The federal government is replacing Hartz IV with citizen income and is raising the standard rates significantly. Critics complain that working with it is no longer worthwhile. FOCUS online has therefore recalculated – look at our example and tell us about your own experiences.

From a purely financial point of view, the conversion of Hartz IV to citizen income from January 1 will lead to a significant increase in the income of the unemployed. The standard rate for an adult is increased from 449 to 502 euros, for children it goes up from 324 to 362 euros on average. There are also a number of bureaucratic simplifications. Citizens’ income recipients will be able to earn more money on the side in the future without risking a reduction in their standard rates. The limit above which savings are counted will also be raised significantly. In addition, recipients of citizen’s income may remain in their current home for two years. The state covers the rental costs, even if the apartment is actually too big.

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“With the citizens’ allowance, non-working will be much more attractive,” says Carsten Linnemann, deputy federal chairman of the CDU. The Crafts Association takes the same line. “At the lower end, the boundaries between regular work and basic income are becoming increasingly blurred,” says Hans Peter Wollseifer, President of the Central Association of German Crafts and Trades (ZDH), to the Rheinische Post, “this will mean that more people than before will be able to do this Not working pays more than working.”

The criticism is sparked by the fact that recipients of citizen income are paid rent, heating costs and the radio license fee in addition to the standard rates. So the actual earnings are far higher than the standard rates.

The citizen money replaces Hartz IV. A decision that gives many economists stomach ache. Because people with low incomes are hardly better off than those who do not work at all.

What do you think of citizen money? Is the work still worthwhile for you personally? Tell us about your life situation, also with a view to the increased energy costs.

Write us a message to mein-bericht@focus.de, preferably with your name and telephone number, so that we can contact you if we have any questions. We would like to publish some of the statements by name.

We compared the financial balance sheets of employees and recipients of citizenship income in eight scenarios. Individuals, single parents with one child, couples without children and couples with two children were considered. In the first comparison, all of these people work in a full-time job with minimum wage, with one parent staying at home in the family. In the second comparison, all adults have a full-time job, the gross wage of which is 2,500 euros a month, slightly above the minimum wage, but well below the national average of around 4,100 euros.

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Result: In seven of the eight scenarios we calculated, working people are better off financially than recipients of citizen income. Only in the extreme scenario of a family of four that would only have to live on a minimum wage is it more worthwhile to collect the citizen’s income. In this case, however, the state would provide further assistance, such as housing benefit.

Citizens’ income will be introduced on January 1, 2023. From this date, however, a few other things will change. Social security contributions, such as the additional contribution to health insurance and the contribution to pension insurance, will rise slightly. With the Inflation Compensation Act, the calculation of income tax also changes in favor of employees: the basic allowance increases by around 300 euros to 10,632 euros. The benchmark values ​​for calculating income tax will also change, child benefit will increase by EUR 18 per child to EUR 237, and the child allowance will increase by EUR 70 to EUR 2880 per child and parent. Overall, this leads to a significant relief, but only for people who work. Citizens’ allowance recipients pay no taxes and receive neither tax allowances nor child benefit.

The citizen’s income is only worthwhile from a purely financial point of view if you have a very low income – i.e. at best the minimum wage – and have to cover high expenses for rent and heating. This can be the case because, as in our sample calculation, you have to pay for a large apartment for a family, but also because you live in an expensive city like Munich or have a gas contract that is far above average.

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However, the state subsidies for rents from citizens’ income recipients are capped. A maximum of 50 square meters will be taken over for one person, 65 square meters for two people and 95 square meters for four people. In our calculation, we used the nationwide average rents for apartments of this size. In the first two years of citizen income, larger apartments are also paid for.

Anyone who comes to the conclusion that he would be better off financially with the citizen’s income than with his current job could of course come up with this idea. Four reasons speak against it:

1. Citizens’ income is a so-called subordinate social benefit. This means that you can only apply for it if you have already exhausted other social benefits. This includes unemployment benefit, all forms of housing benefit and allowances, child benefit, child supplements, sick pay, maternity benefit and parental benefit. In many cases, the employment agency will reject your application for this reason alone.

2. You can’t just quit your job and get citizenship. Anyone who needs help because they have resigned or lost their job through culpable behavior must justify this to the employment agency and can be subject to sanctions. Benefits may be reduced by a maximum of 30 percent.

3. You can’t just lie on the couch and collect money with the citizen’s income. Benefit recipients also have responsibilities. You have to prove that you are actively trying to find a new job, reasonable jobs that the employment agency offers you or that you are taking part in training and further education measures that the employment agency organizes for you.

4. Citizens’ allowance recipients do not pay into the pension fund. Every year in which you collect the citizen’s income reduces your later pension payments. And they can occur earlier than in working people. The employment agency can force recipients of citizen benefit to retire at the age of 63.

Craft President Wollseifer is right when he says that due to the basic income, the boundaries between working and non-working people are becoming more blurred than before. After all, the basic income raises the incomes of the poorest in society, while the incomes of the working people remain the same.

The citizen money replaces Hartz IV. A decision that gives many economists stomach ache. Because people with low incomes are hardly better off than those who do not work at all.

What do you think of citizen money? Is the work still worthwhile for you personally? Tell us about your life situation, also with a view to the increased energy costs.

Write us a message to mein-bericht@focus.de, preferably with your name and telephone number, so that we can contact you if we have any questions. We would like to publish some of the statements by name.

It is questionable, however, to draw the conclusion that the citizen’s income is too high. “In sectors where the gap between earned income and citizen’s income is no longer maintained, there is an urgent need for improvement,” says Verena Bentele, President of the VdK social association, to Deutschlandfunk. What you want to say: It is not the citizen’s income that is too high, but rather the salaries in some sectors that are too low.

Stefan Körzell from the board of directors of the German Trade Union Confederation DGB also finds Wollseifer’s assumption that non-working will be more worthwhile for some than working in the future “cynical”, as he tells the Tagesschau. “Not a single employee has a cent more in their wallets because the planned introduction of citizen income is intended to increase the standard rates slightly.” Ralf Kutzner, board member of IG Metall, argues in a similar direction: “Many craft entrepreneurs have recognized that regular work clearly should be paid better. Herr Wollseifer is obviously not one of them,” he told the dpa.

Economists even criticize that the basic income is still too low. “That’s not enough in front and behind,” said Marcel Fratzscher, President of the German Institute for Economic Research, the WDR. The social association Germany sees it similarly. He calls for a standard rate of 650 euros from January 1st.

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