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Hartz IV could soon change fundamentally and become more generous.
The system, also known as basic security or unemployment benefit II, serves as a safety net to secure a livelihood.
It has been controversial since it was introduced in 2005 by the then red-green federal government.
With a view to the federal elections in September, the parties have first major change plans.
And even now, Federal Labor Minister Hubertus Heil (SPD) wants to enforce a new draft law that will defuse the system.
An overview.
SPD Minister Heil wants to maintain corona rules
In the course of the pandemic, access to Hartz IV was simplified, among other things to help the many self-employed solo workers who are struggling with declining income.
According to the Minister of Labor, the core elements of this regulation are to be retained permanently.
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The corresponding draft law provides for so-called "insignificant" assets and rental costs not to be checked for appropriateness in the first two years of the Hartz IV subscription.
Savings of up to 60,000 euros (plus 30,000 euros for each additional household member) would therefore initially not have to be touched.
Source: WORLD infographic
"Anyone who is temporarily looking for work and is covered by the basic security must be able to rely on it and have the security of not having to worry about their savings and housing for the time being," explains the ministry in a fact sheet.
In “Spiegel” Heil had said: “The basic security should become a social citizen's benefit, for which nobody has to be ashamed who needs it.”
In addition, the sanctions for the long-term unemployed are now to be permanently limited by law.
Since a ruling by the Federal Constitutional Court in November 2019, Hartz IV recipients who miss appointments or refuse jobs may only be sanctioned to a limited extent.
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The standard rate can only be reduced by up to 30 percent.
So far, this has only been regulated by instructions from the Ministry and the Federal Employment Agency (BA).
In no case should, according to Heils plans, anyone should fear that the housing costs will be affected by reduced benefits.
Stricter rules for under-25s should be dropped entirely.
Those who do further training should receive a bonus of 75 euros per month.
At their party congress at the end of 2019, the Social Democrats decided to demand that Hartz IV be overcome.
The SPD proposals went far beyond the reform that was now planned.
The draft law estimates additional expenditure by the federal government, municipalities and the BA of around 550 million euros.
Union and FDP: No creeping introduction of a basic income
Heil's move met with rejection from the coalition partner.
The Union is ready to talk to extend the special corona regulations if necessary, said the CDU social expert Peter Weiß.
It is currently planned to expire at the end of March.
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"But we still stand by the principle of 'support and demand' and also reject an extension of these special regulations," he said.
"A creeping introduction of an unconditional basic income is not possible with us." Because this would devalue work and the placement in work would be less attractive.
Source: WORLD infographic
A lump sum payment for all citizens is not provided for in the salvation draft.
However, critics see the reform proposals as steps in this direction.
Pascal Kober, social policy spokesman for the FDP parliamentary group, also described the waiver of sanctions and the increase in benefits as "introducing the unconditional basic income through the back door".
There is also criticism because of the burden on taxpayers.
Holger Schäfer from the employer-related Institute of the German Economy (IW) is particularly critical of the suspension of the housing cost review.
This is justifiable in the pandemic, but otherwise not.
"If in doubt, the taxpayer would otherwise have to finance very expensive rents," said the labor economist.
"It would hardly be possible to convey to him if the recipient of a welfare benefit resides in a four-room apartment, but he can only afford two rooms himself."
Changes go into the money for the taxpayer: For the year 2021 alone, the federal government is earmarking 23.4 billion euros for unemployment benefit II.
Together with the costs for heating and rent, integration measures in the labor market and administrative expenses, around 45 billion euros are planned.
However, the CDU said earlier that it did not want the receipt of state benefits to result in owner-occupied residential property having to be given up.
The legal regulations on asset utilization and on protective assets will be "revised, adjusted and changed so that recipients of state social benefits can stay in their home".
Greens and Left: Overcome Hartz IV completely
However, Heil's advance does not go far enough, left leader Katja Kipping.
She advocates replacing Hartz IV with a “minimum income guarantee free of any sanctions above the poverty line”.
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The Greens, in turn, have just presented details of their own Hartz IV alternative, with which they are going into the federal election campaign: the "guarantee".
There should no longer be any sanctions and the standard rate should be gradually increased to 600 euros per month.
At 446 euros for single people without children, it is currently significantly lower.
Source: WORLD infographic
The asset check should be omitted, the information provided by those affected should only be checked in justified cases.
The partner's income should no longer be taken into account.
The deputy group leader Anja Hajduk put the annual cost of the reform at a low double-digit billion amount.
In perspective, however, the Greens want even more.
At the party congress in November, the delegates voted against the will of the board of directors to “orient themselves towards the guiding principle of an unconditional basic income” according to the basic program.
AfD: Special rules for foreigners
At the AfD, Heil's initiative met with rejection.
It is a "worsening of the Hartz IV system," said René Springer, spokesman for the AfD parliamentary group on labor market policy.
It leads to more recipients and a higher burden on taxpayers.
"In order to avoid disincentives to immigrate into the social security system, the principle of 'benefits in kind before cash benefits' must apply to asylum seekers," said Springer.
He also wants to further develop Hartz IV so that additional earnings are more worthwhile.
Source: WORLD infographic
The FDP has specific criticism of the previous additional earnings limits.
Social policy expert Kober explains: Hartz IV recipients could keep the first 100 euros.
Anyone with an income of over 100 and up to 1000 euros must give up 80 percent of every euro.
With a mini-job that pays 450 euros per month, you end up with only 170 euros.
“It can't stay that way,” says Kober.
In the long term, he would like to summarize Hartz IV with child allowance and housing benefit.
The CDU is also striving for a reform of income accounting.
"We are calling for a reform of the imputation rules in order to encourage step-by-step withdrawals from drawing benefits," the party said.
Experts: System change unlikely
Experts do not consider a radical system change, for example towards an unconditional basic income (UBI), to be likely in the short term.
Overall, Hartz IV is an “effective form of basic security,” says IW economist Schäfer.
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One cannot deny that the labor market situation has improved significantly since its introduction - "even if it is difficult to prove a causal connection here," says Schäfer.
From the point of view of Jürgen Schupp from the German Institute for Economic Research (DIW), a system change could have some advantages.
For example, a basic income could alleviate existential fears.
However, numerous questions would have to be clarified, such as the amount and funding.
The DIW itself has started a long-term BGE study with the My Basic Income Association.
Schupp has one wish for the next legislative period: that a study commission of the German Bundestag "Welfare State 2030" be set up.
According to him, this should take stock - both with a view to the future viability of the contribution-financed system and possible alternatives such as a UBI.