Decrease in solidarity in social security systems: Does unemployment represent the most important risk factor for poverty?

In January 2002, the Federal Labor Office came into the focus of a severe crisis of confidence after the Federal Court of Auditors had uncovered considerable errors and discrepancies in the statistics on job placement. The broad media coverage of this increased the public pressure on the government considerably, precisely because Germany is right in the middle of the election campaignfound. The Schröder government faced the challenge of reacting quickly and presenting credible solutions. By this time, the plans for a fundamental reform of the German labor market were already well advanced. For months, key government representatives such as Chancellor’s head Frank-Walter Steinmeier, who later headed the Federal Agency forWork Florian Gerster (SPD) and the Federal Minister for Economics and Labor Wolfgang Clement (SPD) closely with renowned management consultancies such as McKinsey & Company and Roland Berger Strategy Consultants. The aim was to develop a comprehensive concept for a so-called “activating welfare state” that relies on more personal initiative and less state welfare.

Reform network: Think tanks, foundations and experts

A central component of this reform strategy was the establishment of a working group on the “Reform of the Unemployment and Social Welfare”, which was located at the influential Bertelsmann Foundation. Not only did significant financial and human resources be available there, but also broad scientific expertise. The Bertelsmann Foundation initiated at the same timeThe project “Employment Promotion in Municipalities” to test innovative approaches to the integration of the unemployed. This close-knit network of government representatives, management consultants, scientists and foundation staff ensured that the reform proposals were both theoretically sound and practical. The preparatory work of this network formed the basisFor the later recommendations of the officially so-called “modern services on the labor market”, which was founded on February 22, 2002 under the direction of the staff director of Volkswagen, Peter Hartz, on February 22, 2002 and quickly became known as the “Hartz Commission”.

Reform motors and personnel decisions

Just one month after the founding of the Hartz Commission, Florian Gerster, a close confidante of Gerhard Schröders and supporter of the “Mainzer Modell”, took over the management of the newly created Federal Employment Agency. As Social Affairs Minister in Rhineland-Palatinate, Gererer had already successfully introduced measures to promote employment in the low-wage sector and are now planning toto expand nationwide. Thanks to the extensive preparatory work, the Hartz Commission was able to submit a comprehensive report with concrete recommendations for the reform of employment and the restructuring of the labor administration just six months after its appointment. After the federal elections in September 2002, the hesitant labor minister, Walter Riester, resigned andwas replaced by the pragmatically determined Prime Minister of North Rhine-Westphalia, Wolfgang Clement. Clement, who later left the SPD and brought his political weight into economically liberal projects, was now responsible for the implementation of the reforms as “superminister” for business and work.

The restructuring of the welfare state: The Four Hartz Laws

The reforms were implemented by the four consecutive laws for “modern services on the labor market”, known as Hartz I to IV and fundamentally changing German labor market and social policy. While these first three reform laws hardly encountered any firm resistance from the general public, it was the fourth law –Hartz IV– which saved the most profound cuts and the largest social explosives. With Hartz IV, unemployment and social assistance was merged into the new unemployment benefit II (ALG II), which primarily turned to neediness and thus initiated a paradigm shift in German social policy.

Political and social consequences: break with the social democratic heritage

The introduction of Hartz IV was highly controversial from the start and became the cipher known throughout Europe for the conversion and dismantling of the welfare state. In his government statement on March 14, 2003, Gerhard Schröder got the population in the mood for deep cuts: “We will cut government services, promote personal responsibility and demand more personal effort from each individual.”The red-green coalition finally said goodbye to many basic principles of social democracy and instead relied on the privatization of social risks. The Hartz reforms, as the heart of the “Agenda 2010”, were cheered on by economic liberal forces, but today are considered to be the low point from a socio-political point of view: Over six million people continue to be on stateSupport for securing the subsistence level, and the number of people who remain poor despite work has been constant for years at over a million.

Social Disorders and Growing Low Wage Sector

The transfer payments of the new ALG II are often not enough to ensure the subsistence level – the so-called “socio-cultural subsistence level” remains a utopia for many. Since Hartz IV was introduced, the number of food boards in Germany has more than doubled; Countless people in need are dependent on free food expenses every day. The privatization of socialSecurity has led to the risk of unemployment, once secured by state social security systems, to be largely shifted to the individual today. The abolition of wage-based unemployment benefits and shortening the period of subscription for unemployment benefit I have forced millions of people to create their own emergency reserves – a development thatsocial inequality further exacerbated.

Flexibility and precarization of the labor market

Another core of the 2010 agenda was the flexibility of the labor market. In particular, the lifting of the ban on synchronization in temporary work made it possible for temporary employment agencies to hire and dismiss their employees as required by the borrowing companies. As a result, regular employment on a large scale was determined by temporary or precariousemployment relationships replaced. For many temporary workers, the hope of ever getting a permanent permanent position again has become an illusion. The social security network was punctured, and the uncertainty on the labor market increased.

After-effects and evaluation of the reforms

The Hartz reforms mark a historical turning point in German social and labor market policy. While their supporters still refer to the falling official unemployment figures and an alleged modernization of employment agencies, the social price remains high: millions of people live on or below the poverty line, trust in the welfare state is sustainableshaken. The politically responsible, who stood for the denationalization of social security systems and the opening of the market for low-wage and temporary work, are often involved in private-sector organizations and often benefit personally from the structures they have created.

The downsides of an activating welfare state

The Hartz laws still stand for a profound shift in responsibility for social risks from the state to the individual. They fundamentally transformed the German welfare state – with serious consequences for millions of people. While economic liberal circles celebrate the reforms as a success, it remains to be said: The social balance in the country was permanently disturbed, andSocial cohesion is put to the test.