Wage subsidy

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In Germany, wage subsidies can be subsidies to both employees and employers . There are also mixed forms in which both sides are subsidized, such as the Hamburg model .

Goal of wage subsidies

Wage subsidies to employers, like combined wages, are intended to ensure that employees with placement obstacles find work, even though their productivity is lower than that of other employees compared to wages. Such barriers can include long-term unemployment , insufficient qualifications or old age . This deficiency is compensated by a subsidy to the employer.

Most of these grants are limited in time, as one hopes that productivity will increase after a training period.

Because they have to be refinanced through taxes or social security contributions , they are only suitable for reducing unemployment if this is predominantly limited to certain groups, as is already the case today with integration grants .

Hamburger model

The Hamburg model is a wage subsidy limited to a maximum of 12 months for the long-term unemployed. ARGE Hamburg pays it in equal parts to employees and employers. From a weekly working time of 35 or more hours (full-time) documented in the employment contract, the funding amounts to 265 euros per month for employers and employable beneficiaries. If you work up to 35 hours a week (part-time), € 132.50 each. The grant is exempt from social security and tax. In addition, the employee can apply for an education voucher worth up to € 2,000.

The employer must create a job that is subject to social security contributions and meets local conditions (no subsidies for wage dumping). The wage must be at least 451 euros (before February 1, 2013: € 400) and may not exceed € 2,000 (before February 1, 2013: € 1,700). Apprenticeships are also not funded. Funding is initially granted for six months, and if you are subsequently taken on in a permanent employment relationship subject to social insurance for a further 4 months.

The Hamburg model was introduced on March 1, 2002 by the Hamburg Employment Agency together with the Hamburg Authority for Economics and Labor . By merging social assistance with unemployment assistance to form the new unemployment benefit II , the Hamburg model is now supported by a working group (ARGE) of the Employment Agency and the City of Hamburg. This means that only Hamburg recipients of unemployment benefit II can be funded.

In contrast to the Mainz model , which started at the same time (and has since become superfluous due to the introduction of mid-jobs ) , the Hamburg model is little regulated and has a significantly shorter funding period. The intention is to compensate for the often low productivity after a long period of unemployment. After a certain time - it is hoped - the qualifications of the formerly unemployed have risen, so that they can earn a higher wage and their employment is still more profitable for the employer. At the same time, the employer should have the opportunity to try out hiring a long-term unemployed without too great a financial risk. In addition, it is hoped that the "indolence" (getting used to unemployment) observed in some cases after a long period of unemployment will be overcome by the financial incentive.

criticism

Like all wage subsidies , the Hamburg model is controversial. Criticism comes from both the “left” and the “right”. While “left” voices criticize the subsidization of employers and demand higher wages instead of wage subsidies for employees, economically liberal critics criticize the costs and instead advocate wage reductions without state compensation transfers. It is also controversial to what extent deadweight effects occur (jobs would have been created anyway). In addition, it remains to be seen to what extent the qualifications of the employees will actually increase to such an extent that after the subsidy expires, they will continue to work that would otherwise have been unprofitable without funding. It is also controversial to what extent the employee can achieve a higher wage after the subsidy has expired and thus compensate for the discontinuation of the subsidy.

A precedent that ended disastrously at the time is the Speenhamland Act .

Mainz model

The Mainz model is a variant of the wage subsidy, in which the state grants a subsidy towards social security contributions and a child benefit supplement. The model was developed by the former labor minister of the state of Rhineland-Palatinate and later head of the Federal Labor Office, Florian Gerster . Its testing and introduction was the subject of the fourth top-level discussion of the Alliance for Work, Training and Competitiveness in 1999 , at which the social partners agreed with the federal government to test the model regionally. On March 1, 2002, the model was expanded nationwide; Funding ran out a year later. The model became obsolete with the introduction of mini and midi jobs as part of the so-called Hartz reforms , which provided for reduced social security contributions for low-paid jobs. A second reason for discontinuing the program was that expectations of job creation had not been met. Only a good 11,000 previously unemployed people took advantage of this offer.

Web links

Links to the Mainz model:

Individual evidence

  1. ↑ Team Arbeit Hamburg  ( page no longer available , search in web archives )  Info: The link was automatically marked as defective. Please check the link according to the instructions and then remove this notice.@1@ 2Template: Toter Link / www.team-arbeit-hamburg.de  
  2. ↑ Opportunities for advancement for low wage earners have worsened . IAB. March 14, 2005. Retrieved August 22, 2019.