German government attacks the welfare state: Basic support payments to be abolished

Marianne Arens

German Chancellor Friedrich Merz attends the cabinet meeting at the chancellery in Berlin, Germany, Wednesday, Sept. 10, 2025. [AP Photo/Markus Schreiber]

On October 8, the coalition committee of the Merz-Klingbeil Christian Democrat/Social Democrat government abolished Bürgergeld (“Citizens’ Income” basic welfare payments). The decision reveals the true character of this government, which is preparing for war abroad and class war at home. As early as August, Chancellor Friedrich Merz (Christian Democratic Union—CDU) declared, “We can no longer afford the welfare state.”

With the new, harsh rules for basic social security, the Ministry of Labour and Social Affairs, led by the Social Democratic Party (SPD), is now directly following the dictates of the far-right Alternative for Germany (AfD). On September 24, AfD leader Alice Weidel had ranted in the Bundestag (parliament) that Bürgergeld had “degenerated into immigrant money, the costs of which are completely out of control.” It was, she said, “a self-service shop in which freeloaders can enrich themselves without shame.” She shrieked: “Abolish Bürgergeld once and for all!”

The government has now complied. “Bürgergeld is history,” declared Christian Social Union (CSU) leader Markus Söder at a federal press conference on Thursday morning. Chancellor Merz confirmed that “the chapter of Bürgergeld is thereby closed.” The federal minister for labour and social affairs, Bärbel Bas (SPD), announced: “We are tightening sanctions to the limits of what is constitutionally permissible.”

Yet the very measures the coalition has now adopted—complete withdrawal of benefits as punishment—were long considered unconstitutional. When asked about this at the press conference, Bas replied: “For those refusing appointments, there will now be a cascade of sanctions that ultimately reduces benefits to zero. … We are firmly convinced that this complies with the constitution.” Merz explained how this works: anyone receiving social benefits who misses a first and second appointment will have their already meagre payments (€563 per month) cut by 30 percent. If they miss a third appointment, all payments will cease.

The 5.5 million people receiving basic social assistance, who are now being put under such pressure, also face benefit cuts. Despite rising prices, they will have to expect a freeze next year. Pensioners dependent on supplementary benefits will also be affected. With all these measures, the government expects savings of up to €5 billion.

At the same time, Merz is handing out tax gifts to shareholders and business owners. He plans to gradually reduce the corporation tax rate paid by companies, limited partnerships and joint-stock firms from the current 15 percent to 10 percent by 2029. In the post-war decades, this rate once stood at 65 percent. “We will have the lowest corporation tax rate ever,” the chancellor promised in the Bundestag September 24. This alone will deprive the federal budget of €46 billion over five years—two-thirds of which will go to those already earning more than €180,000 a year.

Very different treatment awaits those living on the edge of poverty. Bas made it clear at the press conference that the government intends to coerce the unemployed into accepting any kind of work. “We can only save money if we focus on work,” she said. “If we get 100,000 people out of Bürgergeld and into jobs, we will save about one billion euros.”

Given the ongoing mass layoffs in Germany, this is an unmistakable threat. At a time when hundreds of thousands of workers in the car and supplier industries are losing their secure, decently paid jobs, men and women who have worked in industry for decades are now to be forced—after a short period of unemployment—into any available low-paid job.

In March 2024, 10,000 employees demonstrated against layoffs in front of the Bosch headquarters in Gerlingen near Stuttgart

The attack on Bürgergeld is part of a budget that allocates billions for rearmament and war. The federal budget, which rose from €476.8 billion in 2024 to €502.5 billion this year, will increase again next year to €520.5 billion. Added to this are annual allocations from the “special funds” for the Bundeswehr (Armed Forces) and infrastructure to improve Germany’s “readiness for war”, allowing borrowing of up to €1 trillion. Including these special funds, total federal expenditures will exceed €600 billion in 2026—an increase of nearly 26 percent over 2024. Most of this money is going to the military.

The defence budget is the only one seeing massive growth: the Bundeswehr will receive €82.7 billion next year—€20 billion more than this year. Including allocations from the special fund (over €80 billion this year), the total will exceed €108 billion. Compared with the 2015 defence budget (€33 billion), this figure has tripled. By 2029, the defence budget is to rise to €153 billion (3.5 percent of GDP), and in the following years to 5 percent of GDP.

Meanwhile, more and more of the announced “investments” are being channeled into the transformation of society toward a war economy. Entire production sites—such as VW Osnabrück and Alstom in Görlitz—are converting to arms manufacturing with state subsidies. The special infrastructure fund is also not primarily used to renovate decaying schools, hospitals, care homes or public transport but to build war-ready roads, bridges, motorways and communication systems for conducting surveillance at home and abroad.

Chancellor Friedrich Merz at the formation ceremony of the Bundeswehr tank brigade in Lithuania [Photo by Bundesregierug / Guido Bergman]

To finance this war budget, the government is taking on a colossal mountain of debt. To fund the special budgets, it plans to borrow €170 billion annually until 2029. Over five years, this means €850 billion in new debt, raising total public debt to €2.7 trillion.

Merz’s commitment to rearmament—his “whatever it takes” pledge—means that an ever-growing share of the federal budget will flow to the banks as interest and debt repayments. By 2029, these payments will amount to €66.5 billion—and could rise to €100 billion, according to the German Taxpayers’ Association, which warns of Germany’s declining credit rating on global markets.

Defending his policy in the Bundestag September 23, Merz declared: “We face one of the most challenging phases in modern history … Foreign and domestic policy can no longer be separated.” Workers, he insisted, must finally understand that they will bear the cost of rearmament and debt. “We need a national understanding of the inevitability of change,” said Merz.

This attack on Bürgergeld marks a clear signal for a frontal assault on all social achievements won over decades. The government is proceeding step by step against the poorest and most defenceless. Back in May, Interior Minister Alexander Dobrindt (CSU) had halted family reunification for refugees and, with SPD backing, ramped up deportations.

The World Socialist Web Site warned at the time that this was merely the prelude to attacks on all workers. This has now been confirmed. Discussions are already underway about abolishing “Care Level One” payments, introduced in 2017, which would affect 5.7 million people in need of care—865,000 of whom would lose all benefits.

The government has long viewed the federal pension subsidies—comprising about 70 percent of the Labour and Social Affairs budget—as a prime target. For now, only the so-called “active pension” has been introduced: starting next year, retirees who continue to work can earn up to €2,000 tax-free. A broader assault on the pension system has been outsourced by Vice Chancellor Lars Klingbeil (SPD) to an expert commission, which is to present recommendations by early 2027.

Not a single party, from the AfD to the Left Party, has questioned the federal budget or its basic premise: that Germany must become a major military power again and be “fit for war” against Russia by 2029. The “special funds” worth over €1 trillion were made possible only thanks to the active support of the pro-war Greens. The Left Party approved these plans in the Bundesrat (upper chamber of parliament) and has since backed their implementation in parliamentary committees. It also paved the way for Merz’s swift election as chancellor.

The social cutbacks and massive state debt differ little from the conditions that have already led to repeated government crises and mass protests in France. A similar revolutionary situation is rapidly developing in Germany.

Anger in the working class over these social attacks is immense, but it has no political voice, as the trade unions are tightly bound to the SPD, in government with the Christian Democrats, and integrated into German corporate structures. This close collaboration was again demonstrated on Thursday, immediately after the press conference, when IG Metall union chair Christiane Benner met with government representatives and industry leaders at the “auto summit.”

Survey reveals decline in Australian living standards

Leonard Johns

A recently published national survey reveals a long-term decline in living and working conditions across broad sections of the Australian population. This trend was already underway before 2020, but has sharply accelerated since the start of the ongoing COVID-19 pandemic.

Workers queuing at a Sydney Centrelink office in early 2020.

The Household Income and Labour Dynamics in Australia (HILDA) report, produced annually by the University of Melbourne since 2001, released its 2025 edition in September, based on data collected in 2023. HILDA tracks a cohort of some 17,000 respondents through their lives with annual surveys, collecting information on income, financial stress, childcare, retirement and health.

The 2025 report marks the 23rd wave of data collection. Its authors introduce the 212-page document noting, “An important theme of this year’s report is how Australians are faring in the aftermath of the COVID-19 crisis and the sharp rise in the cost of living that has followed it.”

Between 2019 and 2023, median household disposable household income grew by just 1.5 percent when adjusted for inflation. But the official cost-of-living figures are a vast understatement. In the 2022–23 financial year alone, median advertised rents increased by 11.5 percent. Over the past decade, house rents have risen by an average of 59.8 percent across the country.

The survey found that 54.6 percent of workers experienced a decline in “equivalised income”—that is, adjusted to account for estimated household need—from 2022 to 2023, compared with 41.9 percent from 2018 to 2019.

Wealth inequality in 2023, measured by the Gini coefficient, fell slightly from its 2022 level but remained higher than at any other point since 2011, reflecting what the report describes as “growth in high incomes relative to middle incomes and declines in low incomes.”

Since 2021, all indicators of financial stress have increased. These indicators include having to ask for financial help from family, friends or welfare organisations; being unable to heat one’s home; skipping meals; pawning property, and falling behind on rent, mortgage, or utility payments.

Nearly 15 percent of respondents reported experiencing two or more indicators of financial stress in 2023—the highest level in over a decade. Single-parent families were hit hardest, with more than 30 percent reporting financial stress.

The Australian fertility rate—1.5 children per woman in 2023—continues to steadily decline, a decades-long trend. Notably, there has been a marked increase in the number of respondents citing financial pressures as the main driver of their decision to have fewer children or none at all. Compared to 2008, concern about the cost of raising children increased by 7.9 percent among women and 10.1 percent among men in 2023. 

HILDA data show that since 2005, the desire to have no children increased more than any other childbearing preference, rising from less than 8 percent to around 14 percent among women (a 43 percent increase) and from 11 percent to nearly 15 percent among men (a 27 percent increase).

Over the same period, the desire for a one-child family rose from below 9 percent among both genders to around 12 percent for women and 11 percent for men, while the desire for three or more children declined overall.

Nearly every financial consideration related to childbearing has risen in importance since 2005, with job security and childcare costs at the forefront.

Rising anxiety about childcare expenses reflects their escalation as a key household cost, driven by longer working hours and the growing prevalence of dual-income families.

Between 2002 and 2023, the proportion of families using paid childcare increased from 42 percent to 56 percent, and the number of paid hours rose by 7.7 hours per week. Over the same period, median childcare expenditure jumped from $72 to $171 per week—a 137.5 percent rise.

The burden was greatest for working-class families: Between 2002 and 2022, childcare spending rose by 51.3 percent for the lowest-income earners, compared with 41.9 percent for middle earners and 22.2 percent for the top third. Including unpaid care, the total use of childcare grew by 11 percent in the decade to 2023, with 29 percent of families relying on grandparental care, the highest level since the survey began tracking it in 2004.

Older Australians are playing an increasing role in the informal care network for children, despite several factors contributing to the deterioration of their own living conditions and capacity to provide this support.

For one thing, the long-term trend of Australians having children later in life means that grandparents are, on average, more elderly. HILDA reports that “at a given age, fewer people are already grandparents in the more recent period than in the earlier period.” In 2007 and 2011, around 2 percent of 40-year-olds were grandparents, compared to just 0.5 percent in 2019 and 2023. Among 50-year-olds, the figure fell from 19 percent to 15 percent, and among 60-year-olds, from 60 percent to 43 percent.

At the same time, older workers are delaying retirement because they cannot afford to leave the workforce. For those aged 55–59, the retirement rate has fallen from 40 percent of women and 23 percent of men in 2003 to 14.5 percent and 12.3 percent, respectively, in 2023. The steepest declines occurred among those aged 60–64, dropping from 69.5 percent of women and 48.5 percent of men to 40.8 percent and 27.4 percent.

Between 2003 and 2023, the mean retirement age rose from 58.8 to 63.6 years for women and from 59.9 to 64.8 for men. The report attributes this to “financial necessity, improved health, changing social expectations, and policy reforms such as the increase in the Age Pension eligibility age.”

But the HILDA survey’s own findings challenge the claim that improved health is a major factor: Across the entire research period, average bodily pain increased, particularly among older age groups.

Between 2001 and 2023, average pain scores for males rose by 5.1 percent and for females by 11.6 percent. Reported pain increased with age, accelerating in those older than 40. The lowest levels were among respondents aged 15 to 24, whose pain scores increased from 16.7 to 20.4 points out of 100, between 2001 and 2023. Those aged 65 and over recorded the highest pain scores, rising from 38 points in 2001 to 39.8 in 2023.

Alongside physical pain, psychological distress also worsened—particularly among those aged 15–44. Between 2013 and 2023, distress increased by 55.1 percent for males and 46.3 percent for females.

Since 2011, the proportion of 15–24-year-olds experiencing distress has more than doubled, from 18.4 percent to 37.6 percent in 2023. The report further noted “that a greater proportion of individuals are at high risk of developing serious mental illness.”

Taken together, the data paint a bleak picture of family and social life. High living costs are discouraging childbearing; parents who do have children must work longer hours and spend less time with them, while childcare costs climb beyond reach. Many turn to grandparents for help—yet grandparents are increasingly older, less healthy, and often still working out of financial necessity.

Successive governments—Labor and Liberal-National alike—have overseen this decades-long decline, deepening it through relentless austerity. The current Labor government has overseen the largest decline in working-class living standards since the end of the Second World War.

Across the states, Labor governments have imposed real pay cuts on public sector workers through wage caps and union-brokered enterprise agreements that keep pay rises below inflation. Social spending on health, education, and welfare has been cut by billions in real terms since Prime Minister Anthony Albanese took office.

These measures are not accidental, they are part of a conscious program to extract ever-greater profits from the working class amid a descent into global imperialist conflict.

The trade union bureaucracies, fully integrated into the state and corporate apparatus, help enforce this agenda—suppressing strikes, imposing sub-inflationary agreements, and stifling opposition within the working class.

Noboa unleashes murderous repression against mass protests in Ecuador

Cesar Uco

Demonstrators in Cuenca, September 16 [Photo by Martin Vasco / CC BY-SA 4.0]

Military-backed police have killed at least three protesters over the past week in Ecuador, the first fatalities in a nationwide general strike that began on September 22 and is now in its fourth week with no signs of resolution.

The Confederation of Indigenous Nationalities of Ecuador (CONAIE, in Spanish) is one of the organizations that called the strike in protest against a significant increase in fuel prices, rising inflation, power outages and violence from drug trafficking gangs. It issued a statement denouncing the government for having “turned our communities into war zones, using tear gas, bullets, and indiscriminate violence against a people exercising their constitutional right to protest.”

After unleashing lethal violence against protesters in the northern highlands canton of Otavalo, Ecuador’s right-wing government of President Daniel Noboa claimed Thursday to have reached an agreement with local indigenous leaders to end the strike. This was denied by CONAIE as well as by Otavalo’s mayor, who said the strike was continuing against high fuel prices and other national issues. Officials admitted that protesters continue to blockade roads in at least four provinces.

The government has justified its intensification of repression based on an incident that occurred on October 7, when a convoy carrying President Noboa to Cañar came under attack from protesters.

Initial media reports parroted government allegations, calling it a “shooting”; however, the official version rapidly fell apart.

Over 500 protesters surrounded the convoy, and some threw stones. Seven vehicles were damaged, four security officials were injured and five people detained and subsequently released. Noboa himself was unscathed.

The government claimed without providing evidence that the president’s vehicle had been struck with bullets, and that the attack was an “attempted magnicide.”

Daniel Noboa getting out of vehicle allegedly hit by gunfire [Photo: Presidencia Ecuador]

According to video and photo evidence analyzed by BBC Verify Lupa Media, none include sounds or images consistent with gunfire. Finally, a police report cited by El Mercurio concluded that there was “no ballistic evidence” that the president’s convoy had come under fire.

This has not stopped the government from using the event to tighten repression. It declared a state of emergency, expanding troop deployments and suspending democratic rights in 10 provinces, with Noboa branding participants in overwhelmingly peaceful protests as “terrorists.”

In addition to the three dead, military repression has left dozens injured and 120 arrested.

Foreign governments, whether nominally “left” or openly right-wing, expressed their complete support for Noboa’s maneuver, making clear that they are all aligned when it comes to crushing opposition from below.

Through its embassy in Quito, the Trump administration denounced the attack on Noboa: “The United States condemns the attack on President Daniel Noboa’s motorcade. We stand with Ecuador as authorities investigate and ensure accountability, and stand against all forms of political violence.”

British Prime Minister Keir Starmer, criticized for his support for the Israeli genocide in Gaza, hypocritically called for “de-escalation and dialogue” in Ecuador. This isn’t the first instance of reactionary collusion between the UK and Ecuador. In 2019, President Lenín Moreno collaborated in the expulsion of Julian Assange from the Ecuadorian embassy in London, leading to his imprisonment and the threat of an espionage trial in the US.

Right-wing and purportedly left-wing governments in Latin America have expressed solidarity with Noboa, deeming recent events “an attack on democracy.”

Colombia’s Gustavo Petro and Brazil’s Lula da Silva, representatives of the so-called “Pink Tide,” joined condemnations of the attack, sending a message of support to Noboa.

China, concerned about Noboa’s alignment with Washington, described his stance as “unacceptable” and urged Ecuador to “restore peace and stability.”

Ecuador’s mass protests began last month after the elimination of fuel subsidies. They were called by the United Workers’ Front (FUT) and the National Union of Educators (UNE), with additional support from the indigenous organizations.

A “national shutdown,” or paro, was called by these organizations on September 21 under the demands of restoring the fuel subsidies and lowering of the regressive value-added tax back from 15 percent to 12 percent.

The unrest in Ecuador is part of a broader trend in Latin America of resistance to the aggressive social austerity policies and attacks on democratic rights by far-right leaders, including Noboa, Nayib Bukele in El Salvador, Javier Milei in Argentina and the right-wing government now headed by José Jerí in Peru.

Significantly, even as the security forces were killing protesters in Ecuador, in neighboring Peru, a plainclothes agent of the Peruvian National Police (PNP) shot and killed 32-year-old Eduardo Ruiz Sanz Wednesday during a march by students, transport workers and civil organizations against Jerí, who was installed by the right-wing Congress after it ousted Peru’s hated and unelected president Dina Boluarte, and against the Congress itself. The government has indicated it will exploit the violence for which it itself is responsible to impose a state of emergency and concentrate power in a presidential dictatorship.

In Ecuador, Noboa comes from one of the country’s richest families. During his campaign for reelection earlier this year, he found himself trailing his rival, the Correista candidate Luisa González (a supporter of the “center-left” nationalist former president Rafael Correa), by several percentage points in the polls (. In response, he decided to travel to Washington D.C. to meet with Donald Trump, reaching an agreement to use the issue of drug trafficking as a pretext for US military deployments in Ecuador and other countries.

However, the underlying reason of such deployments would be to lay US claim to Latin America’s resources and to suppress the emerging mass movement, which appears to be gaining momentum, posing a significant threat to the capitalist order.

Since Noboa began his second term, amid opposition charges of electoral fraud, the value-added tax (VAT) increased from 12 percent to 15 percent between March and April 2024. A gallon of gasoline rose from US$2.40 to US$2.465 in May of this year and reached US$2.751 in August. Premium gasoline, with the VAT increase, rose from US$3.89 to US$3.99 per gallon. In April 2024, automotive diesel increased to US$1.80 per gallon, and with the elimination of subsidies in September 2025, the price rose to US$2.80.

Since 2023, the economic crisis has worsened, marked by reduced foreign investment, business closures, high food inflation, and increasing informal employment. As the World Bank reported:

Economic activity experienced a contraction of approximately 2 percent in 2024, amidst an environment marked by energy shortages, high levels of violence, and political uncertainty. The worst drought in 60 years caused nationwide blackouts and power rationing.

Major cities in Ecuador, particularly Guayaquil and Quito, have seen a surge in homicides. According to El Universo, intentional homicides reached 4,619 between January and June, a 47 percent increase over the same period in 2024.

The high body count is driven largely by violent competition between criminal organizations. Ecuador is a major hub for narcotics trafficking, which is largely ignored as the Trump administration directs military aggression against Venezuela, which accounts for a minuscule share of drugs bound for the US.

The Ecuadorian people have faced numerous crises over the past 25 years, starting with the 1999 “bank holiday” crisis, which led to a financial collapse, a 7.3 percent GDP drop, widespread poverty, and mass migration to countries like the United States. According to a study by the University of Buenos Aires:

On January 9, 2000, Ecuador officially adopted the US dollar as its currency in an attempt to stabilize an economy plagued by rampant inflation, which at the time reached 96.6 percent.

The study indicates that Ecuador’s adoption of the dollar as its national currency has effectively made it a colony of US imperialism.

In 2019, the International Monetary Fund (IMF) insisted on eliminating subsidies, causing fuel prices to soar by 120 percent. This led to violent protests and increased societal polarization, a situation worsened by the pandemic, which heightened unemployment and poverty.

Ecuador is now facing an energy crisis due to droughts affecting hydroelectric plants, resulting in daily power outages of about eight hours.

The Amazonian indigenous population is particularly affected, facing economic challenges such as high transportation costs and limited access to essential services. In Orellana province, poverty has soared by 76.2 percent, with adequate employment rates at only 11 percent. Bolívar province in the Andes has a poverty rate of around 40.7 percent, with permanent employment of about 20 percent.

Noboa, who personifies the subordination of the Ecuadorian ruling class to US imperialism, is in talks with Trump ally Erik Prince, the billionaire mercenary recruiter, to develop specialized repressive forces. Quito is also discussing with the Pentagon the reopening of the Manta military base, and is exploring the possibility of establishing a new base in the Galapagos Islands, a significant wildlife sanctuary whose unique species were observed by Charles Darwin during an 1835 visit, contributing to his theory of evolution.

However, all factions of the capitalist class, including the Correistas, have repeatedly kowtowed to Wall Street and have their own record of repressing working class and indigenous protests.

Meanwhile, organizations like the FUT, UNE and CONAIE seek reforms through the bankrupt strategy of pressuring the government and have repeatedly sold out mass protest movements.