Réforme Hartz

Problem: Did Hartz reforms really improve the situation on the German labour market?

Concerned market: Labour market

Key-words definition:

- Supply: work supply is composed of employees and unemployed workers who are looking for a job

- Demand: work demand comes from the businesses needs

At the beginning of the years 2000, the German economic situation is critical: unemployment rates break records, the

population ages and the working population keeps diminishing. Germany is then considered as the European black

sheep, and this alarming observation presses the government to take action. The Hartz commission is created in 2003and

a series of reforms are put in place in order to boost the German labour market.

I. Hartz reforms: an unexpected effect on the boosting of work supply and work demand

Four reforms have been put in place and have allowed an increase of labour supply and labour demand.

A) The increase on the labour market (employees)

-Improvement of the public employment service: creation of structures facilitating access to jobs (employment agencies

almost inexistent before), strengthening of the support offered to the unemployed workers, reorganizing of the public

employment service agencies.

- Incentives to look for a job: duration of unemployment benefits are limited, diminishing of their amount and hardening

of the criteria to be able to refuse a job offer.

- Insertion in the labour world: developing internships and training.

B) Reforms leading to an increase in demand (companies hire more)

- Facilitating access to start businesses to the unemployed: new job creations

- Better employment flexibility thanks to Hartz reforms: more flexible system for the employers (legislation regarding

part-time work, temporary jobs, fixed-term jobs and mini-jobs is less severe)

- Diminishing in employer’s social security contributions : recruitement incentives

We note that thanks to the reforms, there is a better adequacy between labour supply and labour demand, which has

allowed the unemployment rates to decrease in Germany. This decrease comes mostly from the increase in part-time jobs

and other atypical jobs such as mini-jobs or temporary work. These jobs have diminished the work time per head and

have led to negative consequences

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