Citizen's benefit vs. minimum wage: The big money differences in Saxony!

Citizen's benefit vs. minimum wage: The big money differences in Saxony!

What are politicians doing when it comes to the topic of citizens' money in Saxony? Today, the German Federation of Trade Unions (DGB) warns against populist debates that put citizens' money in a bad light. The current information is based on a study by the Economic and Social Sciences Institute at the Hans Böckler Foundation (WSI), which shows that it is financially worthwhile to work at the minimum wage. This brings with it not only social but also economic aspects that are crucial for many households.

Full-time employees at the minimum wage in Saxony earn between 560 and 770 euros more than those receiving citizen's benefit. In particular, DGB chairman Markus Schlimbach sharply criticized the Saxon Prime Minister Michael Kretschmer for his demands for reform of citizens' money. The numbers speak for themselves: a family of four with two working parents who receive the minimum wage has around 687 euros more in their pockets than a family with citizen's benefit. This is particularly evident in the Chemnitz and Vogtlandkreis regions, where the gap is as high as 725 euros and 716 euros, respectively, which is supported by lower rents.

Significant differences in household income

The income gap widens even further when considering single parents. Here the average difference is 758 euros for single parents with one child. For single people the difference is 604 euros; The largest difference of 773 euros falls to a single parent with a child in Chemnitz and the Vogtland district.

Another look at monthly household income shows similar trends. A childless couple who works 28.5 hours a week for the minimum wage receives 2,290 euros net. In contrast, a couple who receives citizen's benefit only has 1,458 euros at their disposal, which makes a difference of 832 euros. Things don't get any better for couples with children. An income of 2,704 euros compares to a citizen's allowance of 1,922 euros, which can easily be seen as a clear incentive to work.

Financial incentives and subsidies

The DGB calculations show that the differences between those in employment and recipients of citizens' benefit may even be underestimated. While social support measures were expanded during the lockdown and crisis in 2020, the government's current considerations for reforming social benefits are controversial, especially in the context of Hartz IV. According to experts, a mere reform of citizens' money could not fundamentally improve the situation.

The discussion about the creation of affordable housing remains particularly explosive. Many analysts and political scientists see the challenge here of sustainably supporting people with low incomes without keeping them from the labor market through increasing state benefits.

The emerging changes in the legislation, which were triggered, among other things, by the criticism of the reform proposals by the CDU and CSU, are a hot topic. This political debate will have a major impact on how the climate on the labor market will develop. Both citizens and employers need clear perspectives in order to be able to act as a unit again in the future.

Various political voices point out that it is necessary not only to reform social benefits, but also to work on the dependence of these benefits on rental prices in the respective regions.

Sources for further information include: DGB Saxony, the RND and the Time.