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Hartz concept

The Hartz concept is the name given to the recommendations resulting 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 will begin on January 1, 2005.

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

The commission came up with thirteen "innovation modules" suggesting changes to the German labour market system. These were then put into practice as Hartz I - IV as follows:

Hartz I, II and III

Harz 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)

  • The 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 came into effect on I January 2004. It aimed at restructuring and reforming the Job Centre, changing its name 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. This part of the reform brings together unmployment benefits and social security benefits, leaving them both at approximately the lower level social security claimants received. Until 2005, unemployment benefit claimants received benefits based on their salary previous to losing their job, getting up to three quarters of their last salary.

From 2005, the full unemployment pay (Arbeitslosengeld I) will only be received for one year - less than half the previous length of time - and will be followed by the lower Arbeitslosengeld II if the claimant fits the requirements (see below). Before 2005, two years of full unemployment pay was followed by Arbeitslosenhilfe, unemployment benefits which were higher than the basic social security benefits, depending on how much money the unemployed person had previously earned.

Whether or not a claimant receives Arbeitslosengeld II will depend on his or her savings, life insurance and the income of husband or wife: only when these reserves are used up will a claimant get money from the state. The government believes this will mean that half a million claimants (out of 2.1 million today) will no longer be eligible for benefits. The Institute for Economic Research in Halle estimates that the average long-term unemployed person will receive approximately 350 euro per month compared to 530 before the reform.

The job agencies will also undergo some reforms: more workers will help unemployed people find work, the figures changing from 400 unemployed people per worker to fewer than 75 for 25-year-olds and 150 for people over that age.

See also


Last updated: 02-10-2005 00:44:36
Last updated: 02-17-2005 09:15:38