With major welfare reforms on their way in the UK, comparisons are often drawn to welfare systems in other countries, specifically other European countries. To encourage a better understanding of the similarities and differences of these systems, Policy in Practice is taking an in-depth look at some of them. After an overview of Spain’s welfare system we are now turning to Germany.
Germany has three kinds of support for people that are unemployed or who cannot sufficiently secure their subsistence through income or assets; these are Unemployment Benefit, Unemployment Benefit II and Income Support. Unemployment Benefit is a contributory benefit that is paid for a limited amount of time, whilst Unemployment Benefit II is a non-contributory benefit that is paid as long as someone is capable of, and looking for, work. Income support is paid to everyone that is not capable of working but lives with someone that is capable of working. To qualify for either of these benefits a person needs to be between the age of 15 and the legal pension age, as well as have their habitual residence in Germany
Whilst 914,639 people are receiving Unemployment Benefit (December 2014) , with 4,371,215 recipients a significantly larger number of people are receiving Unemployment Benefit II (February 2015) .
Unemployment Benefit (Arbeitslosengeld) is a contributory benefit that is available to people who have paid National Insurance for at least 12 months in the previous two years. Unemployment Benefit amounts to 60% of the average net income of the past 12 months, or 67% if the claimant has a child. Unemployment Benefit can be received for a maximum of 12 months by people under the age of 50, and up to 24 months for people over the age of 58.
The extended entitlement partly explains why 38% of recipients are over the age of 50 compared to 9% under the age of 25 (for Unemployment Benefit II 17% of recipients are over 50 and 16.5% under 25). It is also notable that 55% of Unemployment Benefit recipients are male and 45% are female, compared to Unemployment Benefit II whose recipients are 48.4% male and 51.6% female. 
Unemployment Benefit II
Unemployment Benfit II (Arbeitslosengeld II or “Hartz IV”) is a non-contributory benefit that is available to all people who are capable of working (at least 3 hours per day), which is means tested (they need financial assistance due to insufficient income or assets).
Recipients are paid a monthly basic allowance as well as certain additional allowances. The basic allowance is supposed to cover everyday expenses, e.g. food, clothes and personal hygiene.
Certain groups with higher needs are entitled to an additional allowance. Pregnant women (after the 13th week of pregnancy) receive an additional 17% above their basic allowance. Lone parents receive an additional 36% if they have one child under the age of seven or two or three children under the age of 16, if this is not applicable they receive 12% for every child, up to a maximum of 60%. People with a disability over the age of 15 are generally entitled to an additional 35%, but this can be increased in individual cases. Furthermore people with disability and people who are sick that need a specific diet are entitled to an appropriate additional allowance to cover that. In total, the additional allowances cannot amount to more than the basic allowance.
One-off allowances can be made for the certain costs such as moving into an apartment including household items, for clothes for pregnant women and women who just gave birth, and for the rent or maintenance of physical therapy equipment.
Recipients of Unemployment Benefit II are entitled to an allowance for housing and heating (similar to housing benefit). The allowance is supposed to cover housing and heating in full, if cost is appropriate. This is determined by local guidelines that account for regional differences (like the local housing allowance in the UK). If housing costs are considered to be too high, people are expected to lower their bills, or even move. In that case, the higher amount is paid until it is reasonable to expect the person to move, but generally for a maximum of 6 months.
Owner-occupiers receive an allowance to cover interest, property tax, incidental costs and insurance, however capital repayments are excluded (similar to support for mortgage interest in the UK). Single people under 25 can only receive housing allowance outside the parental home if there are significant social reasons to move out (e.g. psychological problems, addiction, abuse), if the move is necessary to access the job market or if similarly significant reasons are in place. This rationale is sometimes used to support similar proposed changes in the UK.
An additional allowance for education and participation is paid for children and young people, this covers school trips, 70€ at the beginning of the school year and 30€ in the middle of the school year for school related expenses, subsidies for school meals (parents have to contribute 1€) and 10€ per month for sports or cultural clubs.
How are benefits administered?
Different parts of Unemployment Benefits are the responsibility of either the Bundesagentur für Arbeit (Federal Employment Agency) or the local authorities. To increase efficiency, they created Jobcentres so that all benefits could be administered from one place. Because of this, claimants only have to fill in one form (except for a few additional benefits, e.g. help with school trips) to claim benefits. Allowances are granted for 6 months (unless it is known that need for assistance will end before that), after which a follow up application is necessary. Once the application form is handed in, an appointment with employment advisors is automatically arranged.
Similarly to Universal Credit, Unemployment Benefits – including housing allowance – are paid out once a month to a bank account or by cheque. The bank account does not need to be in the person’s name, even though that is advisable. For benefit claims by cheque there is a 2.85€ admin fee which is waived if the person can prove that they cannot open a bank account for reasons that are not their fault. There are additional fees for cashing in the cheque at the post office starting at 3.50€.
Unemployment Benefit II places certain expectations (conditionality) upon claimants; they are expected to independently make an effort to end their need for assistance, furthermore they have to actively participate in all measures and use all options to reduce or end their need for assistance. Therefore people have to take any employment of which they are physically, mentally and psychologically capable of.
If a person rejects a job offer without significant reason their basic allowance is reduced by 30% for 3 months. If a second job is rejected – or any other breach of obligation occurs – within one year the basic allowance is reduced by 60%, and Unemployment Benefit II is completely withdrawn in case of a third time. For claimants under the age of 25 this escalates even faster: if they reject one job offer they lose their basic allowance completely and only receive the allowance for housing and heating, if this happens a second time they lose all benefits. For missing any appointments with the Jobcentre or medical appointments the basic allowance is reduced by 10%. In case the basic allowance is reduced by more than 30% and there are children living in the household, the family will receive food vouchers.
Moving into work
Unemployment Benefit II can be paid to people in work that are not able to sufficiently secure their subsistence through their income. There are certain allowances on income from employment: the first 100€ of income are not considered, from 100€ – 1000€ the withdrawal rate is 80% and 90% from 1000€ – 1200€. An exception to this rule is the child grant of 184€ which is deducted by 100%. Every person also has a savings allowance of 150€ per year of life but at least 3,100€  and up to 750€ for necessary acquisitions. Income and savings beyond the allowances are deducted by 100%.
About 30% of people receiving Unemployment Benefit II are in work. Of those, 16% are in full-time work, 28% are in part-time work and 10% are self-employed.
(Sozialgeld) is available to people that are not capable to work if they live with at least one person that is capable to work, to ensure that all benefits for that household are administered by one authority. The allowances are the same as for Unemployment Benefit II. People who are not capable to work that do not live with a person that is capable to work receive a similar benefit that is locally administered by the social welfare offices.
  Arbeitsmarkt in Zahlen – Statistik über Leistungen nach dem SGB III, https://statistik.arbeitsagentur.de/Navigation/Statistik/Statistik-nach-Themen/Lohnersatzleistungen-SGBIII/Arbeitslosengeld/Arbeitslosengeld-Nav.html?year_month=aktuell
 Arbeitsmarkt in Zahlen Statistik der Grundsicherung für Arbeitsuchende, https://statistik.arbeitsagentur.de/nn_31994/SiteGlobals/Forms/Rubrikensuche/Rubrikensuche_Form.html?view=processForm&resourceId=210368&input_=&pageLocale=de&topicId=217886&year_month=aktuell&year_month.GROUP=1&search=Suchen
 Unemployment Benefit is calculated by deducting national insurance, income tax and solidarity tax of the average monthly income of the past 12 months, up to a maximum of 6,050€ in West Germany and 5,200€ in East Germany in 2015. For the lowest tax class, the maximum amounts of Unemployment benefit are 2202.30€ per month for a person without child, or 2459.10€ for a person with at least one child in West Germany, and 1960.80€ and 2189.40€ respectively in East Germany in 2015.
 Grundsicherung für Arbeitsuchende in Zahlen, https://statistik.arbeitsagentur.de/nn_31994/SiteGlobals/Forms/Rubrikensuche/Rubrikensuche_Form.html?view=processForm&resourceId=210368&input_=&pageLocale=de&topicId=17490&year_month=201502&year_month.GROUP=1&search=Suchen
 An indication of what is considered to be appropriate (higher rates apply in cases of disability)
 E.g. a 20 year old can have 3100€ in savings, a 30 year old can have 3,500€ in savings. Parents receive an extra allowance of 3.850€ per child
 Arbeitsmarkt in Zahlen – Erwerbstätige Arbeitslosengeld II-Bezieher Oktober 2014, https://statistik.arbeitsagentur.de/nn_31986/SiteGlobals/Forms/Rubrikensuche/Rubrikensuche_Form.html?view=processForm&resourceId=210368&input_=&pageLocale=de&topicId=17710&year_month=201410&year_month.GROUP=1&search=Suchen