By Riham Alkousaa

BERLIN (Reuters) – The German cabinet on Wednesday approved a draft budget proposal that would cut parental leave allowance for higher income earners from next year, part of budget-tightening amid soaring inflation after years of generous spending.

To meet the finance ministry’s 2024 budget plan, the family ministry said it had proposed halving the annual income limit for couples eligible to receive parental leave compensation to 150,000 euros ($163,215.00) from 300,000 euros previously.

The average household income in Germany is 60,000 euros.

The proposed parental leave cut would affect 50,000 parents – about 5% of all recipients – and save some 290 million euros next year, according to the family ministry.

The government plans to slash new public borrowing to within constitutionally mandated limits, enforcing budget cuts on all ministries apart from defence.

The planned changes and other austerity measures are part of a budget financing law that the government plans to have ready by mid-August. The Bundestag (lower house of parliament) will not vote on the entire federal budget until December.

But the move has been criticized as a wrong signal for gender equality in Europe’s biggest economy as it would push women, who typically earn less than their partners, to be fully dependant on them during first-year childcare leave, and remove the incentive for men to stay at home to care for the child.

“We cannot break up traditional gender roles in this way,” Beate von Miquel, the head of Germany’s Women’s Council, told Reuters.

Katharina Wrohlich, a gender economics researcher at the German Institute for Economic Research, said parental allowance was “not only a social benefit, but also has equality policy goals. The cuts should viewed critically”.

The proposed parental leave cut is opposed by the liberal Free Democrats, the junior ruling coalition partner that runs the finance ministry and whose voters are mainly higher earners.

Introduced in 2007, the allowance was meant to raise Germany’s stubbornly low birth rate, especially among higher educated women, by offering new parents around 65% of their monthly salary, capped at 1,800 euros monthly, for up to 14 months.

Dorothee Baer, an opposition conservative lawmaker, questioned the family ministry’s estimates, referring to an online petition against the cuts that has collected more than 390,000 signatures since its Monday launch.

“Many will also surely wonder if they can afford a second or more child under such circumstances,” Baer said.

Martin Bujard, research director at the Federal Institute for Population Research, said the introduction of parental leave allowance and the expansion of childcare slots were the main reasons for the sustainable rise in Germany’s fertility rate from a steady 1.3 per woman for decades to 1.5 today.

Cutting the compensation income limit is unlikely to cause a significant drop in the birthrate as the number of those affected is small, said Bujard. A lack of enough childcare spots dissuades many working women from becoming mothers, he added.

($1 = 0.9190 euros)

(Reporting by Riham Alkousaa, editing by Friederike Heine and Mark Heinrich)

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