The standard rate of welfare payments, known as “Bürgergeld” is likely to remain unchanged for a second consecutive year in 2026, according to a study by the Institute of German Economics (IW), a research organization with close ties to employers. The findings, reported by “Welt am Sonntag” indicate a potential pause in adjustments to the base allowance.
The study attributes this outcome to adjustments made to the mechanism governing the rate’s inflation-linked increases in 2023. Stefanie Seele, lead author of the study, explained that the reform aimed to protect welfare recipients, often facing limited financial buffers, by linking the rate’s adjustment to price developments of the previous year. However, this dual linking method, she stated, delays the reflection of short-term price spikes and does not account for inflation expectations.
According to Seele, the 2023 price developments were underestimated, while the mechanism led to a disproportionate increase in 2024 compared to the slowing rate of inflation. A recent calculation by the Institute for Employment Research (IAB) also suggested that the current level of Bürgergeld could theoretically be too high.
The potential decision to withhold further increases has drawn criticism from political figures. Timon Dzienus of the Green Party emphasized that the standard rate “should not be a political football” and reflects essential human needs. Dagmar Schmidt, Deputy Chair of the SPD parliamentary group, echoed this sentiment, stating her party will carefully assess the official calculations and potential consequences of any adjustments.
Verena Bentele, Chair of the social association VdK, described a continued freeze as “unacceptable” arguing that the standard rate is fundamentally too low. Conversely, Seele believes the new calculation method is intended to prevent annual adjustments from becoming a source of conflict. The IW proposes a revision of the future calculation method to expedite responsiveness to price changes.
One suggested change involves using the average of consumer price index forecasts for the coming year, particularly when inflation significantly exceeds the European Central Bank’s target. This approach would allow for more timely and smaller, but more regular, adjustments, potentially avoiding the issue of overcompensation followed by periods of stagnation.
