Status: 07/28/2022 10:38 a.m.
Citizens’ Allowance is intended to replace Unemployment Benefit II – and focus more on skills, cooperation and trust. But the projects of Labor Minister Heil are criticized. What is planned – and where are the problems?
Why does the traffic light want to reform unemployment benefit II?
During the election campaign, the three parties of the traffic light coalition had already indicated a need for revision: unemployment benefit II (Hartz IV), introduced under Chancellor Gerhard Schröder (SPD) in 2005 , has not only lasted for years – it has long been considered in need of reform. Not just because the Federal Constitutional Court called for corrections in 2019, for example to treat young people harsher in penalties than older age groups. And: There may be penalties, but in moderation. Because this is the subsistence level protected by the Basic Law, ie a matter of human dignity, the sanctions should not go too far.
But there is more than that: labor market research has shown that even the Hartz IV system with the principle of “support and challenge” was not able to significantly reduce the group of long-term unemployed . This represents approximately one million unemployed despite the favorable development of the labor market. As early as 2015, the Institute for Labor Market and Occupational Research (IAB) of the Federal Employment Agency warned of the need for reform in the promotion of the long-term unemployed.
How does Citizen Income differ from Hartz IV?
In the future, Pôle Emploi should be more generous with the living situation of recipients so that they can focus on returning to the labor market as quickly as possible.
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. After that, as before, it should also be checked whether, for example, the housing situation is suitable. In addition, assets up to 60,000 euros should not be touched.
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. The continuing education bonus must be granted for an unlimited period and coaching must become a new “regulatory instrument for holistic care”.
Minister of Labor Heil speaks of a system change – why?
Heil relies more on the principle of trust, qualification and continuous training than the Hartz system has done so far. A six-month ‘confidence period’ should apply from when Citizens Allowance is received, during which time reduced benefits are excluded. Only those who do not cooperate at all with the employment office need fear negative consequences. Even after this period, a period of trust without a fixed minimum duration should follow – employment agencies can only set binding obligations to cooperate in the event of “breach of trust”.
And: The old “placement priority” for the long-term unemployed should be abolished. This means that training and continuing education related to the professional qualification is possible before a temporary job. Citizens’ income recipients should not be forced to take the first job that comes along for which they are overqualified and prefer to acquire other qualifications. To this end, for example, the development bonus should be granted for an unlimited period. “People have the time they need to learn,” says the Labor Department’s key issues document.
What will happen to controversial 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. With the votes of the factions at the traffic lights, the Bundestag had already suspended the previous practice of sanctions from mid-May – in anticipation of the citizens’ income reform. During the last federal election campaign, the Greens called for the complete abolition of sanctions. This shouldn’t happen now.
But the possibilities of sanctions are reduced in the project of the Minister of Labour: young people no longer have to fear greater declines in performance than those over 25 years old. The principle of “promote and demand” is not completely abolished. However, Hubertus Heil’s proposal provides for a reduction of the previous sanction options. But: “For people who do not keep appointments chronically, this can still have legal consequences,” said the SPD Minister of Labor. The FDP considers the instrument very important in order to be able to continue threatening sanctions. “It is a question of respect that we must continue to make a difference if a small minority does not respect the rules,” wrote deputy FDP Johannes Vogel in a guest article for the “FAZ”.
Although citizens’ money is in the coalition agreement, there is a dispute about it – why?
Given the current shortage of workers and skilled workers, the FDP supports Heil’s “clear focus on training and further education” as well as more accommodating supplemental income rules. But there is disagreement between the SPD, the Greens on the one hand and the FDP on the future scope of the sanctions and on the recalculation of the flat rates, as proposed by the Minister of Labour. The coalition agreement does not contain any agreement on the calculation.
So far, there are completely incompatible positions between the SPD and the FDP on the question of whether the successor to Hartz IV will receive a new calculation base, which would lead to a significant increase: it would be an increase of about 40 to 50 euros compared to the current Hartz -IV standard rate of 449 euros per month. Heil thus responds to the demands of social associations. They criticize that the subsistence level is already too tight without war-related price increases in the cost of living and does not offset inflation. Heil argues that the previously applicable standard rate standard adjustment still lags current price increases and cannot compensate for them.
The FDP opposes the investment of additional money in a lump sum increase in the normal rate for all social recipients. After presenting Heil’s key points last week, the FDP immediately made it known that it would not accept his new calculation method. It emphasizes that the normal rates would in any case be adjusted annually to reflect the development of wages and prices. The future citizens’ allowance should be “an activation and not an unconditional basic income”, said FDP leader Christian Lindner.
What do the opposition and social organizations say?
The leader of the CDU party and parliamentary group Friedrich Merz is skeptical: he is “very curious whether there are incentives to return to the labor market”. CDU deputy Carsten Linnemann already sees a complete break with the principle of “support and challenge” in the key points presented. The traffic light coalition makes work even more unattractive despite two million job vacancies – the citizen income presented by Heil is misunderstood social justice.
The leader of the left-wing parliamentary group, Dietmar Bartsch, called on the traffic light coalition to support Labor Minister Heil’s concept and not give in to FDP demands for standard rates. The leader of the AfD’s deputy parliamentary group, Norbert Kleinwaechter, considers the concept of basic income antisocial and advocates an activating basic security with an incentive to work: “Basic income mocks those who work, ignores needs of the needy and only serves the interests of those who are not cared for by the welfare state should.”
Social organizations do not see the reform as a great success, at most “a step in the right direction”. They welcome the fact that the long-term unemployed are better supported by eliminating priority placement and no longer being obliged to take a job. The proximity coaching that accompanies it for job seekers is also useful.
But they are calling for a sharper increase in standard tariffs: “Without an increase, people will find themselves in existential emergencies, indicates for example Diakonie Deutschland. The federal government must urgently make improvements here.
What is the timetable for the introduction of citizen income?
The goal of the Minister of Labor and Social Affairs is the introduction of the new citizen’s income on January 1, 2023. This is also supported by Federal Chancellor Olaf Scholz. Heil sees his basic income concept as largely unified within the traffic light coalition. The details are now being clarified during the cabinet and departmental vote – and probably also during the next coalition committee. The recalculation of the standard rates planned by Heil is to be discussed in parliament in the fall, after which the new federal budget will also be finalized during parliamentary deliberations.
The law is subject to approval – and must therefore also be supported by the majority of the Bundesrat. Heil will therefore still have to campaign for his reform in the Union and the Länder.