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Implementing the new basic allowance for job seekers in Germany

The Peer Review was held on 17th and 18th April 2007 in Berlin, Germany and was hosted by the Ministry of Labour and Social Affairs. Eleven peer countries participated in the discussions: Austria, Belgium, Cyprus, Denmark, Estonia, Finland, France, Greece, the Netherlands, Norway and Sweden.


The policy in brief

As of 1 January 2005, unemployment assistance and social assistance for persons capable of working have been merged into one benefit, the basic allowance for jobseekers (unemployment benefit II) which is a tax-financed, needs-based and means-tested public benefit. The main goal of the new single benefit system is to ensure a decent standard of living for all beneficiaries and to foster (re-)integration into working life through fast and targeted measures. The key elements of the new basic allowance in brief:

  • Eligible are all persons of working age (15-65 years old) who are in need, as well as their dependent relatives. Income and assets of the beneficiaries are taken into account.

  • The monthly allowance includes non-recurring and recurring needs as well as housing and heating allowance covering the actual expenses - if reasonable - and additional allowances for certain extra expenses not covered by the standard allowance. Furthermore, minimum insurance contributions are being paid for all beneficiaries capable of working (to the pension scheme, health insurance and long term care insurance).

  • Beneficiaries are eligible to all necessary labour market services.

  • The beneficiaries capable of working - which is defined as being able to work for at least 3 hours a day under normal labour market conditions (excluded are those suffering from a disease, impairment or disability) - have to accept any kind of reasonable work, unless prevented by special reasons (e.g. care responsibilities).

  • If the beneficiary does not fulfil his or her obligations, the monthly allowance will be cut. Implementing the new basic allowance for jobseekers has also been an organisational challenge. The contribution based jobseeker's allowance is paid - as beforehand - by the jobcentres as subsidiaries of the Federal Employment Agency (Bundesagentur für Arbeit). However, the new system of unemployment benefit II is implemented by two different organisations: The so-called joint agencies (Arbeitsgemeinschaften) of jobcentres and local municipalities (Kommunen) combine all services for the successful (re-)integration into employment (e.g. job placement services and social services). On the other hand, there are 69 accredited municipalities (Optionskommunen) who have been entitled to deliver all services on their own. The competition between these two approaches will end in 2010.

Key issues discussed

When it comes to the relationship between unemployment benefit and social assistance, the systems being in place in the peer countries can broadly be divided into three categories: In some peer countries there is a clear separation of the two systems, in others the relationship of the two is characterised more by overlapping and continuity. A third way is to grant virtually no social assistance, but high severance payment. In many peer countries the unification of the two benefit systems and/or the improvement of the cooperation between the often differing implementing authorities has been - or is now - under discussion. Among the key points discussed during the Peer Review meeting were the best ways to integrate or re-integrate people into the labour market. Some peer countries primarily rely on activation and work fare, others focus on financial incentives for taking up work. A particular focus was placed on case management and the integration of people with a migrant background. There was also a debate on so-called ŒMini-jobs' and their (in-)capacity to provide a stepping stone into Œnormal≠ employment, as well as on Œin work benefits'. One question raised in this context was whether paying subsidies was a consequence of or a reason for low wages. Also discussed were minimum income schemes and their effect on creating or destroying employment. For more details on the Peer Review meeting please download the documents of the Peer Review.


Discussion Paper - Matthias Knuth, IAQ, University of Duisburg-Essen

Official Paper - Federal Ministry of Labour and Social Affairs

Statements and Comments

Participating independent experts



Austrian Institute of Economic Research (WIFO)



Centre for Social Policy Herman Deleeck - University of Antwerp


University of Cyprus and University of Guelph, Canada

Denmark Per Kongshøj MADSEN

Centre for Labour Market Research

Estonia Lauri LEPPIK

Tallinn University
PRAXIS Center for Policy Studies

Finland Simo AHO
France Jérôme GAUTIÉ

University Paris 1



Netherlands Sabine DESCZKA

ECORYS Nederland BV

Norway Einar ØVERBYE Oslo University College
Sweden Gabriella SJÖRGEN LINDQUIST Swedish Institute for Social Research

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