The federal government is arguing about basic child security: you need to know that

What is basic child security?

Child benefit, child allowance, Hartz IV, housing benefit: children who grow up in poverty have received a bundle of financial aid up to now. Far too complicated, say social researchers and politicians for a long time. The federal government had therefore already decided last year to introduce a basic child security scheme – also known as “participation allowance”. This is intended to combine all previous individual aid into a single payment.

The basic child security should consist of a guaranteed amount for all children in the amount of the current child benefit and an additional contribution, which is graded according to the income of the parents. In total, the minimum subsistence level applicable for the respective age of the child should be reached in each case. It is already firmly planned for 2025 in the coalition agreement, but preparations for this would have to begin a year earlier. Paus wants to digitize application and payment more.

What does basic child security bring?

Almost all experts assess the consequences of basic child security as positive. In 2021, the Munich Ifo Institute prepared an expert opinion on behalf of the Greens. According to this, single parents would have between 1,361 and 2,392 euros more available per year depending on the form of assistance, for couples with children it would be between 517 euros with one child in the worst case and 9,964 euros with four or more children in the best case. In addition, households from the lower income brackets would benefit disproportionately. The Ifo Institute estimates that around three percent of households would no longer be affected by poverty. That would be 1.2 million households.

How many children live in poverty in Germany?

An evaluation by the Bertelsmann Foundation at the beginning of the year calculated that children and young adults under the age of 25 are most frequently at risk of poverty of all age groups in Germany. According to the foundation, this affects 20.8 percent of all children and 25.5 percent of all young adults. The Federal Statistical Office officially puts the poverty risk rate for children at 14.8 percent.

The difference is due to the fact that the Federal Office only includes children from households whose household income is below the risk of poverty line. This is 60 percent of the median income and was most recently EUR 2,625 per month for families with two children and EUR 1,250 per month for single parents. The Bertelsmann Foundation also counts all children who live in households that collect social benefits such as citizen income, as they often live only slightly above the poverty line.

The Federal Statistical Office also counts 24 percent of all children in the group who are at risk of poverty or social exclusion. The latter is defined as households that are mathematically above the at-risk-of-poverty line, but do not earn enough to be able to adequately participate in social life. Various criteria must be met for this, for example that a household cannot afford enough food, clothing, furniture or travel. The rate of children at risk of poverty or social exclusion is thus higher than the same rate in any other age group.

Why don’t child benefits, child supplements and so on help against this?

There are already numerous social benefits for children and families, such as child benefit, child allowance, housing benefit and student loans for young adults. But that is precisely the problem, because it means that families with low incomes in particular often do not take advantage of all the services. According to the Ministry for Family Affairs, only around 750,000 children receive the child supplement intended especially for them – 2.25 million would be entitled to it.

Paus therefore not only wants to increase the benefits with the basic security, but also make it easily accessible to all families, which is why the digitization of the applications is so important. In addition, more advice centers are to be set up to help parents.

Why does the state have to help children out of poverty?

According to the results of many studies, children who grow up in poverty have significant disadvantages later in life. On average, they achieve poorer educational qualifications because they usually have to earn money early on and therefore cannot afford lengthy training or studies. This has a negative impact on income throughout working life. In addition, people in poor households are more likely to get sick, both physically and mentally. This is because children from poor households grow up with more mental stress caused by poverty and low social participation. Parents who are poor themselves can do little to counteract these factors, after all nobody lives voluntarily on the edge of subsistence level.

In addition to many moral reasons to help children in poverty, it also helps the state and society. Children who do not grow up in poverty can concentrate more on education and social life, achieve higher educational qualifications and thus better-paying jobs, and ultimately pay more taxes and social security contributions. Because they get sick less often, they also relieve the burden on the healthcare system. The German Institute for Economic Research (DIW) had calculated for the Diakonie in a report that child poverty cost the German state around 100 billion euros in 2019 – on the one hand in the form of social benefits, on the other hand in the form of lost tax revenue.

A US study shows what the effects of more support for children in poverty are. She had given children from low-income families an additional $1,000 a month in their first year of life. Compared to children from comparable families, these children achieved better grades in school and achieved higher salaries in their professional life.

What do experts say on the subject?

The view of economists and social scientists on the subject is clear. “Germany needs basic child security,” says Marcel Fratzscher, head of the DIW in Berlin. “Adequate basic child security is a prerequisite for children in order to be able to use educational and later job opportunities.”

“The reform proposal offers significant improvements in terms of disposable household income, especially for families with children in the lower income deciles. This also significantly reduces the risk of poverty,” writes the Ifo Institute in its report.

“It is shameful when millions of children are kept in poverty in a rich country like Germany, robbed of their childhood and a fair perspective,” says Ulrich Schneider, General Manager of the Paritätischer Gesamtverband. “

How can the government then argue about basic security?

The discussion between Paus and Lindner does not revolve around the sense or nonsense of basic child security. After all, their introduction has already been decided in the coalition agreement. It’s more about the cost. Paus estimates seven to twelve billion euros per year for the project. She argues that a large part of this is based on the fact that, with basic security, families would access benefits to which they are already entitled today.

Lindner, on the other hand, does not want to spend so much money. So far he has planned only two billion euros per year, emphasizing that this amount is negotiable as soon as a concrete concept is available. It is clear that he considers the maximum twelve billion euros per year estimated by Paus to be unfinanceable. He prefers projects that increase short-term tax revenues. In addition, the FDP is against higher social benefits anyway, because they deny the scientifically proven positive effect.

How will the discussion continue?

So far, Paus has not yet submitted a precise draft law and has not been able to justify the exact costs of basic child security. Therefore, all discussions about specific expenses are premature. Chancellor Olaf Scholz (SPD) had therefore turned on and demanded a concept by the end of August. According to Paus, she then gave the chancellery and Lindner a first draft last Friday. Details are not known, but Paus allegedly only calculates an additional 3.5 billion euros for 2025. The draft should contain different variants of basic security. To which this number refers is unclear.

There is not yet an exact timetable for when the draft will be discussed and approved in the cabinet. Paus only said at a press conference that she was optimistic that this would happen soon. The law then has to be debated and passed in the Bundestag. Time is not too pressing, because basic child security is not to apply until 2025. However, in order to complete all preparations in good time, it would be advantageous to adopt them this fall.

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