The Arbeiterwohlfahrt (AWO) has backed the reform approach of a federal government commission and proposes merging basic income support, housing and child benefits. According to the social welfare association, the consolidation not only reduces bureaucracy but also lowers the risk of poverty. The AWO presented a study by Munich’s ifo Institute that calculated the effects of the proposals.
The model envisions splitting benefits for people capable of working into a part that secures existence and a part that supports it. A so-called “earnings booster” – a special payment of 100 euros per employed person above the mini-job threshold – as well as allowances for single parents are intended to create additional incentives. According to ifo study director Maximilian Blömer, the lowest income groups could receive an average of 515 euros more per year as a result.
The at-risk-of-poverty rate could fall by 0.9 percentage points, 322,000 additional people could enter work, and the volume of work could rise by 188,000 full-time equivalents. However, annual additional costs of 5.4 billion euros would be incurred. The AWO points out that increasing child benefit to 299 euros would cost a similar amount but would only reduce the at-risk-of-poverty rate by 0.1 percentage points.
Source: www.zeit.de
