Germany: Cabinet approves replacement for Hartz IV benefits

Germany's center-left coalition government of Social Democrats (SPD), Greens and the business-oriented Free Democrats (FDP) agreed on new unemployment benefits known as "citizens' money" (Bürgergeld) on Wednesday.

It is set to replace the controversial Hartz IV law brought in by the previous Social Democrat chancellor, Gerhard Schröder, almost 20 years ago.

Its successor aims to reduce the pressure on those out of work as well as substantially increase the amount of support provided.

The current Social Democrat chancellor, Olaf Scholz, wrote on Twitter that "The new citizens' money offers security and opens up chances."

"With the citizens' money we are tackling one of the biggest social reforms of the past 20 years," Labor Minister Hubertus Heil said during a visit to a job center in Berlin.

How much money will people receive?

The new system is set to come into effect in January, once it is passed by the German parliament.

Across the board, people who are out of work or otherwise require state support will see their monthly payments go up: For single adults, they will rise by €53 ($53) to €502. 

Households will also receive more money for their underage dependents,  — €420 for those aged 14-17, €348 for those aged 6-13, and €318 for those aged 5 or younger.

The citizens' money will also cover the rent for the first two years that a household is on benefits, irrespective of the size of the apartment and those registering for benefits will be allowed to keep up to €60,000 in savings.

What else will the new system change?

A key difference from the Hartz IV system is the relaxation of the stringent rules that unemployed people face while looking for work.

One example is the removal of sanctions for those who reject a job offer in the first six months of receiving benefits.

Sanctions had been one of the most reviled parts of the Hartz IV system. Instead, the new proposal will focus on further education and professional qualifications.

Professional coaching will also be offered to those who have particular difficulty in entering the labor market.

"People who chronically fail to keep appointments will have to face legal consequences in the new system. But the spirit of the new system is not one of mistrust, but of encouragement, of empowerment," Heil told Deutschlandfunk radio.

The conservative CDU/CSU opposition in the Bundestag criticized the Cabinet's proposal, with one senior official claiming it would "set a pattern of receiving benefits and lead to demotivation instead of new employment."

ab/jcg (dpa, Reuters, AFP)

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