From July this year, the German government will scrap the controversial sanctions sometimes imposed on recipients of unemployment benefits, before ditching Hartz IV completely in 2023, as part of a major shakeup of the system. Here’s what you need to know. 

German government votes to suspend Hartz IV sanctions

As of July 1, 2022, until at least July 2023, people receiving basic subsistence benefits in Germany - a kind of income replacement benefit usually given to the long-term unemployed and often colloquially referred to as Hartz IV - will no longer have to worry about sanctions interrupting their benefits payments. 

Currently, the principle that people should be actively seeking to return to work is enshrined in the German social security system, and so anyone receiving benefits is expected to demonstrate efforts they have made to look for jobs and to apply for positions recommended by the job centre. 

If these obligations are not met, they can be punished with sanctions - cuts to their welfare payments. Sanctions can also be imposed if unemployed people do not keep in regular contact with the job centre, go on holiday without telling them, or are late for an appointment.

New rules on sanctions apply until mid-2023

The system’s proponents believe that this encourages people to look for work and makes it harder to cheat the system, but sanctions have always been controversial, with critics claiming that they make life even harder for people who are already struggling. 

Against the background of a growing cost of living crisis, it is this more compassionate approach that has won out. The Bundesrat recently approved an amendment to the Social Code that will place a year-long pause on most types of sanctions. From July 2022 until at least July 2023, people who refuse a job offer or don’t apply for roles will no longer face sanctions. 

Those who miss job centre appointments without a good reason still stand to have their monthly benefits docked - but instead of the 30 percent that was previously allowed, the maximum reduction will in future be 10 percent. 

Citizens’ Allowance (Bürgergeld) to replace Hartz IV

The 2023 date has been put in place because the government is actually planning to completely overhaul the unemployment benefit II, replacing it with a new benefit called the Bürgergeld (Citizens’ Allowance). 

This shakeup is the government’s response to a number of criticisms that have been directed at the current Hartz IV system, in particular, a 2019 Constitutional Court ruling that found that cutting people’s benefits by more than 30 percent contradicted German Basic Law. They further ruled that, while it was fair to ask for unemployment benefits to fulfil certain obligations, many of the sanctions they were subjected to were unfair and disproportionate. 

The federal government has said that the new system will balance fairer sanctions with an appropriate level of accountability for the people receiving them. They will factor in scientific evidence and lessons learned during the coronavirus pandemic, when sanctions were temporarily suspended. 

According to the coalition, future job seekers will still be asked to sign a “participation agreement” which will set out what is expected of them as recipients of unemployment benefits. Sanctions of up to 30 percent will still be possible under the new system, but there will be exceptions for people experiencing real financial hardship.

Reaction to planned shakeup mixed

Responses to the planned shakeup of the system have - as you might expect - been mixed. More conservative figures from the CDU and CSU parties have accused the coalition government of running the risk of destroying trust in the welfare state by giving people a “free pass” to receive benefits without making any effort to secure work. 

However, experts have argued that scrapping sanctions will make no difference as to whether people go out to look for work. Karsten Paul, a specialist in work psychology, pointed out to Focus Online that there are many benefits to working that don’t include money, all of which are clear to unemployed people, who in most cases are eager to return to employment.