Table 1 Institutional regulations for unemployed persons in need before and after the Hartz IV Reform

Eligibility

Persons, who remain unemployed after exhaustion of their insurance benefits, are transferred to unemployment assistance. A claimant must have worked at least 6 months in the last calendar years to be eligible for unemployment assistance.

Everyone has a legal right to social assistance (Sozialhilfe); it is paid to everyone in need (irrespective of age or nationality).

The basic benefits for job-seekers replace the earlier unemployment and social assistance benefits for job-seekers able to work. Now, all employable people in need who have no entitlement to unemployment benefits have access to the same benefits.

Employment history (gainfully employed)

Depending upon the claimant’s age and work history registered unemployed first received between 12 and 36 months of their full unemployment benefit (60 to 67 % of the previous net earnings) (Arbeitslosengeld). Unemployment assistance (Arbeitslosenhilfe) follows after unemployment benefits expire.

Receipt of full unemployment benefit (called Arbeitslosengeld I) has been restricted to 12 months in general and 18 months for over 55 year-olds. Whether or not a claimant is afterwards eligible for unemployment benefit II (Arbeitslosengeld II) depends on his or her assets like savings, life insurance and the income of spouse or partner.

Means-tested

Yes

Yes

Yes

Employability

Yes

No

Yes

Entitlement benefit level

Unemployment assistance (Arbeitslosenhilfe), (53 to 57 % of the last net salary).

Social assistance was regulated and administered by the Federal States and differed slightly across States. In 2004 the average assistance level for a single person was € 295 (plus the cost of housing and health care) on a regular basis. Additionally one-time benefits for consumer durables, learning aid, etc. were paid. It was possible to receive unemployment and social assistance at the same time, if the unemployment assistance fell short of the minimum subsistence level.

The current benefit level for a single is € 364 per month (known as Regelsatz) plus the cost of ‘adequate’ housing and health care. Couples can receive benefits for each partner and their children. It is possible to be employed and receive unemployment benefit II (Arbeitslosengeld II) at the same time. The earnings are partially deducted from unemployment benefit II payments.