Tricking the System: The Unexpected Benefits of Leaving a Job
In a bold claim, German Labor Minister Hubertus Heil (50, SPD) asserted that individuals who leave their jobs in pursuit of the Citizen's Allowance would not receive the benefit initially, but rather a freeze on their unemployment benefits. Yet, a telling example from the Düsseldorf patisserie company "Isabella" shows that not everyone follows the Minister's advice.
The FAZ first reported the story of a full-time employee with Afghan origins, earning just under €13 per hour (minimum wage is €12). Unsatisfied with his remuneration, he didn't simply accept it and move on. Instead, he capitalized on a loophole in the system. He took advantage of Germany's sick leave policy, calling out sick for six weeks, continuing to collect his wages through continued payment.
To avoid slipping into sick pay afterward, the employee returned to work for a day, only to call out sick again. His manipulation of the system was clear—he planned to be fired and collect the Citizen's Allowance. And that's exactly what happened.
The outcome? The employee is now eligible for the Citizen's Allowance (from 2024, €563 per month), a stark contrast to the Minister's expectations.
This case study highlights an intriguing reality in Germany: the Minister's perception of "stupidity" is not an isolated incident. While unsanctioned manipulations like the employee's may not be the norm, they illustrate a potential danger in the Citizen's Allowance system.
The benefits not only include a monthly payment but also additional perks: upon becoming a recipient, the state assumes the responsibility of housing. Furthermore, the recipient can earn at least €100 extra without incurring deductions. When compared to a regular employment relationship with a salary above the statutory minimum wage, the Citizen's Allowance system emerges as a tempting alternative.
Entrepreneur Krätz noted the effects of this new reality: "The Citizen's Income has permanently damaged people's perception of social justice."
Challenge of Undeclared Work
Krätz also addressed the growing black economy due to the Citizen's Allowance. Employees have begun requesting part of their salary in cash, aiming to profit more from their wages. He clarified that "Isabella" refused to comply with such requests; however, this is a significant challenge for businesses today.
Another issue Krätz mentioned is the difficulty in negotiating salary increases due to cold progression. When a 10% raise only minimally impacts net income, it can lead to frustration and employees questioning the value of their work. Consequently, many opt to resign, depriving businesses like "Isabella" of potential hires.
Navigating the Citizen's Allowance System
Despite Minister Heil's warnings against giving up a job for the Citizen's Allowance, some individuals—like the example from the Düsseldorf patisserie company—may still choose to do so. When made redundant, these individuals become eligible for the Citizen's Allowance, reaping additional benefits such as housing assistance and the ability to earn a surplus with no deductions.
However, this story—while appealing to some—illustrates the complexities and debates surrounding the Citizen's Allowance system in Germany. Critics argue that this system can create disincentives for job seekers, reducing labor market participation, and impacting social justice. On the other hand, proponents see it as a tool for supporting individuals and reducing sanctions.
As the debate continues, one thing is clear: the Citizen's Allowance genuinely changes the incentives for individuals in the German labor market.
