When the state gas levy comes into force in the autumn, the months of intense heating begin – and with that, many people worry that they will no longer be able to bear the costs on their own. Economists are therefore immediately calling for further relief, especially for the middle class.
From the point of view of economists and social organizations, the federal government urgently needs to launch a relief package, especially for people with low to middle incomes, because of the sharp rise in energy prices. “The best instrument are direct transfer payments such as energy money of 100 euros per person and per month for the next 18 months,” said Marcel Fratzscher, President of the German Institute for Economic Research.
Sebastian Dullien, scientific director of the Institute for Macroeconomics and Business Cycle Research of the Hans Böckler Foundation, said that it would be conceivable and sensible to relaunch the energy flat rate, which will be paid to all employees in September. Households that have largely been left empty-handed so far should also be taken into account – such as pensioners with low incomes but without receiving housing benefit.
A state gas levy will apply from October, which will lead to significant price increases. It is intended to benefit gas suppliers who have to buy replacements for the lack of cheaper gas volumes from Russia at high prices. In addition, higher procurement costs are gradually reaching customers anyway.
Chancellor Olaf Scholz has assured the citizens that no one will be left alone. For example, he had announced a reform with a strong expansion of housing benefits at the beginning of the coming year. Scholz said the government also wants to do something for those who have an income from work but also have to do math, who have no savings and cannot easily deal with the increased energy costs. “That applies to a lot of citizens,” said the SPD politician. “I’m concerned with those who earn 2,800, 3,200 or 4,000 euros gross per month, for whom all of this is a big challenge.” It’s a total package.
Fratzscher said the group named by the Chancellor includes more than every fifth person in Germany. “These are mainly people in the low-wage sector, which is unusually large in Germany, and also numerous pensioners.” This group has little savings to cover additional costs and receives little direct support from the state.
Therefore, these people could not cover the costs of higher inflation on their own and urgently needed support from the state. “We already have a strong social imbalance in this group. This is reflected, for example, in the increase in the number of people who are over-indebted,” says Fratzscher. “Politicians must now urgently implement a third relief package, which will give top priority to relieving this group.”
Fratzscher said an energy money of 100 euros per person per month for the next 18 months should only go to people with middle and low incomes and not to people with high incomes.
Dullien said the income groups Scholz named correspond to the lower middle class in Germany. “In 2021, for example, the average gross salary of a full-time employee was just over 4,000 euros per month.” So Scholz wants to relieve the middle of society. “That’s right. The rise in energy prices is hitting middle-class people hard.”
Because of rising gas costs, heating bills would skyrocket. “People who used to pay 100 euros a month for their gas heating will soon be paying 300 euros or more. For families who have 2,000 to 3,000 euros net per month at their disposal, this is a massive burden that leads to payment defaults and social upheaval can lead,” says Dullien. “It is important for social peace in the country to cushion this burden.”
This group cannot be relieved via the normal transfer systems. A new energy lump sum could be paid out in December to help people settle their bills after the winter. “Another good option would be to introduce a gas price cap for basic consumption per household,” says Dullien.
The one-off energy flat rate of 300 euros decided by the federal government will come in September. The money is paid out with the salary, so you also pay taxes on it. Social associations are putting pressure on to clarify the promised relief before the start of the gas surcharge. “The traffic light government no longer has time to argue much longer. We need a solution by September,” said VdK President Verena Bentele of the “Rhein-Neckar-Zeitung”.
The Vice President of the Social Association Germany (SoVD), Ursula Engelen-Kefer, told the “Neue Osnabrücker Zeitung”: “We cannot burden the vast majority of society with more and more burdens and at the same time leave them in the dark about how they will be supported.” So that there is no social unrest in the autumn, it is “crucially important that the federal government quickly decides on relief that reaches the people directly”.
(This article was first published on Wednesday, August 17, 2022.)
