Habeck wants to replace Hartz IV (Hartz four) with a ‘system of guarantees’, which would be based on incentives instead of punishment for welfare recipients.
In an internal strategy paper seen by Zeit Online, Habeck says the way in which people work is changing – and that’s why it was time to get rid of the Hartz IV reforms, which significantly toughened the conditions under which people could claim welfare or unemployment benefits when they were introduced in January 2005.
In the coming years, the world of work will undergo a highly dynamic change, which is why the “guaranteed promise of the welfare state must be renewed,” wrote Habeck, whose centre-left to left party is experiencing a surge in popularity at the moment. He hopes to show “how we leave the Hartz IV system behind us”.
Hartz IV was one of the biggest components of the major labour market reform of the early 2000s, introduced by a coalition government led by the centre-left Social Democrats (SPD) under Gerhard Schröder.
The reforms significantly toughened the conditions under which people could claim welfare or unemployment benefits. They require recipients to regularly attend meetings and show they're actively looking for work or enrolling in skills-training programmes, such as language courses.
If claimants are not taking job hunting seriously, sanctions can be put in place, including the withholding of benefits. Even failing to show up for a job centre meeting can result in a partial loss of benefits.
The basic level for a single person is about €416 a month, and the cost of recipients' accommodation and healthcare is covered. That is expected to rise to €424 from the beginning of 2019.
Widened the gap between rich and poor
While the reforms are credited with helping reduce unemployment in Germany to historically low levels, critics say they have widened the gap between rich and poor in that it quickly pushes people back into the labour market in lower-paid positions.
Even politicians within the SPD have voiced criticism over Hartz IV. Leader Andrea Nahles and General Secretary Lars Klingbeil both said recently it was time to reform it. Commentators say the introduction of the reforms have damaged the Social Democrats hugely – something that's reflected in the party's dismal election and polling results.
In contrast to the various models of an 'unconditional basic income' that everyone would receive, which is currently being discussed by different parties, the ‘system of guarantees’ proposed by Habeck would be paid out only to people in need of financial assistance.
“There is still an application and the need of the claimant has to be proven”, the paper by Habeck states.
At the same time, however, the obligation to take up work should be eliminated, he writes.
In the system envisaged by Habeck, there would be no sanctions for people who do not cooperate with the job centre.
Participation in counselling and training would be voluntary. A system of incentives and rewards would be put in place to ensure that people still make use of these opportunities, though.
According to Habeck, the amount received by recipients should rise, although he doesn’t specify by how much. He said more research would need to done to establish that, but it would lead to an increase on the current rate.
A job centre in the German city of Zwickau. Photo: DPA
Furthermore, the paper states that benefits should be paid out by an independent authority and no longer by the job centres so that these organizations can concentrate on solely helping people find work.
More recipients, less poverty
According to Habeck's ideas, people who are entitled to guaranteed insurance should also be allowed to hold on their assets as a form of savings even if they are receiving benefits.
Habeck adds that if someone earns money in addition to social benefits they should be allowed to keep at least 30 percent of it.
The Greens politician expects that four million additional households would be entitled to 'guaranteed insurance' compared to the number of Hartz IV recipients today.
At present, about 6.22 million people live off the Hartz IV basic state insurance in one of the 3.2 million households that depend on this assistance.
There will be more recipients in this system, but less poverty, writes Habeck. Depending on the design of the model, he estimates the costs to be around €30 billion per year. “The counter-financing must come from a fairer distribution of the wealth of this country,” the paper says.
Habeck now wants to put his proposals up for debate in the party, within the framework of the Greens' programme process, which should be completed by 2020. The next elections are due to take place in 2021.
It came as the Green Party continues to ride high. Most polls now show 'Die Grünen' just three or four points behind the CDU, having apparently eclipsed the centre-left Social Democrats (SPD) as the main opposition in Germany.
A recent survey by pollsters Forsa found the Greens were on 24 percent, while the CDU/CSU scored 27 percent.