Berlin Aims to Cut EUR700 Million in Personnel Costs

The Berlin Senate has approved a financial plan aimed at reducing personnel expenditures by approximately EUR700 million by 2029. This decision, driven by both the CDU and SPD parties, is a response to the rising costs associated with government personnel over recent years.

The plan outlines that annual savings of EUR350 million are to be achieved through various personnel management strategies in 2028 and 2029. The government intends to enhance efficiency via digital solutions and the consolidation of tasks, effectively streamlining administrative processes and eliminating redundancies. The financial administration has suggested that this could involve centralizing personnel responsibilities for the city's approximately 126,000 employees, a topic that may be revisited after the upcoming 2026 parliamentary elections.

While the personnel budget is being curtailed, Berlin is committed to maintaining its investment trajectory. The financial plan projects that investments will remain robust, averaging nearly EUR6 billion annually over the next four years. This represents a significant increase from the projected investment of around EUR4.7 billion for the 2025 fiscal year, with 2026 expected to see an approximately 25% rise to over EUR5.8 billion.

Berlin plans to allocate EUR435 million per year from the federal special fund to support these investments. Funding will be sourced through the issuance of so-called transaction credits and project financing from the federal fund dedicated to infrastructure and climate neutrality, which will become available starting in 2026.

Investment priorities will focus heavily on housing development and educational infrastructure. Specifically, the city aims to allocate between EUR1.4 billion and EUR1.7 billion annually for school construction over the next four years. Moreover, significant financial commitments are planned to support ambitious climate goals, particularly in enhancing district heating systems and electricity network expansions.

The Berlin Energy and Heat Company is set to receive an additional EUR550 million in credit over the next two years to facilitate the decarbonization of heat generation. Simultaneously, the electricity network operator, Stromnetz Berlin, is expected to receive EUR150 million annually to double the capacity of Berlin's electricity grid and support the broader energy transition.

Despite the planned cost reductions, the Senate emphasizes the importance of preserving the city's social balance while securing financial flexibility for the future. This approach will require both courage and political will at the federal and state levels.