Policy initiative and timeline

German Labour Minister Bärbel Bas and Interior Minister Alexander Dobrindt unveiled a ten-point federal action plan to curb organized social welfare fraud and the exploitation of migrant workers. The measures, drafted jointly by the Labour and Interior ministries, are scheduled for approval by the federal cabinet in September 2026, with full nationwide implementation targeted by the end of the year. The policy focuses on commercial criminal networks that recruit vulnerable European Union citizens, predominantly from southeastern European nations such as Romania and Bulgaria, and bring them to Germany under false pretences. These rings place individuals in sham employment relationships with minimal hours to qualify them for state welfare top-ups and child benefits, while organizers siphon off the public funds. Bas emphasized that while foreign workers remain essential to the German economy, organized rings must not distort the legal framework.

“With this action plan, we are taking a firm stand against exploitation and benefit fraud.”

Crackdown on substandard housing

A central pillar of the initiative targets run-down properties, known as Schrottimmobilien, which criminal networks rent out at inflated rates to benefit recipients while pocketing state accommodation allowances. Municipalities, particularly across industrial hubs such as the Ruhr region, will receive expanded legal authorities under revisions to the federal building code. Local governments will be empowered to issue mandatory repair orders, enforce pre-emption purchase rights, impose occupancy bans, and expropriate properties if landlords fail to comply with binding modernization requirements. Jobcenters will also gain the authority to suspend housing payments when apartments are declared uninhabitable, severely overcrowded, or registered under fictitious addresses.

Expanded surveillance and data integration

The action plan mandates comprehensive data exchange among jobcenters, social security offices, local registration bureaus, tax authorities, building inspectors, police departments, and health and long-term care insurance funds. More than 1,500 cases of organized benefit fraud involving EU citizens have been documented by German jobcenters since 2022. Federal authorities plan to deploy artificial intelligence algorithms to detect suspicious payment clusters across welfare registers, building on tools developed by the Federal Employment Agency in Nuremberg, which analyzes disbursement data with algorithms to produce geographical heatmaps. Registration authorities will cross-reference new resident filings with the Federal Central Tax Office and access European wanted-persons databases to flag fraudulent or stolen identity papers. Energy utility providers will also face statutory disclosure requirements to help investigators uncover fake primary residences and undisclosed real estate holdings.

Stricter welfare rules and European enforcement

The new rules will also restrict access to supplementary welfare payments for European Union migrants engaged in negligible employment, removing incentives created by artificial mini-job contracts. Welfare payments under the basic income scheme will be terminated for individuals who are actively sought under enforceable criminal arrest warrants. To deter organized networks, employers will face direct liability for unpaid contributions and fraudulent benefit disbursements resulting from undeclared or misclassified labor. On the international front, the federal government intends to propose revisions to European Union freedom-of-movement regulations and conduct information campaigns in countries of origin to warn workers about predatory recruitment practices.

“To nip exploitation in the bud, we will provide clear information about standards and fair working conditions directly in the countries of origin.”