Hartz concept

The Hartz concept is a set of recommendations that resulted from a commission on reforms to the German labour market in 2002. Named after the head of the commission, Peter Hartz, it went on to become part of the German government's Agenda 2010 series of reforms, known as Hartz I - Hartz IV. The reforms of Hartz I - III took place between January 1, 2003, and 2004; Hartz IV began on January 1, 2005.

The "Hartz Committee" was founded on February 22, 2002; its real name was Kommission für moderne Dienstleistungen am Arbeitsmarkt – the Committee for Modern Services in the Labour Market. Its 15 members were led by Peter Hartz, then Volkswagen's personnel director.

The committee devised thirteen "innovation modules", which suggested changes to the German labour market system. These were then put into practice as Hartz I - IV:

Hartz I, II and III

Hartz I and II both came into effect on January 1, 2003, aiming at making new types of jobs easier to create, and covered, for example:

(Hartz I)

• The foundation of "Staff Services agencies" (Personal-Service-Agenturen or PSAs)
• Support for vocational further education from the Job Agency (Arbeitsagentur)
• Subsistence payments by the Job Agency

(Hartz II)

• New types of employment, "Minijob" and "Midijob", with lower or gradually rising taxes and insurance payments
• A grant for entrepreneurs, known as the "Ich-AG" (Me, Inc.)
• A rise in the number of job centres

(Hartz III)

• It came into effect on January 1, 2004. This measure was aimed at restructuring and reforming Job Centres, whose name was changed from the Bundesanstalt für Arbeit or Arbeitsamt (Federal Labour Institution), to the Bundesagentur für Arbeit or Agentur für Arbeit (Federal Labour Agency).

Hartz IV

The Hartz IV reform was voted in by the Bundestag on December 16, 2003 and by the Bundesrat on July 9, 2004; taking effect by January 1, 2005. This part of the reform brought together the former unemployment benefits for long term unemployed ('Arbeitslosenhilfe') and the welfare benefits ('Sozialhilfe'), leaving them both at approximately the lower level of the former 'Sozialhilfe'. The current (September 2009) level for a single person is €359 per month plus the cost of 'adequate' housing. Couples can receive benefits for each partner including their children.

Prior to 2005, between 12 and 36 months (depending upon the claimant's age and work history) of their full unemployment pay (60 to 67% of the previous net salary) were followed by Arbeitslosenhilfe (unemployment benefits, 53 to 57% of the last net salary). Since 2005, reception of full unemployment pay (renamed Arbeitslosengeld I), has been restricted to 12 months in general and 18 months for over 55 year-olds. This is now followed by (usually much lower) Arbeitslosengeld II if the claimant fits the requirements (see next paragraph).

Whether or not a claimant is eligible for Arbeitslosengeld II depends on his or her savings, life insurance and the income of spouse or partner. If these assets are below a threshold level, a claimant can get money from the state. The current (July 2008) threshold level is €150 for free assets (at least €3,100) and €250 for fixed retirement assets, both calculated per capita and lifetime year^[1]. Additionally, every employable individual in a communal household (persons living in and depending on the resources of the claimant), can have one car worth about €7,500 and a self-used house of 130 square meters living space (more if there are other people in the common household).

To receive payments, claimants must agree to a contract subject to public law. This contract outlines what they are obliged to do to improve their job situation, and when the state is obliged to help. Unemployed persons may be forced to accept any kind of legal job. This compulsion is restricted by constitutional rights, like freedom of movement, freedom of family, marriage and 'human dignity'. If taking on a specific placement is deemed reasonable by the responsible agency, not applying will result in a reduction or even complete suspension of the appropriate payment.

The state pays all unemployed personnel with Arbeitslosengeld II, a pension scheme and health insurance.

It is possible to gain revenue from a job and receive Arbeitslosengeld II benefits at the same time. The job income will be debited from the Arbeitslosengeld II according to a formula that leaves a certain amount of the additional revenue untouched. These revenues are: a certain amount of savings, (which increases with time); €100 plus 20 percent of the wage up to €800 plus 10 % of the wage up to €1200 (up to €1500 if there are children). Through this mechanism Arbeitslosengeld II can be regarded as a sort of minimum wage barrier for employees without assets, where the minimum wage is not paid by the employer but by the state. There are criticisms that this defies competition and leads to a downward spiral in wages and the loss of fulltime jobs.

The Hartz IV reform merged the federal level unemployment agency with the local level welfare administration. This facilitated a better, case-orientated approach to helping unemployed people find work and improve personal situations. The plan's objective is to reduce 400 unemployed people per agent to fewer than 75 for up to 25 year-olds, and 150 for people over that age. For difficult cases, dedicated case managers may be deployed. Legally, however, the agencies remain separate.

By January 2005, the number of people who count as unemployed had risen by about 222,000 due to new statistics introduced with Hartz IV, and by about 300,000 because of seasonal factors (unemployment is much higher in the winter). This brought the total official figure to 5,037,000.

The Hartz IV reforms continue to attract criticism in Germany, despite a considerable reduction in short and long term unemployment. This reduction has led to some claims of success for the Hartz reforms. Others say the actual unemployment figures are not comparable because many people work part time or are not included in the statistics for other reasons, such as the number of children that live in Hartz IV households, which has risen to record numbers.

Legal considerations

Several constitutional lawyers dispute the legality of Hartz IV law, saying that up to ten articles of Germany's constitution (Grundgesetz) may be violated. The gravest problems seems to lie in the level of aid, the initial €345 per month; even though this more or less covers the most basic needs, some doubt whether this meets the constitutional requirement for 'life in dignity,' given Germany's cost of living.

Another problem is the potential for gross disproportion between an employee's total social insurance payments and the benefits (e.g., 30 years of unemployment insurance premiums equate to some five full years of Arbeitslosengeld I, not the 12 months conceded by Hartz IV). Other doubts arise from the Working opportunities with additional expenses compensation, pejoratively called "1-Euro-jobs".

A couple of constitutional complaints were announced in 2005. Many constitutional complaints have not been accepted for hearing due to formal reasons (esp. not having exhausted all remedies at Social Courts and not substantiating the lower deviation of the minimum income needed to exist (see case no 1 BvR 1840/07)). Some cases have been dismissed.

In an order of court on 08-07-2008, the Federal Constitutional Court granted legal aid for a constitutional complaint concerning the standard rate of €359 per month for Arbeitslosengeld II. The courts case no is 1 BvR 1523/08. This court order implies that the Federal Constitutional Court considers the litigation to offer a reasonable prospect of success and not to be wanton. The court announced they will hear this case in 2009.

By order of court on 05-11-2009, the Federal Constitutional Court (case no. 1 BvR 1517/08) ruled that it is unconstitutional to dismiss legal aid applications of poor welfare beneficiaries by referring them to a Job Center, as originating office, for counseling on how to substantiate welfare claims in opposition proceedings. This has been a widespread legal but unconstitutional practice of many municipal courts, frustrating applicant attempts to appeal the level of their welfare Arbeitslosengeld II. The Federal Constitutional Court heard this case, among others, on the grounds that the quota of opposition and court proceedings is extraordinarly high and, that many points of the HARTZ IV law must be referred to the Federal Social Court or the Federal Constitutional Court. Thus, it is now possible for the poor to hire an attorney to help them substantiate welfare claims in opposition proceedings.

Furthermore, the Higher Social Court of the Federal State of Hesse has stayed case no. L 6 AS 336/07, and has referred a Concrete Judicial Review of the above standard rate to the Federal Constitutional Court in October 2008. Higher Social Court of Hesse is arguing that HARTZ IV violates the third amendment (Rule of Equality and Prohibition of Arbitrariness), the sixth amendment (Protection of Family and Marriage) and 20th amendment (Rule-of-Law Principle and Principle of the Welfare State) of German Basic Law. This case will be heard by the Federal Constitutional Court in 2009 and is filed under case no - 1 BvL 1/09 -.

See also

• Monday demonstrations, 2004
• Working opportunities with additional expenses compensation
• Arbeitslosengeld II – Leistungen zum Lebensunterhalt - the German social services and unemployment software system

References

External links

• Anti-Hartz IV Website - in German
• Basic information about Hartz IV - in German
• Ideas on abandoning the ideal of full employment including Hartz IV: Initiative for "Freedom, Not Full Employment" - in English
• Self-help forum in German - it is possible to post in English
• Court order of Federal Constitutional Court case no 1 BvR 1523/08 in German
• Planned mootnesses of Federal Constitutional Court 2009 in German
• Court order of the Higher Social Court of the Federal State of Hesse case no 6 AS 336/07 in German
• Court order of Federal Constitutional Court case no 1 BvR 1517/08 in German
• Court order of Federal Constitutional Court case no 1 BvR 1840/07 in German