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Bürgergeld: What to know about Germany’s unemployment benefits shake-up

The German Bundestag is poised to get rid of the controversial long-term unemployment benefit Hartz IV and replace it with the so-called Bürgergeld. Here's what we know so far.

A person at a job interview in Germany.
A person at a job interview in Germany. Photo: picture alliance/dpa/dpa-tmn | Christin Klose

What’s happening?

The German Bundestag starts debating Thursday on a big shake-up of unemployment support from next year. 

Parliamentarians are considering a proposal from Labour Minister Hubertus Heil, of the Social Democrats (SPD), to reform the controversial Hartz IV unemployment benefit or Arbeitslosengeld II – a programme for the long-term unemployed that the SPD themselves came up with in 2002. 

The plan is to switch to a benefits system based on encouragement rather than sanctions. It will be called Bürgergeld, or ‘citizens’ allowance’ .

The term Hartz IV has long been a major problem for large parts of the SPD. Many people associate the reforms passed in 2005 under Chancellor Gerhard Schröder to be at odds with the Social Democrat’s philosophy of a caring welfare state. 

Here’s a look at the draft plans, what they mean, and the amount of support planned. 

More fairness

The aim of Bürgergeld will be to reform the system to make it fairer to claimants, meaning people will be treated less harshly than under Hartz IV. It will be given to all those who currently receive Unemployment Benefit II or Hartz IV – around 3.5 million people in Germany.

Job centres are to be more generous in dealing with benefit recipients, so that the unemployed can focus on getting back into the labour market as quickly as possible. This means a recipient might be encouraged to take the time to finish an apprenticeship in order to qualify for better paying work, for example.

The government’s proposal provides for an increased rate of support of €502 per month for single people, up from the current €449. Partnered people would receive €451. Benefits would also be available for unemployed people with children, with €420 provided for a child aged 14-17, €348 for 6-13 year-olds, and €318 for children aged 5 and younger. Parents with a teenager working a part-time job earning up to €520 a month would also no longer see their benefits reduced.

In the first two years of receiving Bürgergeld, benefit recipients would also be allowed to stay in their homes without worry – these will not be included in the calculations of what people can receive. 

READ ALSO: 10 golden rules to know if you lose your job in Germany

Furthermore, assets of up to €60,000 would not be touched by the state. The concern of many people that they would have to give up their homes or use up their savings if they were unemployed for a longer period of time could therefore be eliminated – at least for the first two years. After that, as before, there could be checks on whether people’s housing situation is suitable (or if it is deemed too big). After the first two years, assets of up to €15,000 would also not be touched by the state.

Reform of sanctions

Sanctions are a big part of the current Hartz IV system, which links the right to receiving welfare payments to certain obligations, like actively looking for work and applying for roles that the job centre recommends. 

If a benefits claimant doesn’t meet these obligations, they get sanctioned with a cut to their welfare payments. 

In the past, there has been massive criticism of these financial punishments that Hartz IV recipients had to fear if, for example, they did not keep to agreements with the job centre.

Labour Minister Hubertus Heil unveils the Bürgergeld plans on Wednesday.

Labour Minister Hubertus Heil unveils the Bürgergeld plans. Photo: picture alliance/dpa | Christoph Soeder

The new system will limit the sanctions to some extent. Heil’s proposal provides for a new regulation which would mean sanctions could not be introduced during a six-month ‘period of trust’ from the time of receipt of Bürgergeld. Payments would not be docked during this period.

After this point, sanctions could come in, but there is likely to be a change of culture. For instance, appointments at the job centre will remain compulsory, but are to become more flexible and informal.

Only those who do not cooperate with the job centre at all will have to fear negative consequences, the government says. “For people who chronically do not keep appointments, there can still be legal consequences,” said Heil.

More opportunities and incentives for further education are also part of Heil’s proposal for reforming the unemployment support system. Among other factors, people will be given more time to acquire a vocational qualification: three years instead of the previous two, under the plans.

READ ALSO: Germany’s plans to ditch sanctions for the unemployed

What’s the reaction?

So far, the Free Democrats reject a change in the calculation formula for monthly payments. “Instead, we have to improve the additional income possibilities,” FDP leader and Finance Minister Christian Lindner told RTL. The pro-business FDP also isn’t happy with easing the sanctions situation.

But social organisations welcomed the changes.

Yasmin Fahimi, chairperson of the German Federation of Trade Unions, said Bürgergeld had “what it takes to largely overcome the old Hartz IV system”.

However, Fahimi called for an inflation-busting increase in the standard rates. 

READ ALSO: Why are Germany’s Hartz IV benefits so controversial?

How will it be paid for?

Heil has so far remained vague about how Bürgergeld would be funded. 

The government has been hemorrhaging money in the past years due to the Covid pandemic, rising inflation and subsequent measures to help the population and as a result of Russia’s war on Ukraine.

If the Bundestag and Bundesrat pass the reform soon according to plan, it will come into force on January 1st 2023. 

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IMMIGRATION

EXPLAINED: How Germany plans to make immigration easier for skilled workers

The German government has agreed on a set of reforms for the immigration of skilled workers, which was approved by the cabinet on Wednesday. Here's what they're planning.

EXPLAINED: How Germany plans to make immigration easier for skilled workers

What’s happening?

Germany is currently facing a dramatic skilled worker shortage, particularly in the health sector, IT, construction, architecture, engineering and building services. The German government currently expects that, by 2026, there will be 240,000 jobs for which there will be no qualified candidates.

In order to help plug the gap in the labour market, the coalition government has been proposing changes to immigration law for months.

In September, Labour Minister Hubertus Heil presented plans for a new points-based immigration system, that will enable non-EU workers to come to Germany to look for work even without a job offer, as long as they fulfil certain criteria, under a so-called “Opportunity Card” (Chancenkarte) scheme.

READ ALSO: Explained: How to apply for Germany’s new ‘opportunity card’ and other visas for job seekers

Now, the coalition government has agreed on a wide-ranging set of initiatives to help remove hurdles for skilled workers coming to Germany. The points were approved by the cabinet on Wednesday, who should then come up with a draft law in the first quarter of 2023.

What’s in the plans?

The central aim of the government’s plans is to make it easier for people from outside the EU to find a job in Germany.

In the draft paper, ministers distinguish between three so-called pillars, the first of which concerns the requirements that foreign specialists must meet in order to be allowed to work in Germany.

Until now, they have had to have a recognized degree and an employment contract, but the government wants to lower this hurdle.

The draft states: “For specialists who are unable to present documents relating to their professional qualifications or can only do so in part, for reasons for which they themselves are not responsible, an entry and residence option should nevertheless be created.” The competencies could then be finally examined once they have arrived in Germany.

A trainee electrician practices in a training centre in Cologne. Photo: picture alliance/dpa | Oliver Berg

The second pillar involves skilled workers from abroad who do not yet have a degree but already have a lot of professional experience.

For employees in the information and communications technology sector, the requirement of having sufficient German language skills would be waived, and it would then be up to the managers of the company making the job offer to decide whether or not they want to employ the skilled worker despite a lack of German language skills. 

READ ALSO: ‘More jobs in English’: How Germany could attract international workers

The third pillar is about enabling third-country nationals with good potential to stay in Germany in order to find a job. The “Opportunity Card” falls under this pillar and will involve a new points-based system, which will allow non-EU nationals to come to Germany to look for work even without a job offer as long as they fulfil at least three of the criteria of having a degree or professional qualification, having experience of at least three years, having a language skill or previous residence in Germany and are under 35.

READ ALSO: How to apply for Germany’s new opportunity card and other visas for job seekers

What other initiatives do the plans include?

The traffic light coalition also wants to do more to promote Germany as an attractive, innovative and diverse country abroad.

One initiative is to publicise job vacancies internationally and connect qualified people abroad with employers and educational institutions in Germany. 

READ ALSO: Will immigration reform be enough to combat Germany’s worker shortage?

The “Make it in Germany” portal, which has its own job exchange, will be expanded and further developed.

The government also wants to promote the German language both abroad and at home for example, by expanding digital language courses and exams.

The government also wants to simplify and accelerate the recognition procedures for foreign vocational qualifications. One of the planned measures is that the required documents can also be accepted in English or in the original language.

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