For members


Explained: Why are Hartz IV benefits so controversial in Germany?

Germany’s highest court reached a groundbreaking decision this week when it ruled that it was “partially illegal” to penalize Hartz IV welfare recipients. We look at why critics have called to change the system since its beginnings.

Explained: Why are Hartz IV benefits so controversial in Germany?
A Hartz IV recipient in Wiesbaden. Photo: DPA

The ruling was a blow against the notorious system, a type of long-term welfare assistance, which requires recipients to fulfill a specific set of conditions in order to receive a monthly payment and housing assistance. 

READ ALSO: German court slaps down harshest sanctions against job seekers

In the past, the system had relied largely on slapping penalties for job seekers who did not meet all of the criteria, including when they turned down a job they did not want, or did not show up once for a job centre meeting. 

The slogan of Hartz IV has long been “‘Fördern und Fordern” – or support welfare recipients, but only through making demands on them. 

Judges at Germany's highest court in Karlsruhe on Tuesday. Photo: DPA

How did Hartz IV come about?

The Hartz concept was named after Peter Hartz, a former high-ranking Volkswagen manager who was instructed by then-Chancellor Gerhard Schröder of the centre-left Social Democrats (SPD) to find a solution to trim down the German social welfare state. 

In 2004, Germany had some four million unemployed people, and it was becoming increasingly difficult to fund all of them under the Sozialstaat, which relied on payments proportional to their previous income.

So in 2005, then-Chancellor Gerhard Schröder  introduced a series of reforms, known as Hartz I-IV. 

The most well known, Hartz IV, was designed to give long-term unemployed people an “existence minimum” every month – assuming that they fulfill conditions such as filling out job applications. 

While Hartz IV is reported to have trimmed the unemployment rate by 50 percent in Germany, and boosted the Bundesrepublik’s economy, it has also become a notorious name for Germany’s non-working poor. 

What do politicians think?

Over the years, many politicians have called to repeal Hartz IV with a so-called bedingungsloses Grundeinkommen (Universal Basic Income),

in which everyone would receive the same amount per month regardless of whether or not they are an active part of the German labour market.

Many people who reliably cast their votes for the SPD before 2005 became disgruntled by what they saw as the party turning their backs on working class interests. In partial response to the complaints, far-left Die Linke (the Left) formed in 2007, attracting many one-time SPD voters who sought a more humane and better-paid welfare system.

In the wake of this week's ruling, Dietmar Bartsch, a leading lawmaker from Die Linke, called for a complete overhaul of the system.

“Hartz IV plunges people and their families into the abyss,” he tweeted. “We need a new system of unemployment benefits that provides security and removes the fear of social decline.”

But Labour Minister Hubertus Heil, a Social Democrat, earlier this year defended the Hartz IV sanctions.

“The welfare state needs to have the means to demand the reasonable and binding cooperation” of benefits recipients, he said in January.

Green Party co-leader Robert Habeck has meanwhile pushed to scrap Hartz IV and replace it with ‘system of guarantees', which would be based on incentives instead of punishment for welfare recipients.

READ ALSO: How the Greens co-leader wants to ditch Germany's controversial benefits system Hartz IV

What are the conditions of Hartz IV?

Prior to the new reforms, a person could receive an unemployment benefit (Arbeitslosgeld) between 12 and 36 months after they had lost their job, depending on their age and the amount of time they had been out of work. 

But as of 2008, as part of the reform, the so-called full benefit was reduced – in most cases – to 12 months, after which the person qualified for Hartz IV. However this is extended of upwards of 15 months for those 50 and older. 

At the current rate, single jobseeker with no children currently receives €424 a month, while couples receive €764.

Recipients who fail to meet monthly conditions are penalized at least 10 percent of what they are receiving.

For a second offence within one year – including not showing up to a job centre meeting – recipients can have had their benefits cut up to 60 percent. And the third time even 100 percent.

In addition, at this stage the money for housing and heating and the health insurance allowance are no longer paid. With cuts of more than 30 percent, jobseekers have still been allowed to apply for food stamps (Lebensmittelmarken).

In 2018, a total of 441,000 jobseekers were financially penalized at least once, with sanctions the highest for those under 25-years-old. These recipients have lost all payments for housing, heating and health insurance on the second violation.

How did the Constitutional Court justify its decision to end penalties of more than 30 percent? 

Human dignity, as enshrined in Germany’s Basic Law (Grundgesetz), was the main reason that the judges gave for their decision.

The judges consider it unfair for the payment to be reduced by more than 30 percent, because this means too heavy a burden for those affected.

However, they said that light penalties are still permissible in order to encourage the job seeker to reintegrate into the the labour market. 

How many sanctions are currently being imposed?

The number has been falling for years, as has the total number of Hartz IV recipients. According to Federal Employment Agency statistics, around 904,000 sanctions were imposed in 2018, 49,000 fewer than in the previous year.

Over the course of 2017, at least one sanction was imposed on 8.5 percent of those entitled to benefits who were also able to work. Approximately 3.2 percent of recipients were subject to one sanction per month.

The job centres cut benefits most frequently because Hartz IV recipients did not appear on a specific date. Seventy-five percent of sanctions in 2018 were due to missed appointments.

What does this mean for taxpayers?

Hartz IV currently costs taxpayers about €40 billion per year. Fewer sanctions mean higher benefits, but also that taxpayers will have to fork out millions more per year to make up for the difference.

What happens now? 

The Constitutional Court did not impose a deadline on to change the sanction practice. 

Instead, it has set new rules during the transition period. With immediate effect, the job centres will no longer be allowed to impose harsher penalties than the 30 percent reduction. Labour Minister Hubertus Heil (SPD) has announced that rapid reform talks will follow in the coming weeks.

What other types of reforms are being considered?

Even before the 2017 Bundestag elections, the employment and social affairs ministers across Germany had planned to abolish the special regulations for people under 25, and no longer sanction rent and heating costs in order to avoid housing losses. 

In the previous Grand Coalition, Labour Minister Andrea Nahles (SPD) took up the proposals, but the CDU/CSU did not follow. Yet following the ruling, the discussions have been relaunched – including less stringent penalties for those under 25-years-old.

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For members


Five things to know about salaries in Germany

Finding a job is typically a top priority when planning a move to Germany. The country boasts the third largest economy in the world and a continuing need for skilled professionals. 

Five things to know about salaries in Germany

If you are moving to Germany, you might soon start looking for a job in the country. However, like many other aspects of living abroad, there are several cultural differences and specificities when it comes to job hunting in Germany – especially when it comes to salaries.

Here are five things to know about salaries in Germany.

There is a minimum wage in Germany

Germany’s minimum wage of €12.41 per hour, pre-tax came into effect at the start of this year. This amounts to a monthly salary of €2,054 which ranks ninth in the world. The minimum wage will rise again in 2025 to €12.82 per hour before tax deductions.

There have been calls recently to hike the salary up higher to €14 per hour.

READ ALSO: Millions of workers in Germany ‘earning less than €14 per hour’

Find out salary expectations

Germany does not require companies to list salary ranges for listed positions. But that may be changing soon. The EU parliament passed a wage transparency law to require companies to publish annual reports detailing wage and wage discrepancy information. The rules, which are set to go into effect in 2027, are intended to help close the gender pay gap. 

In the meantime, employees can utilise online resources to find industry averages and expectations for different roles:

  • offers users access to salary information on more than 800 professions
  • Online platform, Kununu provides compensation information and employer reviews to users in the DACH region  
  • Berlin residents can utilise REDSOFA’s salary survey for an overview of salary averages in the country’s capital city

As of April 2023 the average gross monthly salary was €4,323 according to Germany’s Federal Statistical Office.

Two-thirds of full time workers make less than this average monthly salary and one-third of workers earn more than this average monthly salary.

While wages after deductions may be less than similar roles in other countries, it is also important to take into consideration what other benefits come with a salary. Paid holiday leave, pension contributions, long notice periods and annual bonuses can help make up some of that difference. 

READ ALSO: How much do employees in Germany typically earn?

Check your payment schedule

Internationals can usually expect their salary once a month when working in Germany. Many German companies choose to pay employees either on the 1st or 15th of the month. It is also important to note that most employees can expect to receive their first pay check within 30 or 45 days of starting. 

For positions that offer yearly bonuses, these payments are included in a 13th pay check which are subject to income tax.  

A person works on a laptop.

A person works on a laptop. Image by Bartek Zakrzewski from Pixabay

How many hours do you work?

When looking for a job, don’t forget to check how many hours you can expect. Job descriptions will include expectations for time commitments. 

Mini-jobs, as expected from the name, are limited in hours and pay. Employees can expect up to €538 per month. Mini-jobs do not provide social security because they do not require social security contributions. Employees are also not automatically covered by health and nursing care insurance. 

Teilzeit, or part time jobs, are defined as any job where working hours are less than a full time position.

A common misconception is that part-time work requires working 20 hours or less a week. But an employee working five days a week for 30 hours, at a position that is typically 40 hours when full time can also be defined as a part time worker. 

READ ALSO: The rules in Germany around ‘mini’ and ‘midi jobs’

In fact, Germany has a term for workers who work between 28 and 36 hours a week. Vollzeitnahe Teilzeit, or nearly full time part time workers, can be a popular choice for some people, including parents. These positions can give employees more flexibility to balance work and family responsibilities. It is important to note that these workers are paid according to their time worked, so it will still amount to less than full time.

Depending on the work schedule, part time employees can earn the same amount of vacation as their full-time counterparts. That’s because holiday leave is calculated based on days worked, not hours. If a part time worker comes in five days a week, they will be eligible for at least 20 days of holiday. If that same part time worker comes in three days a week, they will be legally entitled to twelve days of vacation, even if they worked the same hours as the other employee. 

In most companies, weekly working hours between 35 and 40 hours are considered full-time employment or Vollzeitbeschäftigung

Watch out for the gross v. net difference

Before you sign the dotted line, it will be important to check how much of your gross salary you’ll be able to keep come pay day. Companies that include salary expectations in descriptions include gross salary (Bruttoeinkommen) – not the net income after taxes and deductions (Nettoeinkommen). The amount deducted will depend on how much you earn, the tax class you’re in and on other factors such as how much you’re paying for healthcare but it is usually around 40 percent. 

Salaried employees can find information on the deductions on their pay slip. Some to expect to see include:

  • Taxes are deducted directly from the gross pay. The amount is based on the tax bracket your salary falls within 
  • A percentage of your gross salary is also deducted for your pension / retirement contributions
  • Church taxes between eight and nine percent of your salary will also be due if you are affiliated with a religion
  • Unemployment insurance amounts to a 2.5 percent deduction from your gross salary. It is important to note that the insurance covers a salary up to €90,600 
  • Health insurance contribution rates are typically split between employers and employees. The rate depends on the provider. In 2024, the TK contribution rate to health insurance is 15.8 percent of the gross income

READ ALSO: What you need to know about your payslip in Germany