Even those whose companies are busy enough to employ staff are coming out with so little at the end of the month that they qualify for the basic welfare benefits known as Hartz IV.
Figures from the Federal Labour Agency (BA) show that from 2007 until 2010, the number of self-employed people who relied on Hartz IV rose by more than 50,000 to an annual average of 125,000. In February this year, the BA counted just under 118,000 who were claiming. Around 85,000 of these were clearing less than €400 a month on their own while around 25,000 earned less than €800 a month.
The suspicion arises with many claimants that they don’t really need the money, but are able to make their situation look so bad on paper that they can claim the state aid.
“Of course the self-employed can theoretically structure their income in such a way that they remain in need. But we don’t have any empirical evidence over whether and how often this happens,” said Heinrich Alt, manager at the BA.
There are around 4.4 million self-employed people in Germany, including a growing number of one-person businesses, many of which just about manage to keep themselves afloat and can sometimes require Hartz IV to help them keep going.
Interestingly, around a sixth of the self-employed people who draw Hartz IV live in Berlin, the figures show.
Hartz IV benefits can include up to €365 a month, as well as help with rental costs and up to €287.72 towards a private health insurance, the paper said.
“The verdict of whether a self-employed person actually needs the help, although they perhaps have staff on their books, whether the business costs are avoidable or reasonable, or whether the till records are right, is something for tax regulation gourmets rather than Job Centre staff,” said Alt.
He said the idea should be considered of putting a time limit on how long self-employed people should be able to claim Hartz IV benefits, particularly when they employ staff.
“One has to get into the black at some point, or, even though it will be painful, give up the self-employment. The taxpayer cannot continually help to finance a business idea that is not working,” he said.