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Saturday, January 28, 2023

Hartz IV Replacement: What the New Citizen Money Should Look Like

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Status: 07/20/2022 4:00 p.m.

Hartz IV could soon be history. Federal Minister of Labor Heil has now presented the details of the so-called citizens’ currency. What should change in the future – and why could it still cause controversy?

By Jakob Rhein, ARD Capital Studio

The term Hartz IV has long become a red flag for much of the SPD. Many associate the reforms passed in 2005 under Chancellor Gerhard Schröder with social indifference and a farewell to a benevolent welfare state.

Now, however, the Hartz IV system may soon be a thing of the past. As a new basic security, the traffic light coalition wants to introduce the so-called citizen currency. Federal Labor Minister Hubertus Heil (SPD) presented the basics of his bill.

More fairness

“We want to create a greater sense of unity,” this phrase was repeated over and over during the presentation. In the future, the Pôle Emploi should be more generous with the living situation of recipients so that they can focus above all on the fastest possible return to the labor market.

In concrete terms, this means: During the first two years of receiving the citizen’s income, beneficiaries must be allowed to stay in their apartments in any case, these are not included in the calculations. In addition, assets up to 60,000 euros should not be touched.

Many people’s fear of having to abandon their homes or deplete their savings if they were unemployed for a long period could thus disappear – at least for the first two years. After that, as before, it should also be checked whether, for example, the housing situation is suitable.

reorganization of sanctions

In the past, we had always strongly criticized the sanctions that Hartz IV recipients had to fear if, for example, they did not respect the agreements with Pôle emploi.

During the last federal election campaign, the Greens called for the complete abolition of sanctions. This shouldn’t happen now. The principle of promotion and requirement is not abolished. However, Hubertus Heil’s proposal provides for a new regulation of sanction options.

For example, a six-month confidence period should apply from the time Citizen’s Allowance is received, during which time reduced benefits are excluded. Only those who do not cooperate with Pôle Emploi at all need fear negative consequences: “For people who do not keep their appointments chronically, there can always be legal consequences,” Heil said.

Heil’s proposal to reform the basic security system also includes more opportunities and incentives for continuing education. Among other things, people should be given more time to acquire a professional qualification if necessary: ​​three years instead of the previous two.

Higher period rates – but how far?

In addition to better cooperation between the state and citizens, the Minister of Labor promised that basic security standard rates should “increase appropriately” from January 1, 2023. However, he did not clarified what exactly is meant by “appropriate”. Heil first wants to wait for the calculations of the Federal Statistical Office. On this basis, the recalculation of the flat rates should then take place in September in coordination with the coalition partners of the Greens and the FDP.

The only thing that is clear so far is that the previous principle, according to which the normal rates are calculated on the basis of the development of wages and prices over the previous two years, must be reformed. The previous mechanism causes a significant lag, especially in times of rising inflation, Heil said. This initiative by the minister had recently been criticized by the FDP.

Need for discussion in the coalition

The Minister remained rather vague as to the financing of the incomes of the new citizens. To what extent, for example, the reserves of the Federal Ministry of Finance are sufficient for significantly higher standard rates remains questionable, to say the least. The coalition could still face intensive debates on this subject in the coming weeks. After all, after the many special expenses resulting from the war against Ukraine, the financial room for maneuver is limited.

The Labor Minister’s bill is currently being voted on by the various ministries. The cabinet must adopt it in September. The Bundestag and the Bundesrat could decide on citizens’ income this fall, and it could come into force on January 1, 2023.

Could. Because there are still a few open questions to be clarified before the unloved term Hartz IV truly becomes citizen revenue – and the SPD can overcome one of its greatest traumas.

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Source www.tagesschau.de

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