce the citizen's allowance starting next year, negotiations in the mediation committee must conclude within 11 days, by the final Federal Council plenary session on the 25th.

The bill included a significant increase in the monthly allowance. For a single adult household, the monthly citizen's allowance would be 503 euros (approximately 700,000 KRW), an increase of 53 euros over the existing unemployment benefit. Standard allowances for two-person, three-person, and four-person households would also be raised. As of last month, the number of beneficiaries of the Hartz IV unemployment benefit system in Germany, including adults and children, reached 5.33 million. This figure includes Ukrainian refugees.

AP reported that the opposition agrees with raising the benefit amount but opposes other aspects of the bill.

Nikolaus Hofmeister, Baden-W?rttemberg's Minister of Economic Affairs and Labor, pointed to a six-month grace period during which citizen's allowance recipients would face only mild sanctions without repeatedly visiting job centers, calling for binding measures and clear boundaries. He also opposed raising the asset threshold for eligibility, emphasizing that support should be provided only to those truly in need. The CDU/CSU alliance criticized the citizen's allowance for potentially reducing recipients' motivation to work.

This content was produced with the assistance of AI translation services.