Germany may raise social welfare

Germany’s government may have to raise spending by billions of euros after the country’s highest court challenged the way it …

Germany’s government may have to raise spending by billions of euros after the country’s highest court challenged the way it calculates social welfare to the long-term unemployed and their families.

The government must recalculate the base amount it grants adults and their children who are in receipt of so-called Hartz IV welfare, the Federal Constitutional Court said today in the southern city of Karlsruhe.

Current welfare rules can remain in place until the end of the year, it said.

The provisions in the law that define the base amounts for adults and children "do not fulfil the constitutional right to a decent minimum income," Hans-Juergen Papier, president of the Federal Constitutional Court, said in his explanatory statement.

Higher welfare spending for the more than six million recipients of social welfare in Germany may widen the budget deficit. The government already expects the deficit to swell to 5.5 per cent of gross domestic product this year, almost double the European Union's 3 per cent of GDP rule.

Adult recipients of Hartz IV social welfare get a base amount of €359 a month, while their children get between 60 per cent and 80 per cent of an adult's allowance, depending on their age.

"This is a good day for children and families in Germany," Annelie Buntenbach, a board member of the DGB union federation, said in a statement. "We call on the government to work toward an increase of the base amounts quickly and in a transparent fashion."

Chancellor Angela Merkel's government has earmarked €41.1 billion in this year's €328 billion budget for the recipients of Hartz IV funds.

The court obliged the government to grant additional aid in exceptional cases, effective immediately.

Bloomberg