Traffic light plans: Minimum wage, basic child security & Co.: Who benefits most?

Created: 01/14/2022, 12:35 p.m

By: Michelle Brey

The plans of the traffic light government around Chancellor Olaf Scholz (right) and Federal Finance Minister Christian Lindner relieve two groups of the population in particular.

© Tobias Schwarz/AFP

The plans of the traffic light government also bring financial relief.

Two groups benefit the most.

However, one aspect could change that.

Berlin / Munich – Shortly before Christmas 2021, the traffic light * parties agreed and signed a coalition agreement.

With the new government around Chancellor Olaf Scholz and Federal Finance Minister Christian Lindner (FDP), the wallets of the citizens are facing some changes.

Specifically, there are several points:

• basic child security,

• minimum wage increase,

• Higher allowances for trainees, pensioners and savers,

• solidarity surcharge.

What are the plans of the traffic light government, who will benefit from them - and who will not?

An overview.

Basic child security: traffic light coalition plans automatically calculated “funding”

With the basic child security, the traffic light wants a “restart of family support”, as the parties wrote in the coalition agreement.

Federal Family Minister Anne Spiegel (Greens) described the planned instrument as a “declaration of war on child poverty”.

The basic child security will be “the big hit to get families in Germany out of poverty”.

According to the coalition agreement, previous separate financial support (e.g. child benefit, parts of the education and participation package and the child allowance) should be bundled “in a simple, automatically calculated and paid out subsidy” – the basic child security.

Specifically, the plan is: There should be a fixed amount independent of income.

In addition, there should be a graduated additional contribution, which depends on the income of the parents.

According to calculations by the Center for European Economic Research (ZEW), families with middle and low incomes in particular will benefit.

Couples with children should be able to count on an increase in their average annual income of 3,010 euros.

For comparison: According to the calculations, the increase for couples without children amounts to 690 euros.

In addition, single parents benefit significantly (increase: 2330 euros) compared to single households.

Minimum wage increase: 7.2 million people would benefit

Another point of the traffic light government is the increase in the minimum wage.

In 2022, this rose from EUR 9.60 to EUR 9.82.

According to the coalition agreement, the amount should be raised to twelve euros.

Millions of people in Germany would benefit from the increase, most of them women, Heil told the

in mid-December.

According to calculations by the Federal Statistical Office, the minimum wage increase will benefit almost 7.2 million employees.

Higher allowances: trainees and savers - who benefits?

Furthermore, according to the coalition agreement, several allowances are to be increased.

The project concerns the following points:

• Training allowance:

  This is to increase from 924 to 1,200.

  Lower income brackets will also benefit from this.

• Saver's allowance:

  As of January 1, 2023, this lump sum is to be increased to 1,000 euros for singles (previously: 801 euros) and 2,000 euros for married couples (previously: 1,602 euros).

  The goal: save more, invest more - for example in a private pension plan or shares.

  According to the FDP, the increase is intended to relieve the burden on savers and small investors.

  There is also an innovation in terms of contributions to pension insurance.

  These should be available from 2023

  be fully tax deductible (originally: 2025).

  Lindern, who fundamentally rejects higher burdens for top earners and the rich, announced this to the Bild newspaper.

  Mainly higher income classes will benefit from this, since they have the necessary money for investments.

Solidarity surcharge: Complete abolition could change everything

Overall, low earners and families would benefit the most.

However, that would change if the solidarity surcharge (soli) in its current form were declared unconstitutional.

Background: Since January 2021, the surcharge has been dropped for almost all citizens.

Since then, however, the ten percent of citizens with the highest income have had to pay it.

If the Federal Constitutional Court were to cut the allowances for top earners, the highest-income segment of the population would be better off than parts of the middle class.

So there would be significant relief for top earners.

The FDP* had spoken out in favor of the complete abolition of the solo.