Germany has cut its parental allowance, or the Elterngeld, yet again. This time, the maximum total family income, before tax, will be set at 175,000 euros per year from 1 April, 2025. That’s both parents, not one. It has already been reduced to 200,000 euros per family in April 2024, and this new limit is just moving in the same direction.
Before the year 2024, this limit was 300,000 euros, and before the year 2021, 500,000 euros.
The reasoning behind it was, the high earners don’t need the parental allowance. Interesting how, as the cost of living keeps climbing, the definition of a “high earner” seems to stretch to include people with less and less income. Curious logic, that.
But let’s begin at the beginning. The same page on the IAmExpat website lists the preexisting requirements one needs to receive the Elterngeld at all, and also the level at which it’s being calculated, as follows:
- You look after your child from birth yourself.
- You do no more than 32 hours of paid work per week while you are receiving the allowance (you can receive the benefit even if you did not work before having a child).
- You live together with your child in the same house.
- You are a German / EU / EEA citizen, or you hold a permanent residence permit, or a residence permit that entitles you to work in Germany.
The allowance varies from 65 percent to 100 percent of the previous income of the parent receiving it, but is capped at 1,800 euros. It seems generous enough when you look at the percentage, but read this again, it’s capped at 1,800 euros per month. It’s all you get, even if you were earning 10K per month before. Not exactly the horn of plenty, and this limit has not changed since 2007, when it was first introduced and replaced the childcare allowance. So in 18 years, it received no recalculations, no improvements, despite the growing inflation rates.
But it’s for the high earners, some might (and do) say. It’s for those people who already have a lot of money. What’s those 1,800 euros for them? It’s peanuts!
Let’s do a little calculation to look at those high incomes, shall we?
- 175K euros per year for two equal earners is 87.5K for each, and according to the example calculation at the BMFSFJ website (Federal Ministry for Family Affairs, Senior Citizens, Women and Youth), it would be around 103.5K gross, because these 175K is the taxable income that differs from the gross income somewhat. I think the Ministry is a bit optimistic, but let’s go with it.
- This is 8,625 euros gross per month per parent, while they’re working.
- According to the brutto-netto calculator, this comes to ~5,007 euros per month net wages (calculating for tax class 4, which is applied to equal earners, for Berlin).
Now, how about the cost of living?
Let’s use the Numbeo calculator this time. We’ll estimate the cost of living for the family of three, with no kindergarten (yet, because there’s normally no kindergarten for the parental leave time), and no schools yet. Let’s allow our family two (low-cost) vacations per year, a week each, and let them eat at home mostly, with 10% restaurant meals (mostly in inexpensive restaurants) for special occasions.
The family will use a car and will pay a mortgage on a 3-bedroom apartment (master bedroom, nursery, guest room, not exactly a palace but a comfortable apartment nevertheless, they’re high earners, right?). And we’ll limit their clothing and shoes shopping and the entertainment, too. After all, if a parent is minding a baby at home, they need neither, right?
(Wrong, but let’s not go there. Let’s just say we need to save somewhere.)
It turns out that even with these far-from-crazy requirements, our family of three already needs 7,063 euros per month to cover their expenses. And that doesn’t include insurances, healthcare expenses, parking fees, or domestic help (and even if we say that domestic help is a luxury, the other items on the list are most certainly not).
But, but, together they have 10K per month, you say. Right? Wrong, because one parent is taking the parental leave, remember?
They only have one income left. And if it was supplemented by another 1,800 euros before, what generosity, Germany! What generosity! — this is no longer happening.
So what’s happening is, we increase the family size 1.5 times (in case it’s just one first child), and at the same time, their expenses grow sky high (the first year of the baby’s life is not cheap if you have a look the cost of strollers, baby cribs, kiddy furniture and toys, and all the paraphernalia new parents are buying in the hopes it will miraculously make things easier), and at the same time we cut their income in half. Good luck, ex-high-earners, welcome to the real world, wake up and smell the humus.
But let’s also look at the other side of this. You do know why the gross salary of 8.6K becomes 5K net, right?
Duh, you say. Because of the taxes.
Bingo. So our “high earners” have been working and earning, and paying into the system for years, covering the needs of those who are drawing from it. But when they’re temporarily losing income and needing some support, they’re getting none.
More pressure on ordinary people
Germany prides itself on being a social market economy — one where people with lower incomes are supported in reaching a standard of living comparable to that of higher earners, funded, of course, by the taxes of those same earners. The progressive tax system plays the role of the great leveller, reinforced by a health insurance model that leans heavily on the higher earners to subsidise those with less. And that’s all fair and well — until we reach a point where some are managing to enjoy the same standard of living without ever lifting a finger, while the actual contributors are handed ever more weight to carry. “Here, take this too,” they’re told. “And by the way, better start saving now — for your child who hasn’t even been born yet.”
After all, someone’s got to pull the weight for you and for all those other people, and you already proved you’re capable of it!
But then, wouldn’t it be more honest to have a Wild West capitalism of the United States that at least doesn’t pretend to be in any way “social” and is just pure, unashamed market? “Your kids are your responsibility” it says it clearly, refusing to pay any parental allowance and even to provide a parental leave of over three months. But at least it doesn’t swipe 50–60 percent of one’s income and pretends to be fair while being anything but.
With the median age of the population growing inexorably since 2011, one would think the German government would want to encourage parents to have kids. But this new measure shows what is actually encouraged: working until you drop, to the detriment of one’s own needs and one’s own family, so that all those people milking the system’s financial tap don’t feel disadvantaged.
There’s a story about the two dogs in some Christian literature that runs like this:
An Eskimo fisherman came to town every Saturday afternoon. He always brought his two dogs with him. One was white and the other was black. He had taught them to fight on command. Every Saturday afternoon in the town square the people would gather and these two dogs would fight and the fisherman would take bets. On one Saturday the black dog would win; another Saturday, the white dog would win — but the fisherman always won! His friends began to ask him how he did it. He said, “I starve one and feed the other.”
If you encourage people to be parents, there will be more parents. If you encourage people to be parasites, there will be more parasites.
And let’s not forget. Germany’s gender pay gap is still at 16 percent, even if it is slowly decreasing each year. Parental leave, which is still mainly covered by mothers, contributes to that because of the loss of income; the loss that was partial before due to the allowance will now become complete for those “high-earning” women.
So, which dog is Germany feeding by reaching into mothers’ pockets? One has to wonder.
Maryna Kryvko
Maryna Kryvko is a software developer in Germany. Maryna also writes a programming blog to share her knowledge. She sometimes speaks at conferences, though being an introvert, writing comes more naturally. Maryna says she’s not a professional writer but writing is something she likes, “and I think I can do it pretty well.”
