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Title:Hartz IV: The German ?Word of the Year 2004? and the Country?s Hope to overcome its Problem of Unemployment PDF Logo
Authors:Lohse, Tim
Issue Date:2005
Series/Report no.:Diskussionspapiere des Fachbereichs Wirtschaftswissenschaften, Universität Hannover 311
Abstract:When the centre-left government came into power in Germany in 1998, a core promise of the new Chancellor, Schroeder, was to reduce the lack of jobs and to increase welfare. Facing persistently increasing unemployment rates from then on, the government finally launched ?Hartz IV? in 2004; the largest social reform project in the history of the Federal Republic. This reform, that took effect at the beginning of 2005, aims to increase employment in Europe?s biggest but slowest growing economy, whilst avoiding the financial collapse of its social systems. Its main aim is to strengthen individual responsibility whilst lowering transfers for those unemployed individuals that are capable of work. Therefore, it is also the most disputed reform of the German social welfare system. By characterising effects and defects of the German welfare system, we identify some of the most important obstacles facing higher employment. We provide an outline of the government?s endeavours to handle the problem of unemployment and of the main changes in the country?s laws of social contributions. Particular focus is given to the newly established unemployment benefit II and to the ?reasonableness? of work, which reflects a new social valuation of labour. To conclude, potential welfare and employment effects under the new sys-tem are discussed.
Subjects:Welfare
Unemployment
Poverty
JEL:J64
I38
Document Type:Working Paper
Appears in Collections:Diskussionspapiere, Wirtschaftswissenschaftliche Fakultät, Universität Hannover

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