Unemployment Insurance in Germany

Until 2005, Germans who were out of work and in need would receive 60% of the net salary of their last job 67% if they had children, tax free, then after a year, it would go down to 53%. Former chancellor Gerhard Schröder made it his mission to change this system, a programme known as the Hartz reforms. The cutbacks came into force on 1 January 2005. Schroeder was out of government in the autumn of the same year. 

Under the reforms, now in their ninth year, the first year of unemployment remains covered by unemployment pay. Those who were in paid employment for at least a year beforehand still receive 60% of their net salary for the first year and 67% if they provide for a family. The big drop now happens afterwards. Instead of receiving about half of their former salaries, single people currently get €391 a month, and a further subsidy of between €229 and €296 for every child, depending on their age. Partners who live together will get €353 each. Costs for rent and heating are covered as well. Any personal savings, though, are taken into account and reduce whatever is paid as an unemployment benefit.

The idea behind these changes was to push people into work. The cutbacks went hand in hand with a reform of labour market laws that was supposed to make it easier for jobseekers to get back into employment. The combination of worse conditions for those who had to exist on unemployment benefits and easier entry into the job market was supposed to reduce the high German unemployment rate. But did it work?

The answer to this question is still the subject of a fierce debate.

Chosen excerpts by Job Market Monitor. Read the whole story at  Unemployment benefit: the view from Germany | Imke Henkel | Comment is free | theguardian.com.

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