Fewer benefit cuts for citizenship benefit recipients would increase employment
According to a recent study by the Munich-based ifo Institute, fewer benefit cuts for recipients of citizen's allowance who work more would increase employment. "This reform would even bring more money into the state coffers," explained ifo expert Andreas Peichl, who led the study. According to the study, employment would increase by 136,000 people or 145,000 full-time jobs.
This would enable the reform to finance itself, the institute said. According to the study, public budgets would "end up with around 1.1 billion euros more in taxes and social security contributions", says Holger Stichnoth from the Center for European Economic Research (ZEW), co-author of the study commissioned by the Federal Ministry of Labour.
The proposal is aimed at single parents and single people without children as well as couples with three or more children. Up to now, social benefits such as housing benefit have been reduced by 80 to 100 percent for incomes over 520 euros per month up to 1,000 euros. In many cases, this means that gainful employment is not worthwhile for recipients of citizen's allowance.
The proposed reform envisages reducing social benefits in future by only 70 percent up to an income limit of 2,000 euros. For incomes above 2,000 euros per month, only 65% of social benefits would be cut instead of the previous 100%.
"The results of a representative survey show that such a reform would meet with broad acceptance among the population. In this respect, the hurdles to implementation should be relatively easy to overcome," explained Maximilian Blömer from the Ifo Institute.
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Less benefit cuts for citizen's allowance recipients who increase their employment might lead to a decrease in reliance on public assistance. However, current cuts in social benefits for recipients earning above 520 to 1000 euros per month are often enough to dissuade them from seeking full-time employment.
Source: www.ntv.de
