Citizens’ income is to replace Hartz IV at the turn of the year. The debate about it is highly emotional. Dirk Heyden, head of Germany’s largest job center in Hamburg, explains why the reform is absolutely necessary and why the fierce criticism of it is wrong.
The parliamentary procedure for the citizen income law has not yet been completed. So changes are still possible. Also, the legal basis will not come into force in its entirety as of January 1st, but will be spread over the year 2023 in partial modules. However, the cornerstones are: higher standard rate, higher protective assets, assumption of housing and heating costs, better qualifications, more trust instead of sanctions.
Dirk Heyden from the job center in Hamburg comments on this in an interview. The 58-year-old also explains why work is always worthwhile and why receiving state transfer payments is not a job.
FOCUS online: On January 1, the new citizens’ income starts. The Federal Court of Auditors is already warning of abuse. In the comments it says, for example: “This is how the citizen’s income mocks the taxpayers.” A job center employee told us: “Work is no longer worthwhile.” What do you say?
Dirk Heyden: This is the largest labor market reform since Agenda 2010, and we consider it to be both welcome and imperative.
Heyden: The situation on the labor market today is completely different than it was in 2005. Back then we had over five million unemployed. Unemployment and social assistance were merged. Unemployment is falling steadily today. Nevertheless, it is difficult for people who need help and receive benefits from the job center to get a job. This is mainly due to the fact that around 70 percent of them have not completed their training. However, we must not do without this potential of a total of 3.8 million people who could have a job.
Can you be more specific?
Heyden: The tense situation on the labor market is likely to get worse in the future because the baby boomers – i.e. those born up to 1964 – have already left the labor market stage or will soon do so. I therefore think it is very important that the topic of qualification is strengthened and that incentives are created within the framework of citizen income to take up further training in order to have the prospect of finding work.
What are these incentives?
Heyden: In the future, there will be 150 euros per month as part of the citizen’s income for a degree-oriented qualification. This is real financial added value. So it’s worth continuing your education. There is 75 euros for non-degree-oriented further training. We are now allowed to finance the third year of training again, for example as a nurse. We weren’t allowed to do that for a long time. This is where – and I like to repeat myself – lies the potential of 3.8 million people that we need to leverage.
Is there enough budget for that?
Heyden: We in Hamburg are currently in a good starting position and have sufficient funds. But I know that the situation is already more difficult in smaller job centers in other parts of Germany.
In many letters to the editor all over the country, full-time employees are currently calculating what they have left over and how much of it is going to be used for rent, heating, etc. The central accusation is that people receiving citizenship income would not be far worse off.
Heyden: I think these statements are wrong on the matter. First, one has to consider that the Federal Constitutional Court obliges the German welfare state to secure the so-called socio-cultural subsistence level. The standard rates must therefore not be lower under any circumstances. And with 449 euros or from 1 January then 502 euros a month, you don’t make big leaps in view of the high prices for food and electricity, for example. This is certainly a financial basis, but still poses great difficulties for many people.
The painter, who works 40 hours a week, also faces challenges from the high prices.
Heyden: I think that many of the employees want to act as role models for their own children and don’t want to sit at home all the time. One should not act here as if it would be desirable to receive state transfer payments. This isn’t a job. Work is worthwhile – with a view to your own family, your pension insurance and your own provision. In addition, many of today’s recipients of state benefits will be the same in old age. So if you work and pay contributions to the pension insurance, your lifetime achievement will also pay off later.
Apart from this?
Heyden: The exciting question is how will salary structures in the low-wage sector develop given the decline in the labor supply. In October, six million employees benefited from the increase in the minimum wage to twelve euros an hour. This has improved the situation in the low-wage sector overall and increased the wage gap to recipients of state transfer payments. Companies in particular that have previously paid low salaries, such as supply chains, will have to offer higher wages in the future in order to retain workers.
Dirk Heyden (58) has been Managing Director of the team.arbeit.hamburg job center since 2016, which is the largest job center in Germany with almost 2,500 employees and 18 locations in Hamburg. Before that, he was chairman of the management board of the employment agency in Schwerin for five years. Other positions include: Member of the Management Board of the North Regional Directorate, Managing Director of Internal Services at the Employment Agency in Hamburg, Chairman of the Management Board of the Employment Agency in Iserlohn and Heide. Dirk Heyden is married, father of a daughter and – when he finds time – singer and guitarist in a band.
What will improve in job placement?
Heyden: In the past we had the so-called priority. It was the quick integration into a job that counted, even if it didn’t fit or it was clear from the start that it was only a seasonal job or temporary in temporary work. Now the focus is on sustainable integration into the labor market. This is something we very much welcome. Because we can take the time to get people into permanent work through targeted qualifications.
Terms like “Hartz IV” and “Hartz IV recipient” will no longer exist in 2023. Good this way?
Heyden: We will certainly not miss the term “Hartz IV”, but rather believe that the basic income can contribute to greater public acceptance of citizens in need. We very much hope that the basic income will also mark the beginning of a new era and that this system will not be as stigmatized as it was in the past. It would be good if we were more objective here.
The Hartz reforms were entitled “Fördern und Demanden”. What is left of the demand?
Heyden: “Promote and challenge” is not given up. The obligation to cooperate as such remains intact. We can continue to expect all recipients of state transfer payments to look for work and to come to their counselor’s appointment. That also corresponds to the judgment of the Federal Constitutional Court of 2019. It says there that the obligation to cooperate is not an attack on human dignity. Those who receive state transfer payments can be expected to take care of work.
Heyden: The trust period in the first six months is new. For our customers, the need for help is a stroke of fate. The advisor must create a trust-based foundation for good advice early on. In the future, the approach will be to motivate people in need of help, to win them over for further training and also to show them opportunities in the local labor market. If we manage to do that, good advice can help get people into work without the threat of sanctions.
How many refusers are we talking about?
Heyden: That’s three percent of all beneficiaries. The majority come to the consultation without the threat of sanctions. If we attract people with good support, then society and ultimately the labor market will benefit. “Fördern und Demanden” will continue to exist, but in a more developed form.
Sounds almost too good.
Heyden: Unfortunately, I see many reservations in society about the recipients of state transfer payments. They are often labeled negative. But the reality is very different. For example, among the 3.8 million we have the single mother with a college degree who was abandoned by the father of her child. These people also deserve a chance.
Which you can enable you?
Heyden: As a job center, we have the legal mandate to secure the subsistence level for people who can no longer do it on their own. Our goal is for these people to get a permanent job subject to social security contributions as quickly as possible. What a lot of people don’t know: In Hamburg we already manage to do this 30,000 times a year. That is why we welcome the reform, even if we are not entirely satisfied with all parts of the law.
What does subsistence level mean exactly?
Heyden: The subsistence level means the standard rate plus costs for adequate housing, including ancillary costs, but not electricity costs. However, all priority benefits are taken into account, such as child benefit, widow’s pension, orphan’s pension or student loans. Incidentally, these calculations and proofs are sometimes very time-consuming, and in a modern welfare state I would actually wish that the data would run in the future and not the customers. In other words, that the legislature creates the conditions for easier administration of the system. That would significantly increase acceptance. It would be a citizen-oriented, service-oriented administration.
For example, the fact that the protective capacity is also increased is met with incomprehension.
Heyden: The non-consideration of assets is limited to two years. And the assumption of the full costs of accommodation for the first two years of needing help is a regulation that was introduced under Corona with the social protection package I. This has definitely proven its worth, because in the first 24 months of needing help we don’t have to talk about moving and ask people to use up their savings.
The Federal Court of Auditors criticizes the amount of the rates.
Heyden: But nobody just came up with it. They are based on the Housing Allowance Act, which defines what significant assets are. There is already a legal basis for the rates of 60,000 and 30,000 euros.
Are you expecting many new applications at the turn of the year?
Heyden: Yes, but not primarily because of citizen income, but mainly because of the energy crisis. At the moment we have the situation that the federal government is trying to counteract this with three relief packages: energy price brake, housing benefit reform and heating cost subsidy. Nevertheless, we are already noticing that the number of applications is increasing because people are in need of help, for example due to the enormously increased prices.
So raising the ruleset is secondary?
Heyden: There is speculation in the media that there will be an increase in applications due to the increase in the standard rate. You have to relativize that a bit. The standard rate is raised from 449 to 502 euros, i.e. by eleven percent. That is just a little more than offsetting inflation.
Do you have enough staff to push through the reform?
Heyden: Our team is of course very stressed by the Corona crisis and the consequences of the war in Ukraine, each and every one of them really does a lot above average. We are therefore actually looking for committed new employees in various areas, both for the provision of benefits, for the entrance zones and for job placement. Perhaps there are some among your readers who are interested in a meaningful and challenging job with an attractive employer in Hamburg: we look forward to receiving your application!
Are there any training courses on citizens’ allowances planned? Or are you still waiting for the legislative process?
Heyden: Of course we’re not waiting. We are a large company with 2,400 employees. We have set up a professional project group with four sub-project groups involving 24 employees. Our goal is to be as prepared as possible for the changeover to citizen income and to optimally prepare and support our colleagues. The most important message for our customers is that the new standard rate will be paid out on January 1st. And you don’t have to submit an application or come to the job center, the changeover takes place automatically! We can already guarantee that today. Especially in times of the energy crisis, we have to take some of the people’s worries away.
Heyden: Other sub-areas don’t start right at the turn of the year because, above all, the IT has to be adapted accordingly. This will then happen in stages according to the law. For example, the regulations on further training allowance from April 1st. Others like the cooperation plan only until July 1st. That gives us a little more time to prepare.
As the head of Germany’s largest job center, what do you hope to get from the citizen’s income?
Heyden: Beyond the mere legal change, we want to achieve a different perception of our service. In this respect, it will also be about creating a tangible change through the citizens’ income. For example, with a citizens’ allowance app and notifications in understandable language. For us, citizen’s income is the beginning of a new era – with new forms of advice, with better service, with new information media.
When it comes to pensions, there are major regional differences. The pension gap between women and men in western Germany is particularly large. Another long-term trend seems to have stopped for the time being.
Anyone who is granted a property by will or inheritance contract should not be too happy. The reason: German inheritance law comes up with a number of hurdles that the beneficiary has to jump before he can move into the new home. lawyer dr Markus Schuhmann gives tips.
In an interview with FOCUS online, stock market expert Dirk Müller talks about the greatest economic crisis and opportunity of all time, what geysers have to do with investing, why he doesn’t trust China and recommends stock picking to investors rather than ETFs.