Germany’s government approved a major new anti-fraud package on Wednesday aimed at organised welfare abuse. Some of the measures could mean more checks and stricter rules for EU citizens from the end of the year.
Germany’s federal government has approved a ten-point action plan designed to crack down on social welfare fraud, particularly schemes involving organised criminal networks that exploit vulnerable EU migrants and the welfare system.
The package, approved by the Federal Cabinet on Wednesday, was developed jointly by Labour Minister Bärbel Bas (SPD) and Interior Minister Alexander Dobrindt (CSU).
The government argues that its focus is on criminal networks that exploit vulnerable people and abuse welfare rules for profit, with Bas stressing that Germany needs foreign workers and continues to benefit from freedom of movement within the EU.
Nevertheless, some of the planned measures would increase checks on benefit claims and tighten eligibility requirements in certain cases.
What happened on Wednesday?
Wednesday’s cabinet decision marks the formal adoption of the government’s anti-fraud strategy. The plan is part of commitments already outlined in the coalition agreement and follows months of consultations with municipalities that say they have struggled to deal with organised welfare fraud.
Ministers say the measures are intended to close loopholes, improve cooperation between authorities and make it harder for criminal groups to profit from social benefits.
According to the government, ministries and agencies will now begin putting the various measures into practice with the aim of having them in force around the turn of the year.
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The ten-point plan
The government plans to allow authorities responsible for welfare payments, immigration, taxation, security, healthcare and local registration to share information more extensively. The plans also call for the use of AI-supported analysis tools to identify suspicious patterns.
In addition, municipalities will receive stronger powers to tackle so-called “junk properties” or “problem properties”. Officials are to gain easier access to neglected buildings, cities will have stronger rights to purchase them and, in extreme cases, owners could face expropriation if they ignore binding renovation orders.
The government also wants tougher consequences for employers who use illegal labour or benefit from undeclared work.
Eligibility rules will also be tightened. For example, people wanted on an enforceable arrest warrant – particularly convicted criminals avoiding prison sentences – will no longer receive basic income support.
The government also wants to ensure that EU citizens qualify for certain welfare benefits only after five years of lawful residence, rather than just five years of residence. Transitional support for some EU citizens residing unlawfully in Germany will also be shortened.
The entrance to the Jobcenter in Düsseldorf, North Rhine-Westphalia. Photo: picture alliance/dpa | Oliver Berg
Additional points include stronger enforcement against organised fraud networks, better monitoring of school attendance, closer cooperation with countries of origin and a push for discussions at EU level about possible changes to freedom-of-movement rules.
The government insists the measures are aimed at the abuse of free-movement rules rather than free movement itself.
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Why is the government acting now?
The debate centres on allegations that organised gangs routinely bring people from poorer EU countries, particularly Bulgaria and Romania, to Germany.
While EU citizens generally have the right to move to Germany without a work permit, the government says these criminal networks use sham employment arrangements to help create or maintain eligibility for welfare payments.
The individuals are reportedly housed in overcrowded and dilapidated buildings while criminal organisers profit from the welfare payments, including child benefits and rent subsidies.
Ministers have repeatedly stressed that many of the people involved are themselves victims of exploitation.
Ruhr region identified as a hotspot
The Ruhr region in North Rhine-Westphalia has emerged as the area most frequently associated with the problem.
Cities including Duisburg have long complained about criminal networks using rundown housing, sham employment contracts and welfare claims as a business model. Municipal leaders have repeatedly called for stronger powers and closer cooperation between authorities.
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The federal government says an increasing number of municipalities across Germany are reporting similar problems, although no nationwide figures were presented alongside the action plan.
Has there been any pushback against the ten-point plan?
The strongest criticism so far has come from the Left Party, which argues that the government is focusing too heavily on welfare abuse while failing to devote the same energy to strengthening Germany’s social safety net.
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