Unemployment benefit II has been controversial since it was introduced. The so-called citizen money should replace it in the future. The traffic light is doing much more than just changing labels: the basic principles of the Hartz IV system are being rethought.
When Gerhard Schröder presented his socio-political vision for the future called Agenda 2010 in March 2003, Germany was considered the “sick man of Europe”. More than five million unemployed and a collapsing economy paralyzed the economy. Healing was needed, and the red-green federal government decided on a radical overhaul of what they saw as a rusty social system. With the introduction of Agenda 2010 on January 1, 2005, a comprehensive deregulation of the market economy and labor market came into effect.
The heart of the program: Unemployment benefit II, popularly known as Hartz IV. The thought: If you don’t seriously try to find work, your money will be cut. The requirements were sometimes strict. If an apartment was considered too big, residents often had to move out. The benchmark for a single household was 50 square meters. Hartz IV recipients had to have their savings taken into account.
In fact, the reforms had a positive impact on economic development. Germany became competitive again, and the number of unemployed halved within a few years. However, the proportion of those in need of help remained almost the same – due to the newly created low-wage sector, many workers had to top up. At the same time, the pressure on job seekers increased. Hartz IV became a household word, fraught with stigma and prejudice.
17 years after its introduction, the traffic light coalition abolishes Hartz IV: the cabinet has passed the citizen benefit reform, the Bundestag still has to approve the law. For the SPD and the Greens, it is also about correcting their own legacy. Because even if sanctions in the basic security are currently suspended by law, the public perception of the Hartz IV system is associated with existential fears and a rigidly bureaucratized job center. The new citizens’ allowance, which is expected to be introduced in January 2023, aims for a paradigm shift. The tenor: create incentives instead of punishing.
“The spirit of the new system is not one of distrust, but of encouragement, of empowerment,” said Federal Labor Minister Hubertus Heil, summing up the basic idea. In concrete terms, this means that those who do not keep appointments at the job center in the first six months have fewer sanctions to fear. If a job is not accepted, there should be no sanctions in the first half of the year. But the “duty to cooperate” remains, emphasizes Heil. “People who chronically don’t keep appointments (at the job center) can also expect legal consequences in the new system.”
The aim of the citizen income reform is no longer to get the unemployed back into employment as quickly as possible – no matter which one. Citizens’ allowance recipients should rather have the opportunity to catch up on their professional qualifications. A monthly bonus of 150 euros is paid for this. In the search for the right training, a cooperation plan is to be developed in cooperation with the job center, in which those affected can contribute their wishes. In addition, additional income limits are to be extended.
The draft law provides that recipients of citizen income no longer have to fear for their apartment if it is too big. Accordingly, assets of up to 60,000 euros remain unaffected in the first two years of benefit receipt. There is also a change in thinking in the job center’s communication, which many perceive as being too cryptic and too bureaucratic. “No complex legal texts, no instructions on legal consequences, which are often perceived as threats,” promises Andreas Audretsch, Vice President of the Greens. “In future, everyone will be written to by the job centers in friendly, clear sentences.”
The traffic light struggled for a long time to increase the standard rate. With Hartz IV, it was last at 449 euros a month for single people and is expected to increase by more than 50 euros to 502 euros from next year. The increase in the bill is also broken down for other groups. Housing and heating costs are always covered.
Even in the run-up, the criticism was great – from all sides. “We consider an amount of at least 650 euros as a standard rate to be urgently required, of course with further adjustments,” said Ursula Engelen-Kefer, Vice President of the Social Association Germany, in an interview with ntv.de. The head of the German Institute for Economic Research, Marcel Fratzscher, also criticized the increase as insufficient in view of the high inflation.
The softening of the sanctions was particularly caught in the crossfire. This will mean that “for more people than before, not working is more worthwhile than working,” said the President of the Central Association of German Crafts, Hans Peter Wollseifer, on Monday of the “Rheinische Post”. The Union hit similar tones. CSU regional group head Alexander Dobrindt sees the Hartz IV principle of “demanding and promoting” restricted by the citizen’s income. “This can lead to the fact that the benefit is cemented and demotivation is promoted instead of taking up work,” he told the “Augsburger Allgemeine”.
The FDP defends the citizens’ income against criticism. “It’s not about an unconditional basic income, quite the opposite,” emphasized the FDP parliamentary group leader Christian Dürr in the “early start” of ntv. “It also remains the case that demanding and promoting is correct.”
The loud reactions suggest that citizen money is more than just a new label. It is an attempt by the traffic light to redesign the Hartz IV system in its essence. Less pressure, less work at any price – but more self-determination and freedom. This will also demand a lot from the job centers. Working methods and mechanisms that have manifested themselves over the years must be overhauled. At least the Chancellor is convinced that this change will succeed: “The new citizen’s income offers security and opens up opportunities,” explained Olaf Scholz on Twitter. “On January 1st we will leave Hartz IV behind.”
