Friday, March 30, 2018

Germany, Hartz IV and 2018

For non-Germans, Hartz IV is the German welfare program that came about in the 2004-2005 era, and was designed to avoid serious financial issues that were building up with the old program.

The idea for the change was to take several programs in existence....merge them....rewrite the standards....rebuild the Job-Center idea, and get German focused on getting jobs to get out of social welfare.

The result over the past decade?  Today, one in seven German kids are in a family that is completely dependent on Hartz IV.  Roughly 600,000 of the new migrants/immigrants into Germany....are on Hartz IV.  The general claim is that roughly 13-million Germans are either in the Hartz IV program (full-up welfare) or on the borderline where they live pretty near poverty status.  Out of 82-million citizens and's a fair number.

What happened?  I would draw this down to five basic issues:

1.  Retirement was marginally adequate decades ago, and it's only gotten worse in the past ten years.  A lot of people worked their entire life on a limited income and find that at's nowhere near the level required to live without state aid.

2.  A lot of people didn't have a second option or IRA-like situation, so their one and only pension 'it'.  There is nothing else.

3.  The job market changed over the last couple of decades.  People find themselves at age forty....with no real career, no craft, no certificate, nothing.....that really picks them up when unemployed, fired or laid off.  So the job counselor at the local job-center looks at the guy's background, and there's nothing there.  The unemployed guy was just a clerk...or just some gardener....or just some stock-clerk at some warehouse.  So trying to plug this no-career guy into some new job is practically impossible.

4.  Wage stagnation.  Most Germans will tell you (from the working-class generation) that over the past two decades of work....they might have seen two or three pay-raises at the very most.

5.  The political parties work with the welfare issue as a permanent fixture, and pull it out when they need to focus everyone on some problem (like getting to focus on this right now instead of migration or immigration).

What'll happen over the next six months?  I think you are looking at a SPD Party (they put Hartz IV up originally, and they 'own' the program)....who has dismal numbers and need to rebuild public enthusiasm for the party.  So I think their agenda will go down to three central things:

1.  The Hartz IV program will disappear and be renamed.  Welfare will come to disappear, with some social program rebranding at work.

2.  Somehow, they will have to find a minimum of two billion Euro (maybe even on up to four billion Euro) pump up the social welfare program of today.  This means more taxes added onto society.

3.  Some structured job program with incentives for companies to hire extended-long out-of-work welfare cases.  Maybe a 10,000 Euro per year tax credit for each long-term guy you hire (or three years).  Maybe some training program for long-term unemployed.

All of this will lead onto some public news media campaign to make everyone feel that a great accomplishment was rendered by the SPD, with the help of the Green Party and the Linke Party.  Course, at the end of numbers will be added up and show less money in the hands of the middle-class, and people wondering where the new taxes came from and how it affected their class of financial success.

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