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Do new labour activation policies work? A descriptive analysis of the German Hartz reforms


  • Alber, Jens
  • Heisig, Jan Paul


The German Hartz reforms, introduced by the Red-Green coalition government in the years 2003 to 2005, form part of a broader pattern of European activation policies which have become known as new labour policies. The idea of these reforms was to reduce welfare dependency and to boost activity rates by making work pay, and by transforming the welfare state from a passive instrument of social protection to an enabling social investment that fosters universal labour force participation as the ultimate form of social inclusion. The German variety of these policies abolished earnings-related benefits to the long-term unemployed, partly fused the unemployment compensation scheme with the minimum income social assistance scheme and increased activating pressures on ablebodied people at working age by combining new sanctions with an extension of placement services. Based on a description of the relevant institutional changes, we show that means-tested benefits have become the major form of social transfer payments to the unemployed. The reforms also entailed a massive growth in German employment and especially in low-wage employment. As non-standard forms of employment proliferated, growing proportions of economically active people joined the ranks of the working poor by combining earnings from work with means-tested in-work benefits. Based on survey data from the German Socio-Economic Panel (GSOEP), we show that the working poor enjoy higher life satisfaction, social integration and civic engagement than the nonworking poor. However, these individual and social benefits of employment critically depend on pay levels and overall job quality, as our own analyses confirm for the case of men's life satisfaction. The welfare gains achieved by Germany's recent reforms may therefore be smaller than suggested by employment rates alone, because people near the poverty line are now more willing to make concessions and to accept job offers even if the jobs they get are of minor quality.

Suggested Citation

  • Alber, Jens & Heisig, Jan Paul, 2011. "Do new labour activation policies work? A descriptive analysis of the German Hartz reforms," Discussion Papers, Research Unit: Inequality and Social Integration SP I 2011-211, Social Science Research Center Berlin (WZB).
  • Handle: RePEc:zbw:wzbisi:spi2011211

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    References listed on IDEAS

    1. Ebbinghaus, Bernhard, 2008. "Reforming Early Retirement in Europe, Japan and the USA," OUP Catalogue, Oxford University Press, number 9780199553396.
    2. Boss, Alfred, 2008. "Zur Entwicklung des Anspruchslohns in Deutschland," Kiel Working Papers 1463, Kiel Institute for the World Economy (IfW).
    3. Kemmerling, Achim & Bruttel, Oliver, 2005. "New politics in German labour market policy? The implications of the recent Hartz reforms for the German welfare state," Discussion Papers, Research Unit: Labor Market Policy and Employment SP I 2005-101, Social Science Research Center Berlin (WZB).
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    More about this item


    Minimum income support; unemployment compensation; labour market reforms; Hartz reform; activation policy; social inclusion; recommodification; working and non-working poor; Mindestsicherung; Arbeitslosenunterstützung; Arbeitsmarktreformen; Hartz-Reform; Aktivierungspolitik; soziale Inklusion und Teilhabe; Rekommodifizierung; arbeitende und nicht arbeitende Arme;

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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