The Hartz reforms

Besides UB II, the new basic income scheme provides a social allowance (Sozialgeld) to persons who live together with needy persons capable of working in a joint household (a so-called Bedarfsgemeinschaft). The recipients of social allowance are normally children below the working age of 15 years. Those incapable of working receive social assistance according to SGB XII, which continues to be the responsibility of the municipalities (see Table 2). 

Arbeitslosengeld (unemployment insurance benefit) funded through contributions, earnings-related, limited duration 

Arbeitslosenhilfe (earnings-related unemployment assistance) tax-funded, earnings-related, means-tested, infinite duration 

Grundsicherung (Basic income scheme for needy jobseekers) 

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Prior to the Hartz reforms that came into force between 2002 and 2005, Germany had a three-tier system of income protection in case of unemployment ... 

The practical enforcement of rights and duties , however, is the core element of the Hartz reforms. The activation strategy is implemented in virtually every element of the labour market policy framework. The Hartz reforms shifts priority... 

Activation was reintroduced by the report of the Hartz Commission who made references to good practices at the national levels, e g. models of effective cooperation between BA and municipalities in selected Mozart projects, as well as international best practices and benchmarking of labour market performance and pohcies. Hence, the Hartz reforms focus was inspired by activating policies for the unemployed in other European countries that were perceived to be more success-fill in lowering unemployment such as the United Kingdom, the Netherlands or Denmark (Bruttel and Kemmerling 2006 Eichhorst et al. 2001 Fleckenstein 2004). 

With the Hartz reforms a number of new instruments were created that aim at a more effective re-integration of the unemployed although they are not activating in a narrow sense, i.e. used to enforce benefit conditionality. These innovative instruments comprise different forms of flexible and subsidised employment apart from classical employer-oriented wage subsidies ... 

Within the comprehensive scientific evaluation of the Hartz reforms on behalf of the government, the results of Hartz III focus on the effectiveness of placement services after the reorganisation of the local employment offices. The study by WZB and infas using a conditional difference-in-difference analysis exploits the fact that the new customer-oriented one-stop centres have been introduced at different points in time. The results indicate positive effects of customer centres on the integration into regular employment (Bundesregierung 2006). 

The Hartz reforms tightened benefit conditionality with respect to availability for work and programme participation. They also introduced more flexibility in sanctioning. The objective of a stricter regulation rests on the fact that hardly any sanctions were imposed under the former law or were not asserted with the necessary intensity. Although sanctioning via temporary suspension of UB payments... 

Even to date, there is no societal consensus on policy objectives in labour market policies. Hence, the paradigm shift to activation is not yet complete. Moreover, there is a dominating sense of injustice. It is fair to argue that the broad rejection of the Hartz IV reform is due to a fundamental deficit of legitimising the hidden or silent shift from a social insurance state to a welfare state dominated by basic income support and stronger activation. 

Bruttel O, Kemmerling A (2006) New Politics in German Labour Market Policy The Implications of the Recent Hartz Reforms for the German Welfare State. West European Politics 29(1) 90-112... 

Reform stalemate could only be overcome in the face of the window of opportunity of the placement scandal and the subsequent Hartz report in 2002 with an expert commission legitimising further reforms of labour market policy and regulation, changing the role of social partner tripartism in BA and national policymaking, thus paving the way for more determined government action (Eichhorst and Kaiser 2006 Streeck and Trampusch 2005). 

This was also due to the fact that Hartz IV led to a change in unemployment statistics. As the reform changed the rules for eligibility criteria for unemployment benefits, requiring... 

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