German court rules subsidy for stay-at-home parents illegal

KARLSRUHE, Germany - Germany's Constitutional Court ruled on Tuesday that a benefit for parents who stay home to look after their small children is illegal, dealing a blow to Chancellor Angela Merkel's Bavarian sister party who championed the policy.

More than 455,000 parents, mostly women, who care for their one or two-year old children at home claim the much-disputed"hearth bonus" which starts at 150 euros (S$223) per month and was introduced two years ago under Merkel's previous coalition with the Free Democrats (FDP).

The ruling means that the government will have to abolish the benefit in its current form.

The Social Democrats (SPD), who share power with Merkel's conservative bloc, want to redirect the money into nurseries and kindergartens.

But the predominantly Catholic Christian Social Union (CSU) in Bavaria is likely to seek an alternative way of rewarding stay-at-home parents, possibly at the regional level.

The northern city of Hamburg brought the case, arguing that central government should not grant benefits that perpetuate inequality. It is unfair, the argument goes, because parents who send their children to kindergartens do not receive a similar direct benefit, although the institutions themselves are subsidised.

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