After fierce debate and significant concessions, an agreement was finally reached on higher German benefits

Hartz-IV, the welfare program introduced in 2005 under Chancellor Gerhard Schröder (SPD), had an extraordinary impact on the German language. So there’s the verb rum heartswhich means lingering, or the closest sales pitch: Hartz-IV und der Tag gehört dir (Hartz-IV and the day is yours). In 2006, a hip-hop album was named after the scheme.

Now under another SPD chancellor, Olaf Scholz, and in particular under his social minister Hubertus Heil (SPD), Hartz-IV is being buried. From 1 January 2023, Hartz-IV must be replaced byCitizen moneywhich should be more social than the 2005 scheme.

Hartz-IV was perceived as particularly harsh, especially from a Social Democratic government, and is considered one of the reasons for Schröder’s election defeat in 2005. Now there must be more money and less pressure on the recipients. Opposition leader Friedrich Merz (CDU) called the design a way to process “the trauma of Hartz-IV”, “especially now that the labor market can use any employee”.

Last week, Heil’s bill was rejected by the Bundesrat, the representation of the sixteen states, especially of the states governed by the CDU/CSU. Now Scholz’s coalition seems to be reaching a compromise with the Christian Democrats.

Still sanctions

The biggest point of contention was the sanctions for people who, for example, do not go to a job interview if this has been agreed with the employment service. The coalition of the SPD, the Greens and the FDP wanted to suspend such sanctions for the first six months. Under pressure from the CDU/CSU, these six-month fine exemptions expire.

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Another objection from the CDU/CSU was the amount of equity capital, which according to the first draft would remain unaffected. At the start it was 60,000 euros per person; which is now adjusted down to 40,000 euros. The Christian Democrats also found that the two years in which the rental expenses – regardless of the amount – were taken over were too long: It will now be one year.

The increase of the monthly benefit by more than 50 euros to 502 euros for a single adult was supported by the CDU/CSU from the start. In addition, rent and heating costs and health insurance are reimbursed.

The debate on Bürgergeld has been fierce in recent weeks. Chairman of the employers’ association Rainer Dulger called the coalition’s concept “a throbbing blow for people who go to work every morning.” The CDU thought so too Bürgergeld in its original form did not encourage enough people to take up work, always referring to the many vacancies. CSU chairman and Bavarian Prime Minister Markus Söder called himself “the advocate of the industrious”.

Almost equal to a low salary

According to studies, Bürgergeld does not provide more than a low-wage job, so the Christian Democrats’ argument does not hold; that the difference between a poorly paid job and the citizen’s money is not large is primarily due to the low hourly wage. Earlier this year, the CDU/CSU opposed the government’s decision to raise the minimum wage to 12 euros an hour. The 12 euros an hour is nevertheless the minimum since October.

In Germany, approximately 5.6 million people currently receive Hartz-IV, of which 3.8 million are of working age and not disabled. The Federal Council must do it next Friday Approve Bürgergeld so that these 5.6 million people will receive more than 50 euros in January.

By the name Bürgergeld, many critics pretended that the new scheme heralded a basic income; there is no such thing. In addition to the monthly benefit, recipients must apply for various other benefits, such as child benefit. According to the current definition, a basic income must make additional social benefits redundant and reduce bureaucracy.

A similarity between the basic income and the original concept of Bürgergeld is that the benefit would be paid without too many conditions. It would remove a view of people where citizens would only work if they were given sufficient financial incentives to do so. In the new draft with sanctions, little remains of that agreement.

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