Activation Policies in Germany: From Status Protection to Basic Income Support

Abstract

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Not so standard anymore? Employment duality in Germany

“…In-work benefits also contribute to the more widespread appearance of low pay since the Hartz IV reform simplified access to social assistance as a means to top up low there is no binding wage floor. Hartz IV, one has to note, was one of the core pillars of activation policies in Germany (Eichhorst et al 2008;Ebbinghaus and Eichhorst 2009). …”

“…Hence, one can argue that the Hartz reform package established a rather 'implicit' linkage between (i) activation-oriented active labour market and social policies aimed at reducing benefit dependency and increasing labour supply and (ii) labour market flexibilisation aiming at more dynamic job creation, in particular in the service sector (Eichhorst et al 2008;Ebbinghaus and Eichhorst 2009). …”

Is Germany the North Star of Labor Market Policy?

“…The country's high unemployment rate has often been linked to high levels of employment protection, high labor costs, and strict regulation of labor markets. Although the availability of rather generous insurance-based social benefits-depending on previous wages-helped limit income inequality and wage dispersion, these results came at the cost of strong labor market segmentation and a large stock of long-term unemployed (Eichhorst et al, 2008). The welfare state was thus at risk of becoming unsustainable.…”

“…With respect to PLMP, the unlimited payment duration of unemployment benefits and unemployment assistance was an extraordinary feature of the German system (Caliendo and Hogenacker, 2012). The replacement rates for the long-term unemployed were higher than in any other OECD country, while replacement rates for the short-time unemployed were comparable to many other countries (Eichhorst et al, 2008). As a result, the incentives to take up a job were very low, especially for the low-skilled and long-term unemployed.…”

The Rise of Precarious Employment in Germany

“…These reforms marked a significant cultural and institutional shift in labor market policies towards notions of "activation" (Burda 2016;Eichhorst et al 2010). A rise in precarious employment following these reforms is plausibly the consequence of two distinct sets of policy reforms and their interaction.…”