The German Federal Government — Bundesregierung — has adopted the law “Act on the Restructuring of Basic Income Support for Job Seekers”, introducing a comprehensive reform of the social welfare system. The law was passed by the Bundestag on March 5, 2026, and approved by the Bundesrat on March 27, 2026. It will come into force gradually starting July 1, 2026.

The reform introduces significant changes to Book II of the German Social Code (SGB II). One of the main elements is the renaming of “Bürgergeld” to “Grundsicherungsgeld”, signaling a return to a more traditional concept of basic income support.

A key feature of the reform is the reintroduction of the “priority of job placement” (Vermittlungsvorrang) under Section 3 SGB II. This means that immediate employment takes precedence, while training or retraining measures are only considered if direct job placement is not possible.

At the same time, obligations for benefit recipients are strengthened. According to Section 2 SGB II, individuals capable of working must fully utilize their work capacity in order to end their dependence on public support. For single individuals, this generally implies an obligation to accept full-time employment if feasible.

The rules regarding the “reasonableness” of work (Section 10 SGB II) are also tightened. Employment is considered reasonable once a child reaches 14 months of age, compared to the previous threshold of three years.

For individuals with health limitations, the reform provides more tailored support, including closer coordination with medical and social services. In addition, support for young people is expanded through strengthened youth employment agencies and improved funding structures.

Another major change is the introduction of the “cooperation plan”, replacing the previous integration agreement. This plan defines individual obligations and integration steps. In case of non-compliance, it can be converted into a legally binding administrative act.

Sanctions are also significantly tightened. Violations of obligations may result in benefit reductions of up to 30 percent. Repeated missed appointments with job centers may lead to a complete suspension of benefits, including housing costs. Refusal to accept suitable employment may also result in a full suspension of benefits for one to two months.

The reform further abolishes the “grace period” (Karenzzeit) regarding assets. Asset checks will now take place immediately upon application, with exemption limits depending on age. Housing costs are also capped, with a maximum of 1.5 times the standard allowable amount, even during the initial period.

Finally, job centers are granted expanded powers to monitor and verify eligibility in order to combat misuse of social benefits more effectively.

Overall, the reform represents a fundamental shift in German social policy: from a system focused on support to one emphasizing obligations, control, and rapid labor market integration.

The full text of the law and official information can be found here

Author of the analytical overview - Anastasiia Malyshenko