Providers) independent of the guidelines of the Federal Employment Agency. The remaining
regions formed Joint Local Agencies, where the local authority and the Federal Employment
Agency had to agree on the organisation of the local job centre.2 Within a Joint Local
Agency the local authority has less scope to shape the organisation according to its own
agenda. Within a Joint Local Agency it is hard to bypass the controlling standards and the
guidelines for the use of active labour market policies of the Federal Employment Agency
and impossible to implement another computer software. Still there was scope for
implementing different organisational structures. The descriptive statistics in section 6 show
the considerable diversity of the organisational characteristics implemented by Joint Local
Agencies.
The number of 69 Approved Local Providers was chosen because the Federal Council of
Germany (Bundesrat), which opposed the Federal Government's initial plan, is composed of
69 delegates of State Governments. Each of the States was allowed to nominate as many
regions for an Approved Local Provider model as it has seats in the Federal Council of
Germany. In order to be nominated by a State Government the regions had to apply. In total
70 regions applied for becoming Approved Local Providers. In some States the number of
applicants was lower than the number of available slots. The unutilized slots were then
allocated to those States that had excess applications.
All other components of the public welfare system and the Hartz reforms - such as
benefit entitlements, the tax-benefit system in general, and labour market institutions such as
minimum wages and employment protection - apply equally to all regions irrespective of the
job centre organisation.
3. Labour market conditions before the Hartz IV Reform
Since regions had to apply to become Approved Local Providers, regions with
advantages in activating long-term unemployed might have self-selected to become
Approved Local Providers. Labour market variables in the years 2000 until 2003, i.e. prior to
the Hartz IV reform, are presented in Table 1. The weighted averages shown suggest that
regions that went on to become Approved Local Providers had lower unemployment rates,
lower long-term unemployment rates, lower unemployment assistance recipient rates and a
lower social assistance recipient rates. While the differences for unemployment rates, long-
2 In 20 regions the Federal Employment Agency and the local authority could not agree on the organisation. In
these cases, the local employment agency and the local social benefit administration remained separate
organisational bodies.