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Activation of unemployed and jobseekers Impact of the labour market and benefit reform in Germany

Activation of unemployed and jobseekers Impact of the labour market and benefit reform in Germany. Second ASPEN/ETUI-REHS conference “ Activation and Security ” Masaryk University, Brno, Czech Republic March 20-21, 2009 Dr. Georg Worthmann Institute for Work, Skills and Training

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Activation of unemployed and jobseekers Impact of the labour market and benefit reform in Germany

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  1. Activation of unemployed and jobseekersImpact of the labour market and benefit reform in Germany Second ASPEN/ETUI-REHS conference “Activation and Security” Masaryk University, Brno, Czech Republic March 20-21, 2009 Dr. Georg Worthmann Institute for Work, Skills and Training University of Duisburg-Essen

  2. Labour market and benefit reform in Germany Entitlement to ”Basic Income Support for Jobseekers”(BIS) Providers of BIS The financing of the BIS Competencies and Stream of payments Budget and expenditures Impact of financing on activation Governance and controlling system of the FAW Activatable recipients Conclusion Contents

  3. 2005: Merging of two tax-funded benefits unemployment assistance (administered by the Federal Agency for Work) social assistance (administered by municipalities) to “Basic Income Support for Jobseekers” (BIS) Broader definition of the individual requirements to receive the BIS aged 15 to 65 capable of gainful employment needy and live in Germany Conception of “Communities of needs” Labour market and benefit reform in Germany - Step 4

  4. Social contributions Unemployment benefit II (jobseekers, fixed amount on subsistence level) Social allowance (community members, fixed amount on subsistence level) Accommodation and heating(actual expenditures up to an adequate extent) Activation Labour market policy (numerous measures of active social policy) Additional social measures(e.g. childcare, debts counselling) Elements of contributions and activation

  5. Stream of payments within the BIS

  6. Estimated expenditures for BIS, 2005-2009 Source: Federal Ministry of Finance 2005, 2006, 2007, 2008; Commission for the Reform of Municipal Finance 2003; Deutscher Bundestag 2006, 2007; German County Association 2005a, 2005b, own calculations.

  7. Federal budget and expenditures 2006

  8. Development of estimated expenditures and number of recipients, 2006/2008 Source: Federal Ministry of Finance 2005, 2006, 2007, 2008; Commission for the Reform of Municipal Finance 2003; Deutscher Bundestag 2006, 2007; German County Association 2005a, 2005b, own calculations.

  9. Savings in the federal budget for unemployment benefit II determines objectives for Federal Agency of Work . Integration into the governance progress and controlling system of the Federal Agency of Work forces local providers to achieve objectives, first of all reduction of need measured by the sum of expenditures for unemployment benefit II improvement of integration in employment measured by an integration rate Impact of financing on activation (a)

  10. Providers try to achieve the objectives by short term measures Restriction on integration of job seekers into employment to reduce the expenditures for unemployment benefit II and to achieve the objective of improved integration  Integration with additional allowance or temporary Increase of „additional earners“ Integration into jobs with few working hours and low payment High rate of return into BIS after integration Impact of financing on activation (b)

  11. Share of ”additional earners” among recipients of UB II by amount of income Source: Federal Agency for Work, statistics for BIS, http://statistik.arbeitsamt.de.

  12. Increase of „additional earners“ Few working hours About 45% of jobs are small jobs without social contributions another 31% of jobs are in parttime Low payment: 12,2 % of single persons work fulltime and stay in BIS (Dietz et al. 2009) Return into BIS: 40% return within the first year after integration (Graf/Rudolph 2009) Integration with additional allowance or temporary – data and recent results

  13. Within the BIS budget the main item is “unemployment benefit II”. It was repeatedly amounted too small, and still is in 2009. Objective agreements force local providers to apply short-term strategies that can not take into account necessities of full and sustainable integration. Most recipients of unemployment benefit II need a long-term concept to enable them to an independent working life. In the long run the improvement of employability of the recipients by labour market policies and social measures will be less expensive. Conclusion

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