The Executive Director of the Federal Employment Agency, Andrea Nahles, criticizes the federal government's plan to pay long-term unemployed people a “start-up bonus” of 1,000 euros if they successfully start working, German media report.

“We do not need this bonus to do our job. What we need is for politicians to let us work in peace,” said the former SPD chairwoman. Within the SPD, there are also considerable reservations about the announced project.

Economy Minister Robert Habeck defended the project. “Many who say: ‘This is it’ – these are economists and labor scientists, including conservative ones,” the politician said on Wednesday evening on the RTL Direkt program. “Everyone says that we could reduce unemployment by around 100,000 people.” The concept will work, it is pragmatic and practical.

Chancellor Scholz is not completely convinced

Last week, the government decided to tighten the rules for recipients of the citizen's allowance. If they refuse to work, they will soon face harsher penalties.

At the same time, long-term unemployed people who have been employed in jobs subject to social security contributions for longer than twelve months should be able to receive a one-time payment of 1,000 euros. The regulation is expected to come into force on January 1, 2025.

For some time now, there has already been criticism within the ranks of the ruling “traffic light coalition” regarding the project. Chancellor Olaf Scholz (SPD) also expressed skepticism on Tuesday evening about the effectiveness of the plans. The planned bonus “may not be of benefit,” he said. “But it does no harm either,” he added.

Calls for a new strategy

Nahles warns that the situation on the labor market is worsening. “We are currently experiencing that on the one hand employment is growing, and on the other hand the number of those seeking work is increasing. There are still sectors that are growing. But we also have a recession in some sectors. There is also a structural gap,” she said.

In the overall economy, 15 percent more jobs have been created in the last ten years, but only just under two percent in the manufacturing sector. “Something is changing.”

Nahles called on the ruling coalition to take action. The manufacturing industry in particular is crucial for the German export model and innovation.

“In this sense, it would be very good if the federal government soon found a common industrial policy strategy. From the perspective of labor market policy, I want to say: if there is an urgent need for action, then it should be done,” she added.

Although there is a risk of higher long-term care and health insurance contributions in 2025, the Federal Agency wants to maintain a stable unemployment insurance rate.

“As of today, an increase in contributions is not necessary. An increase in contributions would have a procyclical effect in an economic crisis. We want to avoid that,” said the head of the Federal Employment Agency.

Source: fenix-magazin.de