Unemployment in Germany. Work in Germany. The economic crisis in Germany, issues in the automotive sector, and the struggles with energy transformation have been in the news for many months. However, at the core of these problems is Germany’s social system, which makes working less appealing. How can it be that in one of Europe’s largest countries, it can be more beneficial to be unemployed than to have a full-time job? In Germany, a family with two children often receives more money from social benefits than from working. This situation creates problems and, surprisingly, leads to higher unemployment.
Germany’s Social System: Is Unemployment More Rewarding than Employment?
The German social system offers significant financial support for families, particularly those with children. In some cases, the income from social benefits, like family allowances and unemployment benefits, is higher than the wages these families earn from their jobs. For instance, a family with two children in Karlsruhe receives more money from social assistance than from a full-time job.
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A chart shared on the social media platform X by user MichelAArouet, using data from Badische Neueste Nachrichten, illustrates how families in Karlsruhe receive income based on the number of children and their sources of support. The red color represents income from social assistance, while the blue shades show the earnings of working families, ranging from the median income to the richest 10%.
Large Families Benefit More from Unemployment
The portal Scenarieconomici.it has analyzed data showing that the average family with two children in Karlsruhe has a higher income without working. This trend is even more pronounced among larger families. Even families in the top 25% of earners, including wealthy families, may find themselves less motivated to work. For instance, a family of doctors with four children has a stronger financial incentive to remain unemployed than to take on full-time jobs.
Germany’s Social System: Heavy Tax Burden on Working Families
The issue isn’t the unemployment assistance itself, but the heavy tax burden on working families. As it stands, a family with two children lacks sufficient incentive to take on work. This discourages families from participating in economic activities, which ultimately harms wealth creation for both them and the overall economy.
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If the government were to provide more support to working families, it could encourage employment in sectors like schools, kindergartens, and care services. This approach could create a positive domino effect—boosting economic growth, generating new jobs, and increasing citizen involvement in economic life.
The ‘Traffic Light’ Coalition Policy and the Declining Popularity of the Government
The current support structure stems from the social policies of the “traffic light” coalition led by the Social Democratic Party of Germany (SPD). While their approach to social support may appear beneficial, it actually creates a demotivating system that discourages work. This issue, along with the rising cost of living and economic challenges, is contributing to the government’s declining popularity.