How Germany’s "debt brake" is hindering integration at local level

“I have been working on integration for 25 years now. We started early in Wuppertal,” Arlin Cakal-Rasch explains proudly. Cakal-Rasch,  Head of the Municipal Integration Centre in Wuppertal, is one of the speakers at a workshop on German municipalities held as part of the Friedrich-Ebert-Stiftung’s conference “Migration - a progressive formula”.

Cakal-Rasch explains how they have managed to make integration part of day-to-day life in the city of Wuppertal. Even beyond the North Rhine-Westphalian state lines, Wuppertal, known for its suspension monorail, is seen as an example of successful migration and integration – despite the other significant challenges this city faces such as high levels of child and old-age poverty.

In Wuppertal, the local asylum office, integration and housing departments, along with the job centre and the immigration office are all located in the same building. This means Cakal-Rasch can team up with her colleagues to welcome people in need of their services, helping them to learn the language, find accommodation and look for a job – and all this is done in an unbureaucratic, efficient and flexible way.

Regardless of how successful integration in Wuppertal has been, the financial pressure is still growing. Integration measures cost money – and this is something the municipal authorities are increasingly short of. The introduction of the debt brake has increasingly restricted cities’ financial room for manoeuvre, with rising costs and lack of investment exacerbating the situation.

Tighter purse strings – more for future generations?

What Cakal-Rasch describes is part of North Rhine-Westphalia’s “integration campaign”, which was launched in the early 2000s and seeks to facilitate the participation of migrants in society. But circumstances have changed since then. The debt brake adopted in 2009 calls for strict budgetary discipline at the federal, state and local level. While the federal government is only allowed to borrow a limited amount each year (0.35 percent of the GDP), the Länder are forbidden from taking on any new debt at all.  

The original intention behind the debt brake was to protect future generations from being burdened with excessive debt. But the reality has turned out to be quite different, with municipalities facing growing financial shortages. “It is not yet clear whether and how the individual federal states will manage to implement the debt brake, irrespective of the impact of the refugee crisis,” political scientist Ursula Münch wrote back in 2016.

And today the situation has escalated further, with the aftermath of the Covid-19 pandemic, the war in Ukraine, the energy crisis and an ailing economy restricting financial leeway under the debt brake even more. The Kreditanstalt für Wiederaufbau (KfW) development bank has estimated the 2024 investment backlog in German towns and municipalities at 186.1 billion euros.

When integration becomes a victim of cuts

The investment bottleneck is evident in crumbling bridges, dilapidated schools and housing shortages. But integration efforts have not been left unscathed either. In Wuppertal, food banks and social services are under threat of cuts. “The entire social support structure is collapsing, and suddenly all my years of work, the integration achieved are destroyed. At a time like this, that’s completely unacceptable,” Cakal-Rasch laments.

Other German cities are also struggling with the consequences of the debt brake. Berlin’s State Secretary for Social Affairs Aziz Bozkurt, for example, has reported Germany’s capital spending 1.2 billion euros a year on refugee accommodation. “This would be a whole lot cheaper if we had more housing,” Bozkurt explains. The lack of investment in social housing construction over the years has exacerbated social inequality.

In a workshop on “Security and Integration in the Municipalities”, social worker Sunny Steen described similar problems. Steen looks after young people in Berlin’s Highdeck estate, which has around 10,000 residents, a 70 percent child poverty rate and a 71 percent share of migrants. Even before Steen’s project was launched this year, the equivalent of a part-time position was cut from the team. “Under these conditions, it’s hard to make much of a difference,” Steen maligns.

Human dignity versus austerity

But migration does not disappear just because the municipalities cut their spending on integration. In fact, the opposite is true. The climate crisis and ongoing conflicts are likely to see more rather than fewer people seeking refuge – and enabling them to participate in life here is enshrined in Germany’s Basic Law.

The clauses on human dignity (Article 1) and the welfare state principle (Article 20) are not negotiable – the debt brake (Article 109), on the other hand, absolutely is. But can fundamental rights be respected if the cuts proposed in the 2025 budget go ahead? 

This includes, for instance, reducing integration courses by 50 percent. “We need significantly more support from the federal government in order to meet the growing demand for nationwide, high-quality services,” bemoans, among others, Stephan Philippi, Lower Saxony’s Minister for Integration. The Association of German Welfare Organisations (paritätische Wohlfahrtsverband) has also sharply criticised the planned cuts in migration counselling and psychosocial centres.

More financial leeway instead of budget battles

A reform of the debt brake could ease the struggle for resources and allow for urgently needed investment in integration moving forward. State Minister for Social Affairs in Berlin Cansel Kiziltepe has even called for the debt brake to be scrapped altogether. At the same time, her department is strongly in favour of a lump sum payment, where the districts and municipalities receive funding for each refugee they take on – funds they can use flexibly. This new programme could benefit refugees and the elderly alike. “We have to think of everyone living in our municipality – only then will we be able to move beyond this debate,” Bozkurt urged.

The debate on the debt brake shows that adhering to this instrument has far-reaching consequences for the social fabric of our communities. And the financial pressure is hitting municipal integration efforts particularly hard. Yet it is in the towns and cities that we truly see how forward looking and just our society really is.

A reform of the debt brake could give the municipalities the much needed financial leeway to make a better job of integration. After all, social justice begins on the ground – and this requires more than just austerity.