German lawmakers agree welfare reform to boost benefits and training

The reform is less ambitious than originally planned by the leftist government, which the conservative opposition blocked in the upper house of parliament last week.

The government and the Tories then agreed on the revamped version, which a parliamentary mediation committee approved on Wednesday evening. It still requires formal parliamentary approval on Friday, but it is essentially a formality.

The main change to the original plan is the removal of a so-called six-month “confidence period”, during which job seekers would have received full benefits even if they failed to show up for appointment.

The change means that the amended reform, which will introduce the Buergergeld, or “citizens’ money”, loses a key distinction from the Hartz IV system it will replace, which also penalizes people who reject job offers.

“It’s not really the end of Hartz IV. You changed the system a bit, but you didn’t really abolish it,” Clemens Fuest, president of the Ifo economics institute, told Reuters this week. about the amended reform.

Under Hartz IV, introduced from 2005 at a time of low growth and high unemployment, unemployment benefit recipients can have their payments reduced if they refuse a job offer. Experts say the benefits it offers do not cover basic living expenses.

The overhaul will put even more money in the pockets of state benefit recipients and provide more for those in vocational training.

By contrast, the French government plans to curb unemployment benefits when the jobless rate drops below 9% under a plan presented on Monday that aims to tackle staff shortages.

Germany’s skills shortage is holding back business, with an aging population posing a demographic time bomb for the public pension system – a threat ministers want to defuse with immigration and education.

(Writing by Paul Carrel; Editing by Tomasz Janowski)

James R. Rhodes