Germany’s social welfare system is facing a crisis as bureaucracy costs surge, leaving little room for actual support. A new study reveals that up to 70% of the budget is spent on administration, with long-term unemployed individuals struggling to find meaningful work.
In Germany, nearly 5.4 million people rely on the Bürgergeld social benefit payment to cover their daily needs. However, a new study by the Bertelsmann Foundation has revealed that up to 70% of the budget is spent on administration, leaving little room for actual support.
The Main Culprit: Administrative Costs
The federal government delegates tasks to regional and municipal agencies called Jobcenters, which oversee who qualifies for Bürgergeld and provide career counseling. In 2024, these agencies received €10.7 billion in funding, but administrative costs have risen by 39% over the past decade, reaching €6.5 billion.
Jobcentres are government-funded employment agencies that provide a range of services to help individuals find and maintain work.
They offer assistance with job searching, CV writing, and interview preparation.
In the UK, for example, 'Jobcentre Plus' is a network of centres that provide support to people looking for employment.
These services are usually free and available to anyone who is unemployed or looking to change careers.
A One-Size-Fits-All Approach
The Jobcenters‘ approach to supporting long-term unemployed individuals is criticized for being too rigid and inflexible. ‘Some Jobcenters spend as much as 70% of their budget on bureaucracy,’ the study found. This lack of adaptability creates a complex web of needs that are not properly addressed, including issues like disability, childcare, and a lack of education.
The Reality Behind the Numbers
Among Bürgergeld recipients are 1.5 million children, and 2.2 million individuals who cannot work due to training or caregiving responsibilities. However, only 23% of all vacancies in Germany are suitable for applicants without a degree. The number of those successfully integrated into the labor market has sunk by about 6% since the introduction of the current welfare system.
Part-Time Work Not Paying Off
The Bürgergeld system has been criticized by likely future Chancellor Friedrich Merz and his Christian Democrats, who argue that part-time work is not a viable option for many recipients. A single adult with Bürgergeld currently receives €563 per month, but this amount may not be enough to cover the rising cost of living, making it difficult to balance work and benefits.
Friedrich Merz is a German politician and lawyer.
Born on November 11, 1955, in Bingen am Rhein, Germany.
He served as the chairman of the Christian Democratic Union (CDU) from 1998 to 2000.
Merz was a member of the Bundestag from 1987 to 2019.
He has been a vocal critic of Angela Merkel's refugee policy and the European Central Bank's quantitative easing program.
The Need for Reform
The Bertelsmann study advocates for a total reform of how funds are divvied up, with a focus on providing targeted, individual plans for reentry into employment. More money needs to be allocated for support services, and lawmakers should play a more direct role in overseeing budget allocation. The system’s current ‘one-size-fits-all’ approach has the wrong focus, viewing unemployed individuals as a homogenous group rather than recognizing their unique needs.
The Bertelsmann Foundation is a German non-profit organization founded in 1977 by Reinhard Mohn.
It focuses on promoting social, economic, and cultural development through research and policy recommendations.
The foundation's work areas include digitalization, education, health care, and climate protection.
With annual revenues of over €1 billion, it is one of the largest private foundations in Europe.
Its headquarters are located in Gütersloh, Germany.
The Economic Impact of Bureaucracy
Bureaucratic costs outpace benefit payments, with a 2024 report by the Munich-based Institute for Economic Research (Ifo) estimating that bureaucracy represents a €146 billion-euro hit to the economy. Experts at Bertelsmann call for greater transparency into how Jobcenters spend their money and more impact-oriented management of caseloads.
A Path Forward
To effectively support long-term unemployed individuals, Germany needs to address the root causes of its social welfare system’s inefficiencies. By implementing targeted reforms and increasing transparency, lawmakers can work towards creating a more effective and efficient system that provides real support to those who need it most.
