Exploitative business models and organised social security fraud place a strain on local authorities and undermine confidence in our welfare state. The abuse of social security benefits is unfair to those who fund the system through their taxes and contributions. The Federal Government therefore intends to ensure that there are clear consequences for those who misuse benefits. At the same time, it wants to continue to protect those who need help.

Mandate from the coalition agreement

With the action plan to combat exploitation and the abuse of social security benefits, which the Cabinet has now adopted, the coalition is implementing key commitments from the coalition agreement – particularly for the local authorities affected. The 10-point plan presented by Federal Minister of Social Affairs Bärbel Bas and Federal Minister of the Interior Alexander Dobrindt sets out measures designed to combat the abuse of social security benefits and exploitative structures even more effectively. “We are plugging loopholes in the welfare state and taking a firm stance against welfare fraudsters”, said Dobrindt.

Do not abuse the EU’s freedom of movement

Particular attention is being paid to combating abuse by EU migrants. Germany benefits greatly from the freedom of movement within the European Union. Nevertheless, there are some undesirable developments: local authorities are increasingly reporting that immigrants are failing to integrate successfully into society and the labour market, or that they are victims of exploitative practices. The opportunity to take up employment across borders within the EU without red tape is very important, according to Federal Minister of Social Affairs Bärbel Bas. “What is not acceptable, however, is the exploitation of the freedom of movement in order to exploit people and take advantage of their distress for the purposes of organised abuse.”

The key points from the action plan

The action plan is based on the conclusions of the coalition committee meeting held on 1 July. The action plan brings together measures from various ministries.

• In future, the exchange of data between public authorities is to be made easier so that cases of abuse can be dealt with even more swiftly. As part of the reform of the basic income support scheme for jobseekers, a centre of expertise on benefit fraud has already been set up at the Federal Employment Agency. In cases where undeclared work is suspected or there are indications that the minimum wage is not being paid, provisions have also been introduced regarding employer liability and the job centres’ obligation to report such cases to the customs authorities. Following on from this, employer liability is also to be introduced in SGB XII (basic income support in old age and in the event of incapacity for work). 
• The amendment to the Building Code is intended to make it easier for local authorities to take action against so-called derelict properties used for the purpose of social security fraud. 
• People wanted on an arrest warrant are no longer to receive basic income support.
• Those behind the organised abuse of social security benefits are to be prosecuted more effectively. 
• The Federal Government aims to support EU workers and victims of human trafficking, labour exploitation and forced labour by providing information, assistance and advice.

The Federal Government also intends to press for the European Commission to review EU rules on the free movement of persons in order to better tackle false incentives and abuse.