Benefits, Euro (currency), Europe, European Union, Germany, Greece, Immigration, Tax, Welfare

Hartz Concept and the German Social System

Hartz IV

Hartz IV is Germany’s divisive welfare programme. It involved the consolidation of unemployment and welfare benefits. Some argued the new singular benefit was too low. However, the programme still encourages people to live off benefits when they are able to work. What with bailing out Greece, can the Germans also sustain its current benefits system, asks Helena Miteyko.

The Hartz concept is a term for the Commission’s proposals “Modern Services in the labour market” which was held in Germany under the leadership of Peter Hartz and submitted by August 2002. This Commission was established by the federal government under Gerhard Schröder which makes proposals on how the labour market policy in Germany works and how a more efficient public employment service can be reformed.

Reason for a reform was to help the unemployed and provide welfare benefits. Since 2009 the payment for a single person is €364 per month as well as the cost of “adequate” housing. There are other benefits for families and their children as they get the so called “Kindergeld” for the children.

This is another benefit for children under the age of 18 in addition to the Hartz IV money. Overall the reforms are known as Hartz I to Hartz IV. But now the question is: How helpful is this new system?

The German methodology to fight socioeconomic problems that have arisen from unemployment is seemingly sound – if you cannot work then the state compensates. That’s quite fair you’d say, or is it? A more pressing question is: ‘How foolproof is this system?’ For some, not being able to work is a path that is easily followed, causing cracks to form in the entire Hartz concept. Of course, for the proportion of the population who have been forced out of employment due to severe circumstances such as injury, this plan is undoubtedly justified.

For the ‘Schwarzarbeiter’ (or clandestine worker) however, such government schemes are asking to attract corruption. Workers such as these are notoriously known to register themselves as unemployed, whilst engaging in black-market activities, thus reaping in money from all directions. This is especially popular amongst immigrants who struggle to find an official job whilst not being satisfied with the money from the government. No wonder then, that the rich show distaste towards incentives such as the Hartz concept; their taxes are swallowed copiously by corrupt people leeching off the government. According to the German economist Rudolf Hickel, the main goal was to try to reduce the high unemployment rate so that the German government could encourage social and economic regrowth, mainly driven by increased spending.

Nonetheless, government support can go completely the other way, with people becoming reliant upon benefits as Hickel has suggested. The result of this is a lapse in economic growth. The money required for this reform is approximately equal to 100 working places, making Hickel’s scepticism all the more potent. Further evidence points to the German government’s misjudged planning – social spending did not shrink, instead it doubled. To the surprise of government, social spending increased drastically in 2005, going from 14.6 billion to 25.6 billion. Perhaps the Hartz concept really wasn’t a sensible idea.

Intuitively, the concept might have worked, but unfortunately it assumes a narrow-minded community of ‘pure’ workers, who’d do anything to get back into employment. The drawbacks are apparent, especially after seeing the effects of its introduction. Schoolchildren have been quick to pounce upon the ‘easy life’ that may arise from the Hartz concept. Quotes such as “Why do I need to work, if I can rely on the government and live off the government?” are often heard amongst adolescents. Having come across idle-minded attitudes during my years of schooling in Germany, I feel the issue of inducing laziness (especially among youngsters) cannot be ignored. After all, economic growth needs to be looked at sustainably; a decline of initiative in young people is bound to destroy any of it.

Other politicians such FDP member Guido Westerwelle and CSU member Alexander Dobrint respectively emphasize: “Everyone wants to be able to feed themselves and not rely on somebody”; “Just as a guest room is not [a] home, Hartz IV should never be thought to be a permanent condition”. Westerwelle also thinks that the government should pay greater attention to those who finance the government. In many ways, Westerwelle is right. The taxpayer should be looked at as an indispensable working part of parliamentary clockwork, therefore being given utmost importance.

A good social climate can therefore only be attained by encouraging the population towards beneficial activities – employment being the best of them. Although the Hartz concept was set out to support this, it was unsuccessful because it provided support that people could rest on permanently rather than temporarily. It is not the incentive to sit back, but rather the incentive to work that is needed for significant reform.

The overall political situation in Germany is distracting. Not only were the Germans the first ones putting their hands up for the implementation of the Euro currency which has increasingly worsen their economy. They also have to help countries such as Greece in order to maintain political respect – and because they were in favor of the Euro currency. Therefore the upper class has to pay tax for that as well. The German economy is strong but because of their policies it is weakening.

About lenamiteyko

I am a current student of Charterhouse interested in Politics and Economics. This blog gives me the opportunity to voice my opinion and view other bloggers views.

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