Hartz concept
The Hartz concept is a set of recommendations that resulted from a commission on reforms to the German
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...

 labour market in 2002. Named after the head of the commission, Peter Hartz
Peter Hartz
Peter Hartz , was the human resources executive at the German public company Volkswagen AG . Twenty percent of Volkswagen's shares are owned by the state of Lower Saxony...

, it went on to become part of the German government's Agenda 2010
Agenda 2010
The Agenda 2010 is a series of reforms planned and executed by the German government which are aimed at reforming the German social system and labour market. The declared aim of Agenda 2010 is to improve economic growth and thus reduce unemployment....

 series of reforms, known as Hartz I - Hartz IV. The reforms of Hartz I - III took place between January 1, 2003, and 2004; Hartz IV began on January 1, 2005.

The "Hartz Committee" was founded on February 22, 2002; its real name was Kommission für moderne Dienstleistungen am Arbeitsmarkt – the Committee for Modern Services in the Labour Market. Its 15 members were led by Peter Hartz
Peter Hartz
Peter Hartz , was the human resources executive at the German public company Volkswagen AG . Twenty percent of Volkswagen's shares are owned by the state of Lower Saxony...

, then Volkswagen
Volkswagen is a German automobile manufacturer and is the original and biggest-selling marque of the Volkswagen Group, which now also owns the Audi, Bentley, Bugatti, Lamborghini, SEAT, and Škoda marques and the truck manufacturer Scania.Volkswagen means "people's car" in German, where it is...

's personnel director.

The committee devised thirteen "innovation modules", which suggested changes to the German labour market system. These were then put into practice as Hartz I - IV:

Hartz I, II and III

Hartz I and II both came into effect on January 1, 2003, aiming at making new types of jobs easier to create, and covered, for example:

(Hartz I)
  • The foundation of "Staff Services agencies" (Personal-Service-Agenturen or PSAs).
  • Support for vocational further education from the German Federal Labour Agency.
  • Subsistence payments by the Federal Labour Agency.

(Hartz II)
  • New types of employment, "Minijob" and "Midijob", with lower or gradually rising taxes and insurance payments.
  • A grant for entrepreneurs, known as the "Ich-AG" (Me, Inc.).
  • A rise in the number of job centres.

(Hartz III)
  • Hartz III came into effect on January 1, 2004. This measure was aimed at restructuring and reforming Job Centres, whose name was changed from the Bundesanstalt für Arbeit or Arbeitsamt (Federal Labour Institution), to the Bundesagentur für Arbeit or Agentur für Arbeit (Federal Labour Agency).

Hartz IV

The Hartz IV reform was voted in by the Bundestag
The Bundestag is a federal legislative body in Germany. In practice Germany is governed by a bicameral legislature, of which the Bundestag serves as the lower house and the Bundesrat the upper house. The Bundestag is established by the German Basic Law of 1949, as the successor to the earlier...

on December 16, 2003 and by the Bundesrat on July 9, 2004; taking effect by January 1, 2005. This part of the reform brought together the former unemployment benefits for long term unemployed ('Arbeitslosenhilfe') and the welfare benefits ('Sozialhilfe'), leaving them both at approximately the lower level of the former 'Sozialhilfe'. The current (September 2009) level for a single person is
The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...

364 per month (known as the Regelsatz) plus the cost of 'adequate' housing and health care. Couples can receive benefits for each partner including their children.

Prior to 2005, between 12 and 36 months (depending upon the claimant's age and work history) of their full unemployment benefit (60 to 67% of the previous net salary) were followed by Arbeitslosenhilfe (unemployment assistance, 53 to 57% of the last net salary). Since 2005, reception of full unemployment benefit (renamed Arbeitslosengeld I), has been restricted to 12 months in general and 18 months for over 55 year-olds. This is now followed by (usually much lower) Arbeitslosengeld II if the claimant fits the requirements (see next paragraph).

Whether or not a claimant is eligible for Arbeitslosengeld II depends on his or her savings, life insurance and the income of spouse or partner. If these assets are below a threshold level, a claimant can get money from the state. The current (July 2008) threshold level is €150 for free assets (at least €3,100) and €250 for fixed retirement assets, both calculated per capita and lifetime year. Additionally, every employable individual in a communal household (persons living in and depending on the resources of the claimant), can have one car worth about €7,500 and a self-used house of 130 square meters living space (more if there are other people in the common household).

To receive payments, a claimant must agree to a contract subject to public law. This contract outlines what they are obliged to do to improve their job situation, and when the state is obliged to help. An unemployed person may be required to accept any kind of legal job. This compulsion is restricted by constitutional rights, like freedom of movement, freedom of family, marriage and 'human dignity'. If taking on a specific placement is deemed reasonable by the responsible agency, not applying will result in a reduction or even complete suspension of the appropriate payment.

The state pays for Arbeitslosengeld II, a pension scheme, and health insurance for the unemployed. It is possible to earn income from a job and receive Arbeitslosengeld II benefits at the same time. Job income is debited from Arbeitslosengeld II payments according to a formula that leaves a certain amount of the additional revenue untouched. These revenues are: a certain amount of savings (which increases with age); €100 plus 20 percent of the wage up to €800 plus 10 % of the wage up to €1200 (up to €1500 if there are children). Through this mechanism Arbeitslosengeld II can be regarded as a sort of minimum wage
Minimum wage
A minimum wage is the lowest hourly, daily or monthly remuneration that employers may legally pay to workers. Equivalently, it is the lowest wage at which workers may sell their labour. Although minimum wage laws are in effect in a great many jurisdictions, there are differences of opinion about...

 floor for employees without assets, where the minimum wage is not fully paid by the employer but assured by the state. There are criticisms that this defies competition and leads to a downward spiral in wages and the loss of fulltime jobs.
The Hartz IV reform merged the federal level unemployment agency with the local level welfare administration. This facilitated a better, case-oriented approach to helping unemployed people find work and improve their situations. The plan's objective is to reduce caseloads from 400 unemployed persons per agent to not more than 75 (aged 25 or less), or not more than 150 persons over the age of 25. For difficult cases, dedicated case managers may be deployed. Legally, however, the agencies remain separate.

The Hartz IV reforms continue to attract criticism in Germany, despite a considerable reduction in short and long term unemployment. This reduction has led to some claims of success for the Hartz reforms. Others say the actual unemployment figures are not comparable because many people work part time or are not included in the statistics for other reasons, such as the number of children that live in Hartz IV households, which has risen to record numbers.

"Hartz IV" in common language

Although the official term for long-term unemployment benefits is still Arbeitslosengeld II, most Germans, even news programmes and politicians in parliament, refer to it as Hartz IV. Hartz IV was voted Word of the Year 2004 by the Society for the German Language
Gesellschaft für deutsche Sprache
The Gesellschaft für deutsche Sprache , or GfdS, with its headquarters in Wiesbaden is Germany's most important government-sponsored language society...

. Meanwhile it has become a synonym for the class of non-working poor and is used as a prefix in multiple contexts (i.e. low-brow daytime television programmes are called "Hartz-IV-TV" by critics).

See also

  • Monday demonstrations, 2004
  • Working opportunities with additional expenses compensation
  • Arbeitslosengeld II – Leistungen zum Lebensunterhalt
    A2LL is the abbreviation of the German social services and unemployment software system"Arbeitslosengeld II – Leistungen zum Lebensunterhalt“...

    - the German social services and unemployment software system

External links

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