How topping up promotes social advancement

VMany critics of the Hartz IV labor market reform see it as a particularly dark spot in social policy: the so-called replenishment. Anyone who has a job that is not enough to survive can receive Hartz IV like an unemployed person – only the self-earned wage is then largely offset against the social benefit. Most of the criticism does not aim at this point. Rather, the increase is a fundamentally wrong “subsidization of wage dumping”, as the Left Party put it. It incites employers to pay too low wages. “Precarious” work is thus “cemented”. Social Minister Hubertus Heil (SPD) has also represented this in this way. It supports the political demands for a statutory minimum wage of at least 12 euros per hour.

Researchers at the German Institute for Economic Research (DIW) and the Free University of Berlin have now come to completely different results with a new, as yet unpublished study. In a nutshell: Even if the work performed is only an additional income to the Hartz IV reference, this increase is “the most effective labor market policy instrument at all”. It makes the ascent to adequate work more likely than any costly support measure of the classic type. Compared with unemployed Hartz IV recipients, top-ups have two and a half times higher chances of finding unsupported, adequate work again.

Single parents and the elderly at a disadvantage

The publisher of the study, which the FAZ has received in advance, is the CDU-affiliated Konrad-Adenauer-Stiftung. The special thing about it is that it examines the fate of service recipients with a so-called longitudinal analysis – it can show what becomes of the individual members of a group of people over time. Specifically, it was about more than 12,000 recipients of Hartz IV benefits, whose success on the job market was examined using scientifically recognized data sets for the period from 2007 to 2017.

The results are particularly sobering for unemployed Hartz IV recipients, i.e. for those who did not even have a marginal job at the time of origin: A year later, only 9 percent of them had made the climb to unsubsidized work. Even after five years it was only 23 percent. Conversely, 80 percent were still unemployed Hartz IV recipients after one year, and 57 percent were still unemployed after five years. Most of the other test subjects, up to 16 percent, succeeded in taking a small first step – they became top-ups.

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Not exemplary, but far more successful, however, were those who were top-ups at the beginning of the analysis, i.e. who had at least a minor job: 23 percent of this group had made it to decent work after just one year – a good two and a half times as many like among the unemployed Hartz IV recipients. And after five years, 47 percent of the former top-ups had found unsubsidized work.

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