Hartz IV is coming

This is not another earthquake, hurricane or mega-wave but can be perceived to be almost as disastrous in the wealthy but almost bankrupt western Europe. Hartz IV is the final phase of the German changes in the welfare sector, named after Peter Hartz, the Volkswagen executive who devised the plan, and it is due to kick in on January 1.

The idea is that unemployment benefit will be cut back, streamlined and generally reduced. As yesterday’s International Herald Tribune put it:

“In a nutshell, Germany will dole out money only to those unemployed who need it, and compel them, with the threat of withdrawing all benefits if necessary, to do some kind of work.

After jobless Germans use up normal benefits, whose duration and generosity vary depending on how long a person has worked, they will get only the Hartz IV benefits: €345 per month in western Germany, and €331 in the East.

Recipients of this money, should they fail to find other work, will be also forced into "one-euro jobs," essentially low-paid state make-work programs that require little white-collar skill.”

Earlier in the year there were, as we reported several times large scale demonstrations, which consciously imitated the Monday demonstrations of East Germany for freedom and against totalitarianism. The new demons, against certain aspects of freedom, have died out and are not expected to be revived. To what extent Germans will simply accept the drastic reform of their forty year old generous welfare system is not entirely clear.

While there is no question that some changes had to be introduced, as the German state was going bankrupt and the economy collapsing, it has to be noted that there is no sign of an upswing. Unemployment rate runs at 10.8 per cent of the work force (4.5 million) and real jobs are not being created.

This brings us to the subject of the EU budget. Both the Commission and the incoming Presidency (Luxembourg) are demanding that the big contributors – and Germany is the biggest – should increase the proportion of GNP they hand over, in order that larger EU projects be created. Somehow, in the gloomy circumstances it seems unlikely that Germany will agree. In fact, Chancellor Schröder may well start eyeing the existing contribution with some wistfulness.