On 1st January a reform of the social assistance system in Germany which has been described as “historic” comes into force and will bring more money to the long-term unemployed and step up efforts to re-enter the labour market.
The reform plans of Olaf Scholz’s government were initially more ambitious.
First of all for the Social Democratic Party (SPD), the chancellor’s grouping, it was a question of leaving behind an emblematic aspect of what was the so-called Agenda 2010 of Chancellor Gerhard Schröder.
Schröder cut the time in which unemployment insurance was paid to 12 months, so that the unemployed became recipients of social assistance more quickly. This benefit, unlike unemployment insurance, does not cover a percentage of the last salary but only the minimum of existence.
In addition, in the Agenda 2010 system, a system of sanctions was established in which recipients of social assistance could have their benefits cut if they did enough to return to the labour market.
Agenda 2010 was at the time a bone of contention for the SPD and even produced a split within the party.
Many of Schröder’s opponents, led by former finance minister Oskar Lafontaine, went to the Left Party, the result of a merger between the dissident Social Democrats and the post-communist Party of Democratic Socialism (PDS).
Leaving the agenda behind was long seen as a pending step towards regaining social democratic identity.
However, plans to completely dismantle the sanctions system could not be carried out due to the blocking of the Christian Democratic opposition in the Bundesrat, the upper house in which regional governments are represented.
What remained was a series of one-off improvements and a renaming of the aid that was formerly known as Hartz IV – in reference to Peter Hartz who chaired the commission that drew up Schröder’s reforms – or “unemployment benefit II”.
Now the aid will be called “Bürgergeld (Citizen’s Money”). Most obviously, the amount of aid increases, from 449 euros to 502 euros per month for a single person in addition to subsidies for housing, heating and other expenses.
A couple living together receives a total of 902 euros, 451 euros each; for each child under 6 years of age, EUR 318; between 7 and 14 years, 348 euros, and between 15 and 18 years, 420 euros.
Another benefit is that while in the previous system the welfare recipient was entitled to the costs of renting in a housing “adequate to their needs” now will have 12 months, so they can continue living in their previous home before it is examined if it is adequate or too large.
In addition, while in the past the amount of aid was only adapted to the increase in the cost of living retrospectively, taking into account the inflation of the last year, now this will be done in advance taking into account inflation estimates.
The possibility of sanctions, which the government wanted to eliminate for at least the first six months as a sign of confidence to citizens, remains and, in case someone does not fulfill their commitments to strive to look for work, they can suffer cuts in benefits of between 10 and 30 percent.
Mediation efforts, for people with low skills, should, according to the reform, be reoriented.
Whereas in the past many people ended up in low-paying trades for a short time and did not need special training, now the emphasis must be on training so that people can gain a foothold in the labour market.
According to Labour Minister Hubertus Heil, that should lead to people finding lasting jobs.
The Agenda 2010 reforms, which were once accused of being “neoliberal”, are seen as a factor that helped unemployment fall significantly in Germany so far this century.
