| From Wolfgang
Franz: Two sets of problems characterize the precarious situation
on the German labour market: the particularly high unemployment
among low skilled workers and the entrenchement of unemployment.
A reduction of unemployment among low skilled persons requires
both a higher demand for labour and a higher readiness of
the unemployed to accept such jobs at market-oriented wage
rates. With respect to the latter requirement the Hartz laws
have set in train for-reaching and appropriate changes, but
substantial corrections are in order. Most importantly, the
facility to top up unemployment benefit II through earned
income should be extended and the regular standard rate for
recipients of this income support should be substantially
lowered. Moreover, attention must be paid to ensuring that
earnings stemming from “one euro jobs” do not
add up to an amount that would make taking up a job on the
primary labour market appearing unrewarding.
Steffen J. Roth criticises that the protagonists of various
discussed instruments of the labour market policy concentrate
only on the assumption of the lack of monetary incentives
to work in the low-wage sector. He emphasises that with this
assumption, the situation is very simplified and the complex
reality is not well understood: non-monetary incentives to
work and long-term reasons to accept jobs exist, even if people
do not increase their disposable income in the short term.
The Cologne model Gemeinnützige Beschäftigung, a
kind of community services, is targeted at this group of transfer
recipients who do want to work without additional subsidies,
because they search for opportunities to be productive for
various reasons. Roth emphasises, that these people in particular
deserve to be supported in their efforts of helping themselves.
Moreover, the Gemeinnützige Beschäftigung gets on
without the grave adverse side-effects of “1-Euro-jobs”
or wage subsidies.
Hilmar Schneider: The German welfare system is generating
high implicit minimum wages. Especially low-skilled workers
have little incentive to accept job offers. To overcome this
problem by means of wage subsidies for low-paid jobs appears
not to be very promising. According to the high level of basic
minimum income, wage subsidies on top of this might cause
huge costs but little effect. Workfare turns out as a highly
efficient alternative, but it will only work without additional
wage subsidies.
JEL-Classification: I 38, J 38, Z 13.
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