Germany to raise Hartz IV unemployment benefit by just three euros

People who receive Hartz IV benefits in Germany will receive an increase in the monthly benefit - but for most people it will be just €3 more per month.

Germany to raise Hartz IV unemployment benefit by just three euros
Fruit and veg on sale at a supermarket in Berlin. Photo: picture alliance/dpa | Fabian Sommer

The Hartz IV rates will go up slightly from January 22nd, the federal cabinet decided on Wednesday. 

The standard rate for single adults who are Hartz IV welfare recipients will go up by €3 to €449, while the rate for young people aged 14 to 17 will also rise by €3 to €376. Adults under 25 without their own household will receive €360 – also an increase of €3 per month.

The rate for children up to five years-old in a Hartz IV household will be €285 euros per month in the new year instead of the previous €283. For six to 13-year-olds, the rate will also increase by €2 to €311. 

Hartz IV – or Unemployment benefit II – is a controversial type of long-term welfare assistance, which requires recipients to fulfil a specific set of conditions, like active job hunting or attending education classes – in order to receive a monthly payment and housing assistance. 

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

Why is the increase so low?

The adjustment of the Hartz IV standard rates is based on the wage and price development of the past year.

That means the benefits are based on 2020 – when wages fell overall by 4.7 percent in the second quarter alone due to the Covid crisis. 

Millions of people were on Kurzarbeit (reduced working hours), and many lost their job. At the same time, the German government cut the value-added tax (VAT) to 16 percent for the second half of 2020. This means that prices effectively fell during this period.

READ ALSO: 10 golden rules to know if you lose your job in Germany

From January 1st this year, single adults received a €14 increase in Hartz IV payments, while the rate for young people aged between 14 and 17 went up by €45. For children up to the age of five living in a Hartz IV household, the benefit increased by €33. 

What’s the reaction?

The move by the SPD-led social affairs ministry has been slammed by opposition parties, who say the increases do not reflect the rising cost of living in Germany. 

“Raising the standard rates by a measly €3 a month is little more than a pittance,” said Left Party parliamentary group vice chairwoman Susanne Ferschl.

“Rising consumer prices are causing the money to evaporate faster than it’s in the account.”

Ferschl said the Hartz IV standard rate should be increased to €658 as an “immediate measure”.

Green Party faction leader Katrin Göring-Eckardt criticized the size of the increase as “irresponsible”. Green Party social policy expert Sven Lehmann called for an increase in rates of at least €50 “as a first step.”

The German Federation of Trade Unions (DGB) and the social association VdK also criticised the new Hartz IV rates, which will come into force from January next year. 

“The planned increase of only €3 is significantly below the price trend,” said DGB board member Anja Piel to the newspapers of the Funke Mediengruppe.

VdK President Verena Bentele said the government was once again cutting back on those “who are least able to defend themselves.”

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How to find out what your colleagues earn in Germany

If you suspect your colleagues may be raking in a bit more dough than you are, you'll be pleased to know there's a way to find out for sure. Here's what to know about Germany's wage transparency law - and how to make use of it.

How to find out what your colleagues earn in Germany

Like many countries worldwide, gender pay inequity is a persistent issue in Germany. Recent analyses show that women in Germany earn 18 percent less on average than their male counterparts – the third highest pay gap in the EU. 

In 2017, Germany adopted the Wage Transparency Law (Entgelttransparenzgesetz) to try and address this problem.

The act is designed to highlight pay discrepancies between male and female employees who do equal work. In fact, it’s designed as way to get around the non-disclosure clauses in some employment contracts and the general taboo in German society when it comes to discussing salaries, both of which makes it difficult for women to know if they are being underpaid. 

Unfortunately, making use of the law in practice can prove quite complicated – but it can be done. So if you suspect your male colleagues might be taking home a bigger salary for no good reason, here’s how to find out. 

How does it all work? 

The law, which came into effect in July 2017, has two main stipulations aimed to make pay disparities more transparent and encourage companies to address them. 

First, it enables individuals working at companies with more than 200 people to know the median pay of a group of at least six employees of the opposite sex who work at the same level as you. 

Second, the law encourages companies with more than 500 employees to regularly review their pay structures and publish details on whether they are complying with equal pay rules as part of their financial reports.

READ ALSO: ‘How much do you earn?’ New law tackles gender pay gap

OK, but how do you get hold of this information? 

If you work at a company that employs 200 people, and has at least six people of the opposite sex doing comparable work to you, you can submit a written request for pay information. In this request, you have to demonstrate that the employees whose pay information you are requesting are doing equivalent work to you. This generally means they have the same overall requirements and burdens as you. A good benchmark would be if that person can stand in for you if you miss work because of illness or vacation. 

You can formulate the request on your own, or use a form provided by the government. You should submit the request through your workers’ council (Betriebsrat) unless your company doesn’t have one, in which case, you can go directly through your employer. 

Woman working on laptop at home

A woman works on a laptop at home. The first step in finding out colleagues’ pay is to file a request. Photo: picture alliance/dpa | Annette Riedl

In addition to requesting information on the median of the average full-time annual salary for your position (with the median being the halfway between the lowest and highest salaries), you can request information on up to two other salary components, such as performance-related pay and hardship allowances. Your employer is also required to tell you how they determined your own remuneration.  

Within three months the works council is expected to collect the requested information from the employer and return it to you in written form. You are only allowed to make a request once every two years, but if you team up with other colleagues, you can get access to much more info in a shorter period of time. 

READ ALSO: Women in Germany earn nearly a fifth less than men

What do I do with this information?

Depending on what you find out, there are multiple next steps. If you discover that you earn less than the median salary of your peers, this doesn’t automatically give you the right to a salary adjustment. Instead, a good first step is to take your concerns to your works council or trade union, who should then relay them to the company and pressure your employers to review their pay structure.

If you really want to ramp things up, suing for equal pay under the General Equal Treatment Act (Allgemeines Gleichbehandlungsgesetzes) is also an option – though this route can be precarious. If you’re in a union, you might want to consult with them for legal advice about whether your case is likely to succeed. 

This is because you would have to prove that you are being paid less because of your gender. And while the legal process can be long (a recent successful lawsuit took more than four years), you have to decide quickly if you want to pursue it: after finding out about the salary discrepancies, you have just two months to file a claim. 

READ ALSO: REVEALED: Germany’s top-paying jobs and highest-earning states

What if my company doesn’t qualify? 

A main critique of the Wage Transparency Law is that a majority of women in the country don’t qualify for it, given that around two-thirds of women work in small businesses that employ less than 200 people.

For this reason, critics have called for a reform to the law so that it applies to all companies. Some politicians have embraced this position, with Green Party leader Ricarda Lang hopeful that a change could come as early as this year.

Colleagues work together at a startup.

Colleagues work together at a startup. Small businesses are currently not covered by the law. Photo: picture alliance/dpa/dpa-tmn | Zacharie Scheurer

Until that point, strategies for increasing pay transparency at smaller companies include talking openly with fellow employees about salaries and collaborating with your works council to pressure your company to reveal – and potentially review – its pay structures.

Another option is to search for information on average salaries in your field at companies similar to yours, or use websites like Glassdoor to check for salary information from your company.

READ ALSO: INTERVIEW: How to get an English-speaking job in Germany

Is this law actually effective? 

All in all, making use of the transparency law can be pretty daunting. Even if an employee uses the law to reveal pay discrepancies, there is no guarantee that the company will address the gap. Indeed, critics have argued that the law unfairly places the burden on employees to act on pay discrepancies, through lawsuits or other pressure tactics, rather than companies. 

Perhaps for these reasons, the law has had an underwhelming effect, as it appears that a vast majority of employees haven’t taken advantage of it since its implementation. According to an evaluation from 2019, only four percent of employees surveyed had submitted a request for information, while about 45 percent of companies with over 500 employees have reviewed their pay structures.

Germany is not unique in its rocky rollout of its pay transparency law, as a report by Eurofund found that other countries who adopted pay transparency laws in response to the European Commission’s recommendations have also faced challenges in implementation. But the report contends that with continued dedication to the issue of equal pay, and a willingness to adjust and reform laws seeking to address this issue, these measures could prove more effective with time.