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What is Hartz IV?

Nils Zimmermann
June 6, 2017

To understand German politics, it helps to understand "Hartz IV," a controversial welfare benefits and unemployment insurance reform introduced in 2003 by a coalition government led by the Social Democratic Party (SPD).

The word Hartz IV appears under a magnifying glass
Image: picture-alliance/dpa

The Hartz IV (read: "Hartz four") reforms, which were passed into law in 2003 and took effect in January 2005, significantly toughened the conditions under which people could claim welfare or unemployment benefits. They require benefits recipients to regularly attend meetings with a job-center advisor and show they're actively looking for work, or enrolled in approved work-preparatory skills-training programs.

The advisor is empowered to withhold benefits if the claimant refuses a job - even if the job is not what the claimant would like to do. Even a single failure to show up for job-center meetings can result in partial loss of benefits - and regularly failing to show up results in their complete cancellation.

Benefits are set at rates intended to secure a ‘socio-cultural minimum': They're carefully calculated to be just enough to get by on, with no frills. Benefits packages include the government paying for the rent on a modest apartment, medical insurance, and a monthly stipend.

Good or bad?

The clear intent of the Hartz IV package is to avoid making life too comfortable for benefits recipients, and to nudge or push them into employment - even if poorly paid. This is reflected in the government's Hartz IV slogan: ‘Fördern und Fordern,’ i.e. support recipients, yet make demands on them, in the manner of a stern parent.

Hartz IV was the fourth in a series of business-friendly labor-market reforms enacted in 2002 and 2003, all named after Peter Hartz, the head of an SPD government-appointed labor market reform commission. Since the reforms, the rate of unemployment in Germany has gradually decreased, except for a temporary setback in the wake of the 2008 financial crisis. As of 2016, the ‘employment rate,’ i.e. the percentage of adult citizens in work in Germany, was at its highest in post-war history.

Mainstream politicians, including Chancellor Angela Merkel, support the Hartz reforms, and have no intention of repealing or softening them. They attribute Germany's comparative economic success over the past decade in significant part to the reforms.

SPD leader Martin Schulz looking pensive
Martin Schulz, the new leader of the Social Democratic Party (SPD), faces an uphill battle to restore working-class faith in his party - a faith that was severely harmed by the pro-business Hartz reformsImage: Getty Images/AFP/J. McDougall

Rage on the left

It has become a standard trope of the German left that Hartz IV is an inhumane, pro-capitalist, 'neoliberal' social and economic instrument tailored for the interests of corporations, and unnecessarily harsh and stingy towards unemployed workers. 

On the left, the coercive provisions of Hartz IV are seen as a way of humiliating the unemployed and squeezing the poor. Amongst leftists, the chimeric political-economic vision of an ‘unconditional basic income’ (UBI) has been gaining ground in recent years.

Many people who had reliably voted for the SPD prior to 2005 remain so disgruntled and enraged by the party's perceived betrayal of working-class interests that they refuse to believe the electoral campaign commitments of the new SPD leader, Martin Schulz, who says he intends to reform the Hartz IV system to make it a bit more generous.

Schulz’s signature slogan going into the September election is "More Fairness." But online forums are choked with dismissive anger at Schulz and his party, claiming that the SPD is not to be trusted, that it always campaigns on the left and governs to the right, and that its real policy agenda is nearly indistinguishable from that of Merkel's CDU.

Ironically, the left's rage at the SPD over Hartz IV and Agenda 2010 may result in leftists voting for minor parties or staying home on election day - and that helps the re-election chances of Christian Democratic Union (CDU) Chancellor Merkel, whose party is less pro-labor than the SPD.

"We can advance reforms today"