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Standard benefits pursuant to the Code of Social Law currently still constitutional
Press Release No. 76/2014 of 09 September 2014
Order of 23 July 2014
1 BvL 10/12
The benefits to secure a dignified existence pursuant to the Second Book of the Code of Social Law (Sozialgesetzbuch Zweites Buch – SGB II) are, currently, still constitutional. This was decided by the First Senate of the Constitutional Court in a decision published today. The Court held that, ultimately, the legislature had not violated its constitutional obligation to effectively ensure a dignified existence. Overall, the amount that was set by the legislature for benefits to secure the recipients’ existence can be explained with reference to sound reasons. However, insofar as it is unclear whether certain specific existential needs are in fact covered, the legislature must ensure that, during the upcoming redetermination on the basis of the Income and Consumption Survey (Einkommens- und Verbrauchsstichprobe) 2013, they are viably calculated.
Facts of the Case and Course of the Proceedings:
Subject of the proceedings are the standard benefits for singles, cohabitating adults, children up to the age of six, and for young people between the age of 14 and 17. The Court decided two specific judicial reviews that are based on an action by married parents and their – then – 16 year old son (file no. 1 BvL 10/12), as well as a case of a single adult (file no. 1 BvL 12/12). A Social Court of First Instance (Sozialgericht Berlin) considers the provisions that identify standard needs and set standard benefits, as amended in 2011, to be unconstitutional. It stayed the proceedings and referred the question of their constitutionality to the Federal Constitutional Court. The constitutional complaint (file no. 1 BvR 1691/13) was brought by a couple and their son, born in 2009, who did not succeed in a Social Court (Sozialgericht Oldenburg), in a case against a decision of the job centre to assess benefits for the period of May to October 2011. The Federal Social Court (Bundessozialgericht) rejected the leapfrog appeal (Sprungrevision).
Key Considerations of the Senate:
1. Art. 1 sec. 1 of the Basic Law (Grundgesetz – GG) in conjunction with Art. 20 sec. 1 GG guarantees the fundamental right to a guarantee of a dignified minimum existence. The right to benefits (Leistungsanspruch) guaranteed by the Constitution covers the absolute necessities to secure one’s physical existence and to ensure a minimum of participation in social, cultural and political life.
a) The legislature must, timely and realistically, assess the respective needs of all persons that re-quire support. It has a margin of appreciation regarding both the assessment of the factual condi-tions and the evaluation of the needs that must be met. The result of the assessment must be based on sound reasons. However, the Constitution neither prescribes what reasons and calculations must be provided in the legislative process nor how, and when exactly, this must be done, but leaves room for negotiations and political compromise. Neither does the Basic Law require the legislature to determine a minimum existence in the very best way and in light of all possible factors; rather, to strive for this is a matter of politics. Ultimately, it is crucial that the constitutional requirement to effectively ensure a dignified existence is in fact met.
It is for the legislature to select a suitable and appropriate method to determine the needs and to assess the benefits. The legislature may not choose a method that excludes benefits to secure the recipients’ existence; it must also continually review the calculation and, if necessary, develop it further.
b) Corresponding to the legislature’s discretion, the Federal Constitutional Court employs a standard of restrained scrutiny; in its examination, the Court does not take the place of the legislature. The Basic Law itself does not specify how to precisely calculate benefits to ensure a dignified existence. The Constitution only requires the existential needs to be actually met; as a result, it must be possible to explain the amount of benefits based on sound reasons.
If the legislature decides to use a statistical model to calculate standard benefits, a model that measures the needs according to the average expenses of certain goods, it must take precautions against the risk of underfunding associated with this method. If the legislature uses the “basket of goods” model to reduce this statistical calculation, it must also ensure that the existential needs are actually met. In addition, benefits awarded as a lump sum must either completely secure financial flexibility so as to ensure that an underfunding of specific needs can be compensated internally, or so that the recipient can be held responsible for saving up and thus cover certain needs. If the legislative scheme fails to secure this, there has to be a right to receive some other kind of compensation for such underfunding. Generally, internal compensation cannot be based on the argument that benefits to cover socio-cultural needs could be used, since such benefits are part of the constitutionally protected minimum existence.
2. According to these standards, and based on the necessary overall assessment, the challenged provisions still satisfy the requirements of Art. 1 sec. 1 GG in conjunction with Art. 20 sec. 1 GG during the relevant time period.
a) The determination of the overall amount for standard benefits does not reveal that the existen-tial needs are evidently not covered. In fact, the legislature by now also allows for benefits for education and participation in social and cultural life for children and young people.
b) Even if the amount of the benefits did in fact correspond with political aims, this alone is not objectionable under the Constitution. It is true that the standard benefits of stage 1 for 2011, namely EUR 364, correspond exactly to the amount that would have resulted from continuing the 2008 standards. However, from the perspective of constitutional law, the decision to take is only whether the amount of benefits can be explained with sound reasons, based on reliable data and not on arbitrary numbers or random estimates.
c) By using the Income and Consumption Survey (Einkommens- und Verbrauchsstichprobe – EVS), the legislature based its decisions on appropriate empirical data.
d) The decision to refer only to the poorest 15% of households in the 2008 EVS survey (instead of the bottom 20%, as in the EVS 2003) is objectively justifiable. Also, the legislature has removed those households from the calculation that would induce circular reasoning, because they themselves are in need of social benefits. It remains within the legislature’s margin of appreciation to not remove the so-called “supplementers” (Aufstocker) who have other income apart from the benefits to secure their livelihood. Also, the legislature is not obliged to remove from the calculation households that live in hidden poverty, and thus receive no social benefits despite having a right to them, since one can only approximate their number. Finally, it is not evident that the inclusion of persons in the calculation who receive benefits under the Federal Educational Assistance Act (Bundesausbildungsförderungsgesetz) significantly distorted it.
e) In so far as the legislature deviates from the statistical model, the amount of standard benefits can still be viably justified on the basis of the necessary overall assessment for the relevant time period.
Under the Constitution, the legislature is not barred from subsequently removing individual items from the Consumption Statistics from its calculation, as in a shopping basket model. However, such modifications of the statistical model may not reach a level that calls into question its usefulness for determining the amount of standard benefits that ensure a dignified existence; to do so, the legislature must ensure that there is some internal financial flexibility. Currently, the monthly standard benefits are calculated in such a way that not all consumption expenditures recognised in the EVS are recognised as existence-ensuring, but between EUR 132 and EUR 69 less, and thus only 72% to 78% of it. Whenever there are serious doubts as to the actual coverage of existential needs, it is within the discretion of the legislature to conduct appropriate follow-up surveys, to increase benefits on the basis of a separate index, or to otherwise absorb an under-funding.
As one example, this applies to household electricity. Should the cost for this important expendi-ture item increase exceptionally, the legislature is obliged to adjust the calculation even before its regular update.
The same applies with regard to mobility needs. While the legislature does not have to consider the costs for a motor vehicle as part of a minimum dignified existence, it must ensure that mobility needs can otherwise be actually met in the future.
In addition, the Social Courts must prevent underfunding as to the need for durable goods (such as a refrigerator or a washing machine), for which only a small monthly amount is allocated today. The courts must interpret the existing rules on one-time benefits to supplement standard benefits in conformity with the Constitution. If this is not an option, the legislature has to create individual rights that ensure a dignified existence.
g) There are no constitutional objections against the determination of standard benefits via a cal-culation formula for children up to the age of six and adolescents between 15 and 18 years. In light of the overall assessment required by the Constitution, the amount of the benefits is current-ly not objectionable. The legislature must take changes into account when it readjusts the standard benefits.
It is justifiable to install partially separate coverage of needs in an education package (Bildungspaket) and a basic school package (Schulbasispaket). It is also within the legislature’s discretion to partly provide such benefits in the form of vouchers. However, education and participation op-portunities thus covered must actually be accessible at no additional cost to the persons in need; therefore, the statute that creates discretion as to reimbursement of travel expenses must be inter-preted as a right.
3. The requirements for updating the standard benefits in those years in which they are not re-determined do not unreasonably stray from the structural principles of the chosen method of identifying standard needs. The legislature has provided sound reasons for tying the update to the nationwide average development of prices and wages. However, the development of prices must weigh more heavily in comparison to wage growth (which is the case), since any assessment must guarantee for the real value of goods needed to sustain a dignified life, especially with regard to benefits covering physical subsistence.