German unemployment benefits reform to go into effect in January

By Basil Wegener, dpa I Friday, November 25, 2022

 

BERLIN – A major overhaul of Germany’s unemployment benefits system is set to go into effect next year after both chambers of the country’s legislature passed a compromise package that had been banged out earlier this week.

The legislative backing means the current benefits programme for the long-term jobless, known as Hartz IV, will be replaced by a plan known as Bürgergeld, or basic income, on January 1.

“This reform is a milestone of social policy in Germany,” Chancellor Olaf Scholz told the magazine Focus on Friday after the votes. “This reform put assistance for untrained people who belong to the long-term jobless front and centre.”

The Bundestag vote was 557 for to 98 against, with two abstentions. The Bundesrat passed the measure later on Friday.

Germany’s ruling coalition, led by Scholz’s centre-left Social Democrats (SPD) along with the Green Party and the business-friendly Free Democrats (FDP), had proposed the overhaul. The new benefits will be more generous and are aimed at reducing pressure on out-of-work Germans.

The conservative CDU/CSU opposition bloc had objected to an initial version of the proposal, complaining in particular that the new benefits were too generous to people who turn down job opportunities or do little to find work.

Although Scholz had the votes in the lower house, the Bundestag, to get the measure through, the CDU/CSU had the power to block it in the upper house, the Bundesrat, until the two sides hammered out a compromise this week.

The compromises mean that benefits could be cut during what had initially been conceived as a six-month “trust period” if an unemployed person is not assessed as looking hard enough for new work. Additionally, people on the benefits scheme would still be able to keep control of €40,000 ($41,600) of their own assets and still be eligible for the programme.

Scholz’s original proposal would have set that figure at €60,000.