Surveying the welfare state: challenges, policy development and causes of resilience



20
in 1998 were directly linked to what the SPD had promised during its election campaign
and repealed some late reforms of the Kohl government: this applied to pensions (suspen-
sion and later abolishment of the demographic factor of the 1998 reform that was to lower
pension levels gradually), disability pensions; the deregulation of dismissals; cuts in sick-
ness benefit; and the introduction of privatizing measures and instruments strengthening
personal responsibility in health care insurance. In contrast with these reforms, the Schroder
government was also capable of breaking with established policy legacies and thus pro-
duced discontinuities with the policy of earlier governments: examples were the Riester
pension reform with its move towards a ‘revenue-oriented expenditure policy ‘in old-age
pensions’, during the first term, and the labour market reform Hartz IV, during the second
term (Schmidt 2005: 114ff.).

What happened to the major programmes during the period? Let us firstly look at labour
market policy. The Schroder government continued and extended active labour market
schemes and the differential treatment of unemployed by benefit type in accordance with
the objectives of ‘status adequate’ reintegration and maintaining a sizable second labour
market (i.e. subsidised public employment). In 2001, new legislation introduced stricter
rules for job-search activities, profiling and reintegration contracts for unemployed persons
(Clasen 2005: 72f.). Following the 2002 Hartz proposals and the announcement of
Schroder’s reform programme Agenda 2010, in 2003 there was an ‘acceleration of the
speed of reform’ and the ‘breaking of new ground by introducing new benefit structures’
(Ibid: 75), when the reforms called Hartz I-III (including for instance, organisational reform
of job centres as well as the Federal Employment Agency, and the introduction of new
forms of [self]-employment) were adopted.

Hartz IV was a second path-breaking reform and originated from the proposals of the Hartz-
commission on labour market reform. It merged social assistance with unemployment assis-
tance, replacing the latter with a new means-tested benefit.16 Regarding the once guaranteed
standard of living, Bleses and Seeleib-Kaiser note that active and passive labour market
policy reduced the commitment to this principle by further weakening the wage-earner cen-
tred approach. As far as passive labour market policy is concerned, rather than reversing the
cuts of the Kohl government, the Red-Green coalition added to them. On the other hand, the
unemployment insurance scheme became more family-oriented by defining family time as
equivalent to contributions. Regarding active labour market policy, it is striking that the aim
of getting the unemployed back into standard employment had de facto been given up, as
measures at odds with the guaranteed living standard principle were enacted
(Bleses/Seeleib-Kaiser 2004: 66).17

16The Hartz IV-reform strengthened the incentives for unemployed to accept job offers and sanctioning
the unwillingness to comply, while considerably widening the definition of which jobs were ‘acceptable’.
The principle of the ‘activating’ welfare state was applied to social assistance and unemployment insur-
ance through Hartz IV (Schmidt 2005: 119 f.).

17 These measures included the increasing promotion of new forms of subsidised self-employment and
temporary work. In addition, employers were freed from paying unemployment insurance contributions



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