From next year, unemployed people and families are to benefit from newly approved social laws by the Bundesrat.
The Bundesrat, Germany’s upper house of parliament, approved a series of Social Laws on Friday which will see an increase in benefits for unemployed people and families as from next year. The Bundestag, the lower house, had already passed the laws at the end of October.
From January 2021, child benefit (Kindergeld) will be increased by 15 euros to €219 per month for the first and second child, €225 per month for the third child and €250 per month for the fourth and each subsequent child.
New Unemployment Benefit II (Arbeitslosengeld II or Hartz IV) rates will apply from January 2021. The standard rate for single adults will increase by 14 euros to 446 euros per month while spouses and partners will in future receive 401 euros.
The standard rates for basic income support recipients aged 14 and over will also rise by 45 euros to 373 euros and for adults between 18 and 24 years of age, who live with their parents, 357 euros.
In addition, the standard rate for children up to five years of age will be 283 euros in the New Year instead of the previous 250 euros. For six to 13-year-olds, the rate increases by just one euro to 309 euros.
Moreover, the tax-free allowance (Steuerfreibeträge) for children was increased from 5,172 euros to 5,460 euros per year. The tax-free allowance for the care, upbringing or training needs of a child was also increased by 288 euros to 2,928 euros. In the case of families, income amounting to the minimum subsistence level, including basic needs for the care, upbringing and education of children, must remain tax-free.
People with disabilities will also benefit from better tax treatment in 2021. The lump sums for additional expenditure due to a disability, which have not been increased for 45 years, will be doubled. The more severe the recognised disability is, the higher they will be. The lump sums for relatives who care for a person in need of care will also be increased.
The increases are intended to accommodate the increased costs of living in the country.
Social organisations and some opposition members of the Bundestag have criticised the increases as insufficient. They had demanded significantly higher standard rates of 600 euros or more in unemployment benefits for adults. The critics also called for a fundamental reform of the basis for calculating state benefits, because in their view the current level is too low and does not reflect the reality.
The Federal Government is legally obliged to regularly recalculate the standard rates for Hartz IV as soon as a new so-called Income and Consumption Sample is available on the development of prices and wages. Among other things, the expenditure on communication was supplemented to take account of the costs of mobile phone use.