Labour
Germanys working poor
By FES 12/9/117
Sep 13, 2017 - 1:33:47 PM

More than a dozen people were queuing in anxious silence at the reception counter of the JobCenter in Berlin’s Pankow district, though it was 8am and the place had only just opened. A middle-aged man said: ‘Why am I here? Because if you don’t come when they summon you, they take away what little they give you.’ He thought they would have little to offer him — except maybe a job that had nothing to do with his skills: an unemployed teacher had recently got a letter inviting her to apply for a job as a sales assistant in a sex shop, or be sanctioned. She had posted online ‘I’ve put up with all sorts from my JobCenter, but this is too much,’ saying she intended to file a complaint against the agency for abuse of authority.

The minibus mobile advice unit of the Berlin Centre for the Unemployed had set up in the car park. Team member Nora Freitag put a pile of brochures on ‘How to defend your rights against the JobCenter’ on a folding table and said: ‘This initiative was launched in 2007 by the Protestant church. People are distressed and feel powerless against this bureaucratic monster, which the unemployed rightly see as a threat.’

A pensioner approached. She seemed embarrassed to discuss her problems in front of strangers. Her pension was less than €500 a month, not enough to live on, so she was getting top-up benefits from her JobCenter, but as she still couldn’t make ends meet, she had started a precarious part-time job as a cleaner, earning €340 a month net. She explained: ‘I’ve had a letter from the JobCenter that says I haven’t declared my income, and I have to pay back €250. But I haven’t got the money. And I declared my income on the first day, so they must have made a mistake.’Another team member took her aside to explain where to appeal and file a complaint if the appeal wasn’t successful.Sometimes the minibus is used to discuss a problem in privacy. ‘That’s one of the effects of Hartz IV,’ said Freitag. ‘Stigmatisation of the unemployed is so strongthat many are ashamed even to talk about their situation in front of other people.’

Hartz IV is the fourth and final part of a deregulation of the labour market known as Agenda 2010, implemented between 2003 and 2005 by the Social Democratic Party (SPD)-Greens coalition under Chancellor Gerhard Schröder. It is named after its architect, Peter Hartz, a former personnel director at Volkswagen, and merges social welfare benefits and benefits for those unemployed longer than 12 months into a single package, paid by the JobCenters. The low rate — €409 a month in 2017 for a single person (1) — is supposed to encourage recipients or ‘customers’ to find a job as quickly as possible, no matter how badly paid or poorly matched to their expectations or skills. Payment is linked to one of the most coercive monitoring systems in the EU.

‘Honest people first’

As of 2016, Hartz IV applied to nearly six million people, including 2.6 million officially unemployed, 1.7 million unofficially unemployed — squeezed out of the statistics by ‘activation measures’ (training schemes, ‘coaching’, jobs paying €1 an hour, mini-jobs) — and 1.6 million children of recipients. In a society that worships work, they are often despised as lazy, or worse. In 2005 the economy ministry published a brochure titled ‘Honest people first: fighting abuse, fraud and selfishness in the welfare state’, with a preface by the minister, Wolfgang Clement (SPD). ‘Biologists,’ it read, ‘use the term “parasite” to refer to an organism that obtains its nutritional needs by feeding off other living things ... it would be inappropriate to apply concepts from the animal world to human beings.’ The popular press, led by Bild, took up the expression ‘Hartz IV parasite’.

Since the living wage won’t cover rent, the JobCenters pay it, up to a maximum for the region determined by the government. ‘A third of the people who come to see us have housing problems,’ Freitag said. ‘Most often because the huge rise in rent levels in major cities, especially Berlin, has forced them to break JobCenter rules. They have to move, though they don’t know where because the rental market is saturated, or cover the difference themselves by cutting back on their food budget.’Of the 500,000 Hartz IV recipients in Berlin, 40% are thought to pay more than the regulation maximum rent.

JobCenters may also pay a small emergency allowance, which gives them extensive supervisory rights. No area — bank account, purchases, travel, family, even love life — escapes their humiliating scrutiny. The 408 JobCenters are allowed to use their initiative, and can be rather too inventive: last year the JobCenter in Stade, Lower Saxony, sent a questionnaire to an unemployed, pregnant, single woman, asking her to fill in the names and dates of birth of her sexual partners.

The roots of this system go back to the 1999 manifesto ‘Europe: The Third Way/Die Neue Mitte’, signed by Schröder and his British counterpart Tony Blair. In it, these ‘modern social democrats’ proclaimed the need to ‘transform the safety net of entitlements into a springboard to personal responsibility,’ claiming that ‘part-time work and low-paid work are better than no work because they ease the transition from unemployment to jobs.’ They thought a poor person working hard was better than a poor person out of work. This barroom philosophy was the ideological matrix of ‘what is probably the most important break in the history of the German welfare state since Bismarck,’ according to Christoph Butterwegge, a political scientist at the University of Cologne (2).

Macron worships German model

In France, the Hartz laws have delighted employers, media and politicians for the last 12 years. Worship of the German model has strengthened since the election of President Emmanuel Macron who believes ‘Germany has achieved wonderful reforms’ (3). His opinion is rarely contested by the media. The day after his election, the editorial director of Le Monde wrote: ‘German Chancellor Gerhard Schröder forced through the reforms that make his country prosperous,’ urging Macron — who wants to make France a ‘startup nation’ — to be ruthless in implementing his own reforms (4). The economist Pierre Cahuc, who with Marc Ferracci and Philippe Aghion inspired Macron’s vision for overhauling the labour market, also hails ‘the exceptional success of the German economy.’ He believes Hartz IV is not only ‘better for employment’ but that it spreads joy and goodwill, since ‘an increasing number of Germans, especially those on lower incomes, say they are satisfied with their situation, whereas satisfaction among the French is stagnant’ (5).

Macron’s plans are directly inspired by the German model, especially the hollowing-out of France’s labour code and tighter controls on the unemployed, who would be sanctioned if they turned down two successive job offers. Macron summed up the spirit of Hartz IV when he told the French parliament that ‘protecting the weakest members of society should not mean making them dependent on the state for ever’ but giving them the means, and eventually obliging them, to ‘take proper responsibility for their own futures.’ He added: ‘We must replace the concept of social aid ... with a genuine policy of inclusion for all.’ Schröder’s maxim for the poor was even pithier — fördern und fordern (encourage and demand).

Hartz’s own reputation is tarnished: Germans have not forgotten that in 2007 he was given a two-year suspended sentence and fined €500,000 for ‘buying social peace’ at Volkswagen by bribing members of the works council with cash, tropical holidays and prostitutes. He still finds an audience in France, where he has taken refuge. The French employers’ federation Medef regularly invites him to speak, and former president François Hollande apparently considered making him an official adviser. Today he offers his advice to Macron, via the press.

Yet Hartz played only a supporting role in Schröder’s reforms. He chaired the commission whose work served as their basis, but the Bertelsmann Foundation, Germany’s most influential media group, was the main director of operations. Its ‘philanthropic’ work was central to the development of Agenda 2010: it financed expert assessments, distributed press packs and networked ‘goodwill’. Helga Spindler, a professor of public law at the University of Duisburg-Essen, wrote: ‘Without the Bertelsmann Foundation’spreparation, support and after-sales work at every level, the Hartz commission’s proposals and their transformationinto law could never have happened’ (6). The foundation even took the 15 members of the commission on study trips to countries considered to have an avant-garde approach to repurposing the unemployed: Denmark, Switzerland, the Netherlands, Austria and the UK.

On 16 August 2002, Hartz presented his conclusions to Schröder under the dome of the French church of Friedrichstadt, in Berlin. Schröder said it was ‘a great day for the unemployed’, promising to get two million back into work within two years. The 344-page report included 13 ‘innovation modules’ written in management-speak peppered with ‘Denglish’ (German-English) and expressions such as ‘controlling’, ‘change management’, ‘bridge system for older workers’ and ‘new exploitation and voluntary work’.The JobCenters were described as an ‘improved customer service’.

Unemployed are paupers

The Hartz IV system came into force on 1 January 2005. Getting the unemployed into work required the creation of a wide range of help for employers: the exemption of low wages from tax, the launch of mini-jobs paying €400 then €450 a month, the removal of restrictions on the use of temporary labour, subsidies for employment agencies recruiting among the long-term unemployed. Employers, especially in service industries, got greedy. Supplied with fresh labour by the JobCenters, they converted regular into precarious jobs — those who took them could join the queue at the JobCenter to supplement their earnings. The number of people in temporary employment rose from 300,000 in 2000 to nearly a million in 2016; the ratio of working poor — earning less than €979 a month — rose from 18 to 22%. The introduction of a minimum wage of €8.50 an hour in 2015, raised to €8.84 this year, has not affected the trend: 4.7 million workers survive on a mini-job paying a maximum of €450 a month. Germany has converted its unemployed into paupers.

Hartz IV is like a compulsory precarious employment service. ‘Customers’ are in permanent danger of falling into the sanctions trap. Berlin resident Jürgen Köhler, 63, is a self-employed graphic designer. Competition from big firms has forced prices down and he doesn’t get enough work, so he registered at the JobCenter. ‘One day I got a letter telling me to report to the employment agency at 4am the following Monday and Tuesday for a construction job. It said that I would be paid the same evening, and that I needed to bring a pair of safety boots. Obviously, I don’t have that kind of equipment, and I’ve never worked in construction. I didn’t think it would be a good idea to start at my age.’

As is often the case, there was no time to appeal, so Köhler’s only option was to go to court, and hope to get a ruling before he was sanctioned, which could have cut his benefits by anything from 10 to 100%. No one is safe, not even children aged 15-17: in return for a monthly allowance paid to the household, the JobCenter can call them in at any time, even if they are still at school, to ‘advise’ them to look for work in a particular sector with a shortage of labour, and can stop the allowance if they miss an appointment. It’s as if they already had ‘Hartz IV’ tattooed on their foreheads.

As an unemployed member of the service industries trade union Ver.di, Köhler had access to free legal representation and was lucky enough to get a favourable ruling in time. Sanctions were applied to nearly a million people in 2016, with penalties averaging €108 — a considerable gain for Germany’s federal labour agency, to which the JobCenters report. In 2016 some 121,000 complaints were filed against JobCenters, though 60% were dismissed. ‘You get hit with sanctions for such absurd reasons that there’s a good chance of winning if you go about it right,’ Köhler said. ‘But a majority of the unemployed don’t know their rights and can’t defend themselves well; most don’t even try.’

It wasn’t always like this. In 2003 and 2004, tens of thousands, unemployed and in work, joined spontaneous marches every Monday in German cities to protest against Schröder’s reforms. The movement was especially strong in the east of the country, where slogans openly referred to the anti-government ‘Monday demonstrations’ of 1989. It spread rapidly to the west, where trade unions, reluctant to support it, were taken unawares.

Ralf Krämer, Ver.di’s federal secretary in charge of economic issues, admitted: ‘The unions prevaricated for a long time. Their position was all the more ambiguous because two of their representatives had been on the Hartz commission, one from the DGB [German Trade Union Confederation] the other from Ver.di.’ The commission also comprised two politicians, two academics, a senior civil servant and seven senior managers, including members of Deutsche Bank, chemicals group BASF and consulting firm McKinsey. ‘The trade union movement in Germany traditionally has close links to the SPD,’ said Krämer. ‘All the evidence suggests the Schröder reforms only passed because we had a Social Democratic government, otherwise the opposition to them would have been far stronger.’

‘We could have won’

In November 2003 there was amazement when a demonstration in Berlin not organised by trade unions attracted 100,000 people. Krämer said: ‘Many union members were there, including me, because the Ver.di grassroots could see that the reforms were only aimed at promoting the low-wage market.But the DGB leadership dragged their feet.’ Five months later, protests in Berlin, Stuttgart and Cologne attracted half a million, something not seen in Germany since the second world war. This time, union leaders led the marches. ‘We could have won if they had kept it up,’ said Krämer. ‘But the DGB were scared of losing control and didn’t call for more demos. The Monday demonstrators found themselves alone, and the movement faded away. We missed a historic opportunity. Of course, confrontation is not a part of German union culture. We don’t normally challenge decisions made by a democratically elected government, though personally I regret that.’

This failure did not lead the unions to consider a change of strategy. Neither the leadership of Ver.di, nor that of the DGB — dominated by metal and chemical workers, though Ver.di is also a member — thought there was any point in opening a debate on the illegality of ‘political’ strikes, a peculiarity of German law that forbids unions from calling on their members to strike over legislation they consider to be against the interests of workers. Mehrdad Payandeh, a member of the DGB’s federal executive committee in charge of economic issues, raised his eyebrows when I mentioned general strikes: ‘To us, a strike only makes sense if we fail to negotiate a pay rise in sectors where we have representation. That’s rare. Our legitimacy comes from our membership, not from the street. We’re not like countries in the South, where people walk out over nothing.’

The Monday demonstrators found themselves alone, and the movement faded away. We missed a historic opportunity. Of course, confrontation is not a part of German union culture Ralph Krämer

Payandeh is a good example of the union culture Krämer describes. He pays more attention to employers he knows, whose ‘ability to work with the unions’ he praises, than to the Hartz IV unemployed, or the slaves of precarious employment, whom he sees as being outside his brief. ‘Of course I’m against the Hartz IV sanctions and precarious employment. But legislation passed by the Bundestag is not our business. Our job is to defend our members through sectoral agreements.’ There are very few such agreements outside the metal and chemical sectors; the all-powerful services sector is therefore able to draw on a pool of workers who are easily exploited and ever less protected.

The struggle against the Hartz laws has marked Germany. It has considerably weakened the SPD, which is reeling from the loss of around 200,000 members since 2003. It has also reshaped the political landscape by driving SPD dissidents to merge in 2005 with the neo-communist Party of Democratic Socialism (PDS) to form Die Linke (The Left), the only party represented in the Bundestag that is still campaigning for the repeal of the Hartz laws. It has also created a huge network of groups of unemployed determined to make their voices heard through high-profile acts of mutual aid and self-defence, like the Basta collective, based in the working-class Wedding district of Berlin, which often protests at JobCenters.

As people in France ask themselves whether it will be possible to oppose Macron’s reformist ardour, many German trade unionists are holding their breath. ‘Macron’s reforms worry us a lot, because there’s a risk they will drag wages down and there will be a knock-on effect in Germany,’ said Dierk Hirschel, a senior Ver.di official. Krämer added: ‘We used to see France as a great example in many ways. The way things are going now is tragic. We hope the French unions won’t make the same mistakes we did, and will be more aggressive than we were.’

(1) It falls to €368 each for Hartz IV recipients living as a couple. Recipients also get €237 a child up to the age of six, €291 aged 7-14, and €311 aged 15-18.