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Fourth step of the Hartz reforms: iMergingi of unemployment assistance with social assistance into a new minimum income benefit called iunemployment benefit IIŒ

Country of implementation
Germany
General short description of the innovation
Before the reform, most unemployed people would draw one of the following three benefits: / 1. Unemployment benefit, based on previous contributions to the unemployment insurance fund, maximum duration 12 months (up to 32 months for claimants 45 and older with long-term contribution records), as a percentage of previously earned income (60%; 67% with at least one child), no means-testing; / 2. unemployment assistance, based on previous eligibility for unemployment benefit after its exhaustion, open-ended, as a lower percentage of previously earned income (53 / 57% respectively), with means-testing; / 3. social assistance, based on neediness, open-ended, flat-rate, stricter means-testing than in unemployment assistance. / The reform ... / 1. ... shortened maximum duration of unemployment benefit for older claimants to 18 months and raised the age threshold for extended durations from 45 to 55; / 2. abolished unemployment assistance; / 3. created a new benefit (‰unemployment benefit II¡) which combines the benefit logic of social assistance with activation, job search obligations and active labour market policy instruments.
Target group
Total Population
Policy Field
  • social
Type of Policy
  • public
Duration of the policy
2005 - open-ended
Scope of innovation
  • Scope: Structural ¤ the benefit structure for workless people was changed fundamentally
  • Budgets: Since this was not a new programme but a restructuring of existing benefits and budgets, any number given here would be misleading.
  • Number of intended beneficiaries: Directly or indirectly, the reform affected almost 7 million persons of working age (plus their children), but only the 1.7 million recipients of social assistance could be justly called ‰beneficiaries¡ since they received slightly more benefits and eventually better service
  • Spatial coverage: national
General description of (intended) objectives and strategies
The official discourse focused very much on those recipients of unemployment assistance who had to draw supplementary social assistance because the unemployment assistance benefits (earnings-related, see above) were too low to cover family needs. It was seen as a fundamental problem that two separate administrations ¤ the Federal Employment Agency and the municipalities ¤ were responsible for them. The merging of the benefits was depicted as a prerequisite for merging the administration and for having more effective ‰one-stop¡ services. However, the number of persons actually affected by this administrative fragmentation was only 210,000 (as compared to what became nearly 7 million claimants in 2006). There was also the short-term perspective of unburdening the municipalities from soaring costs of social assistance by shifting the responsibility for income maintenance for recipients of working age and considered able to work to the central state. The less expounded but actually dominant objective / was to speed up the job matching process by making the recipience of unemployment-related benefits financially less comfortable, by increasing job search obligations and by intensifying service in support of job search.
Nature of the innovation-short-term perspective
In the short-term perspective, municipalities were relieved of some of their social burdens
Nature of the innovation-long-term perspective
The reform was a radical change of the unemployment-related benefit system best described as ‰re-commodification¡.
Type of ideal-typical strategy for the innovation
  • typical strategy for the innovation (optional; according to Obinger)-dualisation
  • typical strategy for the innovation (optional; according to Obinger)-flexicurity
  • typical strategy for the innovation (optional; according to Obinger)-liberalisation
Type of innovation
  • new form of policy monitoring and/or evaluation
  • new form of policy-making
  • new policy, practice or measure
  • retrenchment or expansion of an existing/earlier policy
New outputs
  • benefit duration (reduced)
  • benefit eligibility (reduced for some, expanded for other groups )
  • benefit level (reduced for some, slightly expanded for others )
  • job guidance, coaching and/or counselling (expanded)
  • training schemes (reduced in scope and duration)
Intended target group
Unemployed, in particular long-term unemployed
Working age population
  • main source of income: social protection (please specify; e.g. unemployment benefits/disability benefits/social assistance/other benefits) (unemployment benefits, unemployment assistance, social assistance )
Actors involved in policy-making/implementation and/or evaluation
  • making/implementation and/or evaluation-agency or national social insurance body (Federal Employment Agency)
  • making/implementation and/or evaluation-central state
  • making/implementation and/or evaluation-municipal government (all municipalities (around 440) and their associations )
Intended output
  • benefit duration
  • benefit eligibility
  • benefit level
  • job guidance, coaching and counselling
  • services
  • training schemes
Did the innovation have any outcome related to job quantity?
increased because former recipient s of social insurance were now registered as unemployed and thus counted as ‰active¡increased, but effect of reforms uncertain negative ¤ incumbent workers have become more risk-averse because of the benefit retrenchment; labour turnover has decreasedcontained, development lagging behind, but this started already before the reformsincreased, but effect of the reforms unclear increased by reclassifying inactive benefit recipients as jobseekersslightly reducedreduced, but effect of reforms uncertain
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