Minister of Labor Heil wants to re-regulate social assistance and introduce citizen income. Instead of pursuing short-term jobs, the unemployed should rather do an apprenticeship. And when it comes to sanctions, they want to be more lenient. About a reform that raises many questions.
Digital and uncomplicated: Hartz IV notices can easily be 200 pages long. The federal government wants to change that.
Wiesbaden, Sternschnuppenmarkt, the year 2006. The SPD leader at the time, Kurt Beck, just wants to shake a few hands and take a few nice photos with Santa Claus. Then the slightly shaggy-looking Henrico F. stalks him. In a half-minute monologue, the unemployed person blames the politician for Hartz IV and the fate of millions of unemployed people. And Beck mobbed back: “If you wash and shave, you’ll have a job in three weeks.”
Hardly any scene symbolizes the Hartz IV system better than that encounter at the Christmas market. Hartz IV – that was an emotive word from the start. For those affected, because society suddenly began to distrust them; because they became one with trash-tv-promoted clichés of unwashed, corn-drinking bums.
And it is also an emotive word for the responsible politicians, above all those in the SPD, because since then they have been accused of having created a poverty trap with Hartz IV, a social cut that is unprecedented in the history of the Federal Republic. Only at a distance did it become clear: the basic security system Hartz IV – that is also a success story. Studies show that social reform played a part in ending mass unemployment. Almost five million people were unemployed when basic security was introduced in 2005, and by 2022 the number had more than halved.
Germany is no longer the “sick man of Europe”
The federal government now wants to adapt social benefits to the current situation. Scientists and social organizations have long considered the system ready for reform. The Federal Constitutional Court also dictated changes to the federal government in 2019. Germany is no longer the “sick man of Europe”. Today, the shortage of skilled workers is causing problems for many industries. Even the corona pandemic has hardly changed anything – despite the months of lockdown.
The largest social reform since Agenda 2010 in the coalition agreement of the traffic light government fills three pages. There is talk of “more dignity for the individual”, more “social participation” and of “digital and uncomplicated”. The government wants to start with the name: “Bürgergeld” should mean basic security in a friendly way in the future. The first parts of the reform should be in place by the end of the year. Then it will become clear whether the reform is more than just name marketing. Much is still vague. Above all, the sensitive issue of sanctions is likely to keep the traffic light coalition busy.
Ingo Zielonkowsky heads the job center in Düsseldorf, the state capital of North Rhine-Westphalia. Its employees look after around 17,000 unemployed people, including 10,000 who are permanently unemployed. “The way back to working life is difficult,” says Zielonkowsky. Those affected should not lose heart, the support of the family is important. There are around 3.6 million Hartz IV recipients in Germany. A single adult currently receives 449 euros per month. There are also subsidies, for example for rent and heating costs. Only a small proportion of Hartz IV recipients are actually unemployed. Most of them are so-called “top-ups”, i.e. people whose income is too low to be able to live on it.
Number of long-term unemployed increased again
However, almost 990,000 people actually live permanently without a job. With around 2.5 million people currently registered as unemployed, their share is significant. In addition, the number of long-term unemployed rose sharply again during the pandemic. After falling below the 700,000 mark at the end of 2019, it has even climbed over the million mark at times over the past two years.
“Around two-thirds of the long-term unemployed have no professional qualifications,” says Zielonkowsky. The head of the job center considers further training to be the greatest lever for getting people back to work. “It doesn’t even have to be new training, it can just be a forklift driver’s license.”
Labor Minister Hubertus Heil is also convinced of this idea. The Social Democrat wants to give priority to further education in the future. The placement of short-term jobs without prospects should no longer be the focus. If you want to catch up on your degree, you should get a bonus. 150 euros per month for the duration of the program are under discussion. “Training before a temporary job,” Heil calls it aptly.
Forbearance in asset testing
Labor market experts support the project for the most part, but also warn against exaggerated hopes. It is important to develop a realistic and targeted qualification plan for each individual case, says Melanie Arntz from the Leibniz Center for European Economic Research at the NZZ. But it is also true that not all long-term unemployed could be placed in this way in the long term. “For this group, the question remains as to how social participation can be secured in the long term.”
Another building block is decisive for the new basic income anyway: the federal government wants to rebalance the interaction between demands and funding. The asset test should be more generous in the future. In the first two years, the benefit should be granted without taking assets into account, according to the coalition agreement. An examination of the suitability of the apartment should also be refrained from during this time.
The economist Andreas Peichl also thinks it is right to simplify the controls. The asset test made sense “when the unemployment rate was still very high and thus the likelihood of abuse,” says the head of the IFO Center for Macroeconomics and Surveys to the NZZ. In the meantime, the abuse of the services is hardly significant. “Many Hartz IV recipients feel stigmatized when they have to disclose their financial circumstances in detail at the office,” he says. There’s a lot of mistrust involved.
No timetable for the moratorium
The sanctions should also be more lenient in the future, although the coalition agreement is very vague here. “We are sticking to the obligations to cooperate that are laid down in the participation agreement,” it says. Until a new legal regulation has been created, a “one-year moratorium on the previous sanctions below the subsistence level” should apply. In addition, a “six-month period of trust” will apply in the future.
It is not yet known what “time of trust” actually means, nor what exactly the “duties to cooperate” should contain. And the moratorium has not yet come into force less than two months after the federal government took office. The Ministry of Labor does not want to comment on the timetable.
In any case, the new regulation of the sanctions should still entail some coalition talks. It is well known that the Greens would prefer not to use them at all. With the Minister of Labour, on the other hand, that is unlikely to be possible. “But there will still be obligations to cooperate. That’s right,” Heil said recently to the “Funke Media Group”. The FDP sees it similarly.
symbolism for the taxpayer
In practice, benefit cuts only play a minor role anyway. The economist Peichl considers the debate about sanctions to be “symbolic”. “It’s about signaling to the taxpayers that the beneficiaries are also required.”
This is also the experience of the Düsseldorf Job Center. Currently, 0.4 percent of the long-term unemployed are affected by cuts in benefits, reports Zielonkowsky. The fact that this proportion has recently fallen sharply across Germany is mainly due to a ruling by the Federal Constitutional Court in 2019. At the time, the judges decided that sanctions are unconstitutional if they cause Hartz IV recipients to fall below the subsistence level. Before that, reductions of 60, even 100 percent of benefits were possible if an unemployed person refused a reasonable job or dropped out of a training program.
Zielonkowsky emphasizes that these hard cases are a rarity anyway. If sanctions were imposed, it would be because those affected missed an appointment at the office or a deadline. The reduction in performance is then less. “It’s not because of laziness that people are unemployed for a longer period of time,” emphasizes Zielonkowsky. Most people are unable to work due to illness, mental health problems or even drug addiction.
Years later, after meeting Kurt Beck, Henrico F. stated that he had found a permanent job at the Frankfurt music broadcaster iMusic TV, which had since gone bankrupt. He gets up at 6 a.m. every morning and always goes to work with a “buck”. His boss read about the encounter and offered him the job. There are plenty of them, the Hartz IV success stories. However, neither the mediation of a job center nor a further training measure played a part in this.