“We believed for too long that we would get everyone into work just by improving the economy,” Nahles told the Süddeutsche Zeitung on Wednesday.
In a plan to be presented to the Bundestag's social committee on Wednesday, she will outline government subsidies for jobs for the long-term unemployed of up to 100 percent, funded from an annual budget of €150 million.
Nahles also plans to recruit more staff for job centre employment office branches, especially 'coaches' to provide personal support to the unemployed.
Germany has around 10 percent more long-term unemployed people than the average in the advanced economies' club the Organization for Economic Co-Operation and Development (OECD).
German social charities have long been calling on Nahles to do more to deal with the problem.
“If you really want to end this misery, it has to start with a paradigm shift in the labour market,” president of the German Social Federation Adolf Bauer said.
Ulrich Schneider of the Equality Association had suggestions for Nahles.
“We need concrete programmes for the more than one million people who have already been looking for work for over a year,” he said.
“Giving aid to social enterprises could create good, real jobs for these people.”
Ulrike Mascher, president of social federation VdK, said that there should be a public job market with a set wage and social benefits.
“A public employment sector can offer a future to long-term unemployed people who have no chance on the open market because of social, psychological or health problems,” Mascher said.
The charities also called on Nahles to abandon her plans for cuts to Hartz IV unemployment benefits as part of a streamlining process.
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