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Reforming the reforms

October 20, 2009

Initial hearings on the unemployment benefit reform known as Hartz IV have thrown doubt on the constitutional legitimacy of the methods by which the standard payment rates are calculated, for adults as well as children.

Constitutional court judges
Germany's supreme court looks set to force a major reformImage: AP

Speaking at the first day of hearings to re-assess the Hartz IV unemployment benefit reforms, the president of the court Hans-Juergen Papier spoke of "the principle of guaranteeing a humane existential minimum", and described the standard rates for children as "simply not enough".

Should the court decide that the children's rates paid to families receiving unemployment benefit need to be measured by different standards, the state potentially faces new welfare bills of billions of euros.

Currently, families receive an amount for each child, depending on age, which is merely a percentage of the adult rate. That leads to absurd irregularities. For example, under the present system, children are effectively given an allowance for alcohol and cigarettes, but nothing for schoolbooks.

Job center queue
The German state is obliged to provide a minimum standard of living to its citizensImage: picture-alliance/ dpa/dpaweb

But Papier also expressed doubts about the system by which the standard Hartz IV payment for adults, of 359 euros ($536) a month is worked out. Papier suspected that the calculations for certain allowances, for example for clothing and public transport, had been manipulated to produce this precise figure. The basis of these calculations at the moment is the income and consumer tests carried out by the Federal Office for Statistics.

Government defends the rates

The German government, represented by the state secretary in the Labor Ministry, Detlef Scheele, defended the standard Hartz IV payments at the hearings. Scheele pointed out that the rates for children under 14 had been raised on July 1 from 60 percent to 70 percent of the standard payment for adults. On top of this school children now received a payment of 100 euros for school equipment at the beginning of each school year.

Hartz IV was introduced under the government of Chancellor Gerhard Schroeder in 2005, and has led to considerable protest, but this is the first time that its constitutional legitimacy is being questioned. The hearings have been sparked by the complaints of three families, from three different German states - North Rhine-Westphalia, Bavaria and Hesse - who appealed for more money for their children.

Child with doll
The standard rates for children are considered particularly lowImage: AP

The state social courts eventually referred the cases to Germany's highest court, after ruling that Hartz IV benefits in these cases constituted a violation of the state guarantee of a minimum standard of living, and the constitutional ban on discriminating against families.

Trade unions and charity organizations have been particularly critical of Hartz IV. Georg Cremer of the welfare organization Caritas estimates that around one million children in Germany are living in hidden poverty.

"It is enough. We have growing child poverty," said Lutz Schaefer, a lawyer representing one of the outstanding cases. His client Thomas Kallay said, "I want justice. I want the standard rates for adults and children to be calculated properly and transparently. No flat fees."

The constitutional court is not expected to make a ruling until early next year.

Editor: Michael Lawton