The traffic light government has initiated the transition from Hartz IV to a largely unconditional citizens’ allowance. Perhaps our society has to admit that there will never be any prospect of a job for around 3.5 million long-term unemployed.

On May 19, almost unnoticed by the public, the Bundestag laid the foundation stone for one of the traffic light’s biggest reform projects: the restructuring of the welfare state.

As a first step, the coalition factions SPD, FDP and Greens decided in the Bundestag to partially suspend the Hartz IV sanctions. Next year, the traffic light wants to seamlessly introduce citizen income. The basic income could then cover the existing rental costs for long-term unemployed people for two years, grant a single person at least 450 euros per month and leave his assets untouched.

Hartz IV, i.e. unemployment benefit II, which the red-green federal government under Gerhard Schröder launched in 2005 as part of some labor market reforms, would then be history. At the time, Schröder wanted to “bring more people a living”, transferred responsibility to the employment agency and thus relieved the municipalities of social assistance. The traffic light is now revolutionizing the job market and the welfare state again. Reason enough to take a closer look at the current situation.

According to data from the employment agency, 5.2 million people are currently living on Hartz IV in Germany – the long-term unemployed and their children. A total of 1.4 million children live in so-called communities of need.

The planned “citizen’s allowance” of the traffic light should then be based on the regulations currently in force: According to the coalition agreement, the “citizen’s allowance” should pay the rent for two years and leave the existing assets untouched for just as long.

The effect of citizen’s income on low earners could be devastating: A patrol officer with salary class A7 gets just 1,700 euros a month net for being allowed to be insulted by illegal parkers and criminals 40 hours a week. For the money, he has to look for a cheap apartment far away in the outskirts of an overpriced city and commute to work. A recipient of citizen income, on the other hand, works zero hours a week, could have his expensive city apartment financed by the taxpayer and still gets 450 euros on top of that.

Also read on the subject: Commentary by Hugo Müller-Vogg – More money for nothing in return: the FDP buries its own principles with citizen money

If the policeman is married and has two children, he gets about 2250 euros net per month including child benefit, which the family has to live on including rent if he is the sole breadwinner. The family of four in the city, on the other hand, gets the rent for a 0-hour week and an additional 1400 euros free money. Whether the citizen’s income family acts sustainably in the long term depends on the subsequent design of the citizen’s income through the traffic light.

The legal scholar Gregor Thüsing from the University of Bonn fears in view of the change in the traffic light law, “that the social consensus with regard to livelihood security services could be called into question and perceived as unfair – both on the part of the customers involved in their integration and on the other side the financing community of taxpayers.

In the current federal budget, the planned expenditure for unemployment benefit II so far is 21.1 billion euros and for accommodation and heating benefits 9.8 billion euros. The latter are likely to rise if the federal government takes over the existing rents for two years, regardless of the amount.

However, the traffic light still has to clarify how long the payment period lasts, what happens after the first two years and whether it wants to integrate social assistance and housing benefit into the citizen benefit.

Amazingly, strictly speaking, only 41 percent (around 1.5 million) of employable Hartz IV beneficiaries are actually considered unemployed, i.e. also looking for work. “There are three main reasons why employable beneficiaries are not unemployed,” explains the Federal Agency: For the majority, work is currently unreasonable because they are either looking after small children, caring for relatives, or still going to school or studying. Another part does not count as unemployed because they work unsubsidized for at least 15 hours a week, and many are not included in the unemployment statistics because they are currently taking part in further training.

The majority of Hartz IV recipients are childless: 56 percent of the communities of need are single households, nine percent are childless couples. According to the employment agency, around a third of the approximately 1.5 million unemployed Hartz IV recipients are foreigners, mainly from Syria, Turkey and Afghanistan.

Integration into the labor market is poor: According to the Federal Agency, only 1.6 percent of the long-term unemployed manage to take up work that is subject to social insurance contributions.

If the obligatory job placement and further training are no longer required, even with the planned “citizen’s allowance”, this already low success rate will continue to fall.

But: Of course, in order to take up a job, you also need jobs. The employment agency is currently assuming around 850,000 vacancies. This roughly corresponds to the number of short-term unemployed who receive unemployment benefit I as an insurance benefit. There are therefore no jobs for the 1.5 million who are considered Hartz IV unemployed in the statistics. Two-thirds or 2,526,000 are already “long-term benefit recipients” who have been receiving Hartz IV benefits for at least 21 months.

This raises the question of whether the traffic light considers Hartz IV recipients to be completely lost for the labor market. If that were the case, sanctions, reporting and application requirements would actually be superfluous. So does the traffic light write these people off?

Some of the Hartz IV recipients may actually be work-shy: the chances of getting a job from Hartz IV are minimal anyway. The integration rate was only 1.4 percent in 2016.

Wilhelm Adamy, the labor market expert at the trade union-affiliated Hans Böckler Foundation, wrote about the Hartz IV recipients at the time: “Many of them do not manage to gain a permanent foothold in the regular labor market and to secure their own livelihood. Not even half of all labor market integrations of the unemployed in the Hartz IV system lead to a living income, at least temporarily. Most of them remain in need of help.” According to Adamy, many movements into and out of long-term unemployment are of a more statistical nature, and the transitions into incapacity for work or hidden reserve clearly exceed the number of those who can be integrated into employment: “Anyone who becomes unemployed and needs help in this country stays it often for a long time.”

In its judgment of November 5, 2019, the Federal Constitutional Court considered cuts in unemployment benefits of up to 30 percent to be permissible if the legislature can use sanctions to demonstrate a positive effect on integration into the labor market. But with an integration rate of 1.6 percent, he can’t really do that.

In the hearing in the Bundestag, the DGB representative Martin Künkler remarked: “As far as studies are available, these show that only a very small part of the recipients of help ‘sets up’ in the system and that the subjective living conditions (such as illness, separation from partners, mental illnesses) are significant.” The subsistence level must always be guaranteed, according to Künkler: “The minimum is the minimum! Since the rule sets are sewn to the brim and just about cover the subsistence level, every cut represents an intervention in the subsistence level.”

The traffic light’s labor market revolution lies in the fact that it admits that 3.5 million people in Germany have no chance on the labor market. She no longer wants to make life unnecessarily difficult for them. She pushes them into social welfare and euphemistically calls it citizen money.

In view of the lack of prospects on the labor market for most Hartz IV recipients, turning away from the principle of “support and demand” is perhaps a humanitarian necessity, since there are mostly no jobs to “demand”. But you also push a part of society onto the sidelines, and this insight has a depressing effect in a country as rich as Germany. Especially since “well over 90 percent of benefit recipients do not even come into contact with sanctions” because they want and are looking for work, as the Federal Association of German Employers’ Associations stated in the committee hearing: because they “try to accept a reasonable job or the Visiting reasonable measures with great commitment to living a life without welfare”. This 90 percent is now left to itself by the traffic light with the citizens’ income.