The Ifo Institute contradicts the widespread assessment that work in Germany is no longer worthwhile because of citizens’ money. “In Germany, work always leads to higher incomes than doing nothing,” explained the Munich Economic Research Institute.
According to the scientists’ calculations, the prerequisite is that low-income earners also apply for the possibility of topping up their income through additional social benefits. Without money from the state, the pure income from work may actually be lower than the citizen’s benefit.
“The claim made by some politicians that those who only receive social benefits receive more net than a low-income earner is simply wrong,” said Andreas Peichl, head of the Ifo Center for Macroeconomics and Surveys.
The institute’s calculation examples: A single person in a city with a medium rent level like Dresden with a gross income of 1000 euros can, with the help of additional social benefits, earn 891 euros net per month after deducting rent and heating costs. Anyone who doesn’t work and only receives social benefits has 563 euros in citizen’s benefit.
“Only if a single person with a gross income of 1,000 euros does not apply for any social benefits that he can receive, then he ends up with 357 euros net,” said economist Manuel Pannier.
According to Ifo, with a gross income of 2,000 euros, a single person can earn 1,020 euros per month with social benefits; without social benefits, it would be 965 euros. Both contributions are significantly higher than the citizen’s allowance of 563 euros.
