Performance of Active Labour Market Policy in Germany
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tained the unemployed in passivity rather than stimulating them to integrate
into the regular labour market.
The Hartz reforms aimed at improving employment services and policy
measures, and activating the unemployed. Public employment services were
modernised along the lines of New Public Management. This includes
results-based accountability of local employment agencies, outsourcing of
many services and open competition between private service providers. The
former employment offices were converted into costumer-orientated
one-stop-centres, offering individual profiling, job search assistance, social
services and administration of benefit payments. Furthermore, various policy
changes implement an activation strategy according to the principles of
“rights and duties”. First, the entire benefit system was re-designed. Unem-
ployment benefit levels and durations were reduced. Eligibility for sub-
sistence allowances now differs according to a person’s ability to work rather
than previous contribution payments, as was the case before. Benefit re-
cipients may also be subject to sanctions, mainly benefit reductions, if duties
are not complied with. Second, priority is given to measures that support un-
employed workers who are pro-actively seeking integration into regular em-
ployment, most importantly wage subsidies and start-up subsidies. Third, jobs
with reduced social security contributions were introduced (Midijobs), and
the regulation for jobs exempt from such contributions was reformed
(Minijobs), both with the intention to provide higher incentives for individuals
to take on employment in the low wage sector.
Results of evaluation studies of German active labour market policies have
been rather inconsistent for many years. Probably this was due to a lack of ap-
propriate data, or to the sensitivity of results with respect to different identifi-
cation strategies. However, due to better data, advances in methodology and a
higher consensus on identification strategies, recent evaluation studies seem
to be able to provide more robust and consistent results. For the pre-Hartz
period, it can be concluded e.g. that most training measures seem to show a
considerable dynamic in programme effects, having negative (locking-in)
effects in the short-run and a tendency towards positive employment effects in
the long run. Based on such results, future cost-benefit analyses might be able
to trade costs of negative short-run effects against benefits of positive long-run
effects. Moreover, there is evidence that job creation schemes perform badly
on average in the short run, and actually bring about impaired employment
prospects for participants. The (limited) evidence on wage subsidies and
start-up subsidies pre-Hartz indicates modestly positive effects of such
measures.
The comprehensive evaluation of the Hartz reforms, which involves more
than 20 research institutions and a total of about 100 researchers, has