After the election is before the election: Due to the historically poor performance in the European elections, the SPD is struggling to find its course – proposals are to be put on the table quickly with which the party hopes to win back voters. The first proposal is now ready for discussion: the standard rate for people receiving citizen’s allowance who work illegally should be cut. Only the rent would continue to be paid.
“The black sheep on the side of the companies, but also on the side of those who take on such work, especially if they also receive citizens’ allowance, must be exposed and punished,” said party leader Saskia Esken – and praised the Chancellor. During his time as finance minister, Olaf Scholz had significantly strengthened customs, including in terms of personnel, said Esken.
The irony is that the number of uncovered illegal employment crimes fell in 2023 – not least because the number of companies inspected fell by 20 percent. Where less is searched, less is found.
In fact, however, undeclared work is booming. Financial scientist Friedrich Schneider has been calculating the volume of illegal employment for years. For 2023, he came up with 463 billion euros – an increase of around 80 billion compared to 2022. In addition, there are more lenient penalties. The total number of prison sentences imposed as a result of undeclared work has almost halved since 2021.
The Social Democrats’ latest move is also a smokescreen. The entirely correct approach to combating illegal work is unlikely to have much effect, as experts from the police union responsible for customs explain.
Social courts are likely to impose corresponding cuts. Proposals on how to do this more effectively have been on the table for years.
The second part of the SPD plan also sounds shaky: saving money. It is no coincidence that the idea comes in the middle of budget negotiations. It is intended to appease Finance Minister Christian Lindner (FDP), who is responsible for customs, and calls for a tougher approach to the citizen’s allowance.
However, the number of people whose citizen’s allowance is cut off because of illegal work is likely to remain very small. According to “Spiegel”, the responsible Federal Employment Agency (BA) does not have any figures on this.
The tactic is reminiscent of the debate about the “total objectors”: The SPD wants to score points with supposedly tough measures against welfare abuse, but the practical effects are only evident in homeopathic doses.
What actually helps against illegal work: tougher penalties, more targeted investigations instead of random checks, and digital networking between job centers and customs. In addition, Labor Minister Hubertus Heil should implement the proposal presented to him in a specially commissioned study by the ifo Institute and ZEW Mannheim: by adjusting the so-called transfer withdrawal rates, employment could be increased by 136,000 people or 145,000 full-time jobs.
So far, the state has not provided enough incentives to switch from illegal work to regular employment. Various calculations have shown that illegal employment in combination with the citizen’s allowance is simply too attractive.
On the other hand, anyone who receives citizen’s allowance and doubles their working hours officially will hardly have any more money in their pocket. More work is currently not worth it for the more than 800,000 people who top up their wages with citizen’s allowance – even if the Minister of Labor insists otherwise.
