This paper aims to provide an overview of Germany's current social protection system with a strong focus on unemployment benefits, especially regarding the conditional cash transfer instrument. It discusses the main arguments and lessons learnt within this ongoing reform process. Against this background, the controversy regarding graduation mechanisms and the “right” set of conditions and incentives to reintegrate beneficiaries into the job market is especially highlighted. Summing up, this paper draws lessons learnt from the last decade of social policy reform in Germany. By doing so, it aspires to provide relevant insights about the trade-offs between costs and benefits of the current system that hopefully could enrich the ongoing discussions and reform processes within developing and emerging economies.