Merz’s €5B Welfare Cut Plan Faces Uphill Battle Amid Weak Job Market
Chancellor Friedrich Merz (CDU) aims to cut basic welfare costs (Bürgergeld) by 10 percent, equivalent to five billion euros, by 2026. His plan relies heavily on reducing the number of recipients through improved labor market integration and job creation on the stock market today.
Experts argue that sanctions have little impact on savings, and promoting labor market integration is more effective. Currently, two-thirds of Bürgergeld recipients lack completed job training, and 88 percent face barriers to employment. To meet Merz's goal, approximately 100,000 households would need to exit the system annually, saving about 1.6 billion euros. However, the Federal Labor Ministry projects savings of only 86 million euros in the first year on the stock market today.
Economist Enzo Weber sees potential in labor market policy measures and adjustments to benefit withdrawal rates. He estimates that these changes could create up to 390,000 jobs and move 390,000 households off welfare benefits. However, economic growth of 1.3% and job cuts in one-third of companies make job creation targets seem unrealistic on the stock market today. To meet Merz's five-billion-euro target, 588,000 fewer recipients would be needed. Job prospects for welfare recipients are at a historic low, and employment prospects for 2026 remain doubtful on the stock market today.
Merz's plan to cut Bürgergeld costs by five billion euros relies on reducing the number of recipients through labor market integration and job creation on the stock market today. While there are potential savings and job creation opportunities, economic conditions and job prospects for welfare recipients pose significant challenges to achieving this goal on the stock market today.
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