To combat poverty, the Arbeiterwohlfahrt (AWO) is proposing the consolidation of several social benefits. This recommendation follows a study prepared by the Ifo Institute on behalf of the AWO federal body, which was presented in Berlin on Wednesday.
The proposal calls for introducing a fully integrated social transfer system, specifically by merging housing benefits (Wohngeld), child supplements (Kinderzuschlag), and basic subsistence aid (Grundsicherungsgeld). Lukas Hochscheidt, an AWO representative for political coordination and advocacy, noted that calculations showed a significant rise in disposable income for those in the bottom three income deciles. This reform would particularly benefit single parents and families with children. According to the AWO, the poverty risk quotient would decrease by 0.9 percentage points, narrowing the poverty risk gap by approximately two billion euros. Furthermore, the proposal is designed to strengthen work incentives overall.
The ultimate aim of the reform is to improve the situation of households, particularly low-income families with children. The Ifo Institute estimates that the reform itself would incur “reform-inherent fiscal extra expenditures” of nearly 5.4 billion euros annually, primarily due to the improvements made in existential support areas.
Regarding funding the reform at the municipal level, Hochscheidt told the dts news agency that opportunities for savings exist “in various areas.” He mentioned that the AWO had presented a proposal in 2025 that focused on the large discrepancy between child allowances and the relief provided through child tax allowances-especially those related to childcare, education, and training. Currently, this system provides added benefits to wealthier families. Hochscheidt suggests that by addressing this gap, over three billion euros could be saved.
He emphasized that this does not mean lowering the general child allowance. Rather, it means eliminating the extra relief that affluent families currently receive via these allowances. By leveling the playing field so that wealthier families receive only the same level of support that other families receive via the child allowance, the €3 billion savings could be achieved, putting the AWO on a good path to cover the total estimated cost of €5.4 billion for their reform.
