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WORKING IN GERMANY

How generous is Germany’s unemployment benefit system?

Germany is often ranked among the top countries for the best unemployment benefits. What are the conditions for getting financial support if you find yourself without a job - and how much can you expect to receive?

How generous is Germany's unemployment benefit system?
A sign points to the Employment Agency office in Hoyerswerda, Saxony. Photo: picture alliance/dpa | Robert Michael

If you lost your job – or walk away yourself – there are a few steps to take to ensure that you receive financial support during your unemployment.

How to register

To receive relief when you are unemployed, you must register at the Federal Employment Agency. Once your case is reviewed to ensure you are eligible you can begin receiving unemployment benefits. 

You must visit the Federal Employment Agency (BA, or Bundesagentur für Arbeit) in person or online at the earliest three months before your employment ends.

READ ALSO: What happens to your residency permit if you lose your job in Germany?

If your employer does not provide you with advance notice of your contract termination, then you need to visit the Agency three days after you know of your unemployment. You do not need an appointment. 

There are strict protections against unlawful termination of employment, but not all employers are aware of the rules. If you find yourself unlawfully terminated you may be entitled to a severance payment

If you register too late you could receive a Sperrzeit, or disqualification period which would decrease your unemployment benefits. 

Is unemployment available after quitting your job?

Yes, but you may have to wait for those benefits to kick in. For individuals who resign to find employment elsewhere and need unemployment benefits while looking for their next step, you can also visit the Federal Employment Agency in person or online at the earliest three months before your employment ends. 

The BA will require you to wait three months after your notice period before you can receive benefits, so it is advantageous to schedule an appointment before you leave the job.

This period can be waived if you can show that your job took a toll on your health (with a doctor’s note), your new employment contract was canceled, and / or you can prove you resigned without notice because of employer misconduct like not receiving pay. 

What unemployment benefits are available?

There are two types of unemployment benefits available in Germany. 

  • Unemployment Benefit 1 is an insurance-based benefit available if you contributed to the unemployment insurance system during your employment. You will receive benefits according to your contributions to the system while employed. 
  • Unemployment Benefit 2 or Bürgergeld is a benefit for individuals and families facing financial hardship because of unemployment or low income. This benefit is funded by federal taxes.

READ ALSO: Bürgergeld: Germany’s monthly unemployment benefit to rise by 12 percent

A woman clicks on an online application for Bürgergeld

A woman clicks on an online application for Bürgergeld, Germany’s long-term unemployment benefit. Photo: picture alliance/dpa | Carsten Koall

Eligibility for unemployment

Regardless of which unemployment benefit you are eligible for, you must be a legal resident of Germany, registered as unemployed, actively looking for a job, and between the ages of 15 and 65.  

To be eligible for Unemployment Benefit 1, you must have been employed and contributed to the unemployment insurance system for at least 12 months in the past two years before becoming unemployed.

You may also be eligible for this benefit if you raised a child until the age of three, received sick pay, voluntarily signed up for unemployment insurance while freelancing, or completed voluntary military service, federal volunteering or youth service.

To be eligible for Unemployment Benefit 2, expats who are facing financial hardship must meet the means test criteria set by the job centre. Foreigners must also fulfill at least one of the following scenarios:

  • Registered resident in Germany for at least 5 years
  • Previously received Unemployment Benefit 1, but benefits ran out
  • Worked in Germany for three of the last six months, and are not entitled to unemployment benefit 1

What is covered by unemployment benefits?

Unemployment Benefit 1 is based on previous earnings so it partially covers living expenses and housing. Recipients will also remain covered by health insurance. 

Unemployment Benefit 2 covers essential living expenses including food, clothing, 

It covers rent and heating costs up to the rate set by each state and recipients receive 

Both categories can receive job-seeking assistance, free professional training and counseling to improve job opportunities. 

How much money will I get?

Recipients of unemployment benefit 1 can expect to receive 60 percent of their gross income, or 67 percent if they have children. It is important to note that the money you receive is taxable. Germany also ignores gross income above €90,600 when deciding benefits. 

Bürgergeld recipients can expect up to €563 per month along with the payment of other living expenses and housing. Local authorities set rates for “reasonable” accommodation costs based on the region’s cost of living. Check with your local ‘jobcentre’ to determine what the allotment will be.   

The jobcentre in Berlin Mitte.

The jobcentre in Berlin Mitte. Photo: picture alliance/dpa | Philipp Znidar

How long do unemployment benefits last?

For those receiving Unemployment Benefit 1, assistance typically lasts between 6 to 12 months. If you are over 50, the benefits can last up to 2 years. Still, you could receive less unemployment benefits if you face a Sperrzeit or assistance disqualification period. 

Changes proposed to Germany’s system

And Germany’s unemployment system may face another shakeup. 

That’s because the CDU proposed several changes to Bürgergeld, Germany’s long-term unemployment benefit. The center right party said in a statement it wants to “abolish it in its current form” and rename the program to “Neue Grundsicherung” or New Basic Security. 

What are the proposed changes?

Under the current proposal, stricter sanctions would be established to reduce benefits if appointments at the jobcentre are missed with no excuse or recipients refuse employment. 

The CDU resolution also intends to prevent Totalverweigerer (complete refusers), unemployment recipients who are able to work but refuse to do so, from receiving any benefits. 

Germany’s Constitutional Court decided in 2019 that a 100 percent cut was not constitutional. But the country’s highest court found that a 30 percent cut in benefits could be permissible but anything higher than 60 percent was unreasonable. It is unclear how the CDU plans to clear this hurdle when implementing the plan. But for “total refusers” it may be permissible to fully cut benefits

The SPD and the Green party rejected the CDU initiative. SPD leader Lars Klinbeil rejected the plan in a statement to Tagesschau

“The amount of citizens’ money is determined by a constitutional court decision. This has now been implemented, with the consent of the Union, by the way,” he said. “We need to have other debates than attacks on the welfare state.”

The federal and state governments also met to discuss potential changes to refugee policy. 

New Ukrainian refugees may also no longer receive Bürgergeld, instead the group will receive monetary assistance through the Asylum Seekers’ Benefits Act, according to a recent CSU proposal. 

Under this proposal a single asylum seeker would be entitled to a maximum of €460 in monthly assistance through the Asylum Seekers’ Benefit. This represents a slight decline from the €563 Ukrainian refugees could receive previously through Bürgergeld. 

In 2023, nearly 6 million people received Bürgergeld benefits. There is no national data on how many benefit recipients fall under the “complete refuser” category. 

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WORKING IN GERMANY

How the German government wants to toughen up rules on unemployment benefits

People receiving long-term unemployment benefits - Bürgergeld - will see tighter rules soon under plans put forward by the German coalition government in the latest budget.

How the German government wants to toughen up rules on unemployment benefits

The coalition government wants to get people out of work into the workforce by toughening up the rules around receiving Bürgergeld – the long-term unemployment benefit in Germany, also known as Arbeitslosengeld II. 

According to a 31-page paper put together by the coalition, made up of the Social Democrats (SPD), Greens and Free Democrats (FDP) as part of 2025 budget proposals, the plans include making longer commuting times acceptable and introducing more sanctions.  

The move is part of a ‘growth initiative’ aimed at revitalising the sluggish German economy.

READ ALSO: How Germany’s planned 2025 budget could affect you

“In order to maintain acceptance of the benefits and to get more of those affected into work, it is necessary to strengthen the principle of reciprocity again,” says the paper.

However, not everyone in the coalition is happy about the decision to toughen up the rules around the ‘citizen’s allowance’, which sees people out of work for a long time receive around €563 per month. 

Some commentators have said the proposals are similar to the previous controversial long-term unemployment system – Hartz IV – which was known for being sanctions-based. 

Here’s a look at the big talking points. Keep in mind that nothing is set in stone just yet, and there may be changes. 

Increasing commuting times

The SPD, Greens and FDP coalition leaders believe that commuting three hours a day is reasonable if you work more than six hours. Those who work up to six hours, on the other hand, should have to accept a slightly shorter total time for the outward and return journey, namely two and a half hours.

In general, the Job Centre (Bundesagentur für Arbeit) should be able to look for a job for a Bürgergeld recipient within a 50-kilometre radius of their home. By doing this, the government hopes to get more people into work – even if it means people are having to travel further from their home.

There are to be exceptions, for example, if people are looking after children or relatives in need of care.

READ ALSO: 10 golden rules to know if you lose your job in Germany

Sanctions to be tightened

Under the plans, tougher penalties are to be imposed on recipients of Bürgergeld benefits who refuse to accept reasonable work, training or an integration measure designed to help the long-term unemployed get back into the labour market.

Anyone who refuses reasonable work “without a valid reason” should “have to reckon with increased reductions” to their benefits, the coalition leaders state. The plans are for the allowance to be cut by 30 percent for three months.

German Finance Minister Christian Lindner, Minister of Economics Robert Habeck and German Chancellor Olaf Scholz deliver a press conference on July 5, 2024 in Berlin, after the three parties in Germany's ruling coalition struck an agreement on the 2025 budget.

German Finance Minister Christian Lindner, Minister of Economics Robert Habeck and German Chancellor Olaf Scholz deliver a press conference on July 5th, 2024 in Berlin, after the three parties in Germany’s ruling coalition struck an agreement on the 2025 budget. Photo by RALF HIRSCHBERGER / AFP

Reporting to the jobcenter more often

The government wants to encourage more meetings between those who are unemployed for longer than a year and the jobcenter.

“A high, binding contact density between recipients of the Bürgergeld and the authorities is important for successful placement,” says a paper from the Ministry of Finance, which summarises the planned tightening of the citizen’s allowance.

In order to increase the success of people getting into work, the coalition wants to oblige certain people to go to the authorities once a month and report there. This should not affect all recipients, but only those who are “available to the labour market at short notice”. This excludes, for example, people who have to look after small children or are in further education.

Tougher penalties for those caught working on the side

Anyone who receives Bürgergeld and works illegally on the side will soon face tougher penalties if the plans are approved. For those caught, the Job Centre will be able to reduce benefits by 30 percent for three months.

However, undeclared work must first be uncovered. In order to improve the rate, the government wants to make it a requirement for unemployment officers to report suspected cases to customs. Customs is responsible for combating undeclared work.

At the moment, anyone who works illegally is committing an administrative offence or a criminal offence, depending on the extent of the offence, a fine may be imposed. Anyone who receives unemployment benefits is also committing social fraud, which can be punished with imprisonment or a fine.

READ ALSO: Bürgergeld – Germany’s monthly unemployment benefit to rise by 12 percent

Reduced grace period for using own assets

People should generally use up their own assets before they receive Bürgergeld from the state. However, there is a protected amount of assets that do not have to be touched within a special grace period.

As part of the Bürgergeld reform, the coalition had increased protected assets to €40,000. An additional €15,000 is added for each additional person in the household.

Under the new plans, the waiting period during which the money doesn’t have to be used is to be reduced from the current 12 months to six months, according to the traffic-light coalition leaders. However, the pension scheme is excluded from this.

A person holds a wallet with cash.

A person holds a wallet with cash. Photo: picture alliance/dpa | Lino Mirgeler

What is the timetable for this?

The above-mentioned proposals are announcements from the agreement paper that Chancellor Olaf Scholz, Economics Minister Robert Habeck and Finance Minister Christian Lindner have drawn up, as well as from German media reports citing sources. 

Many questions are still unanswered and a lot has to be finalised in the coming weeks and months. 

What’s the reaction?

SPD General Secretary Kevin Kühnert emphasised this week that aspects of the agreement are not yet fully formulated. He is sceptical about how big an impact the changes to the Bürgergeld will have. “The assumption that there are hundreds of thousands of lazy people on unemployment benefits” is technically incorrect, Kühnert told German broadcasters. 

Beate Müller-Gemmeke, from the Green Party, also believes that the measures “don’t help one bit with integration into work”.

Justice Minister Marco Buschmann, FDP, on the other hand, praised the planned tightening of the law as “socially just”. 

Meanwhile, German newspaper Taz ran a story on Monday the headline: ‘Bald wieder wie Hartz IV?’ – “Soon to be like Harz IV again?”

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