Germany reaches compromise plan on landmark welfare reform - sources

Reuters

Published Nov 22, 2022 06:06AM ET

Updated Nov 22, 2022 06:17AM ET

BERLIN (Reuters) -Germany's ruling coalition parties and opposition conservatives reached a compromise on a major welfare reform on Tuesday, according to a proposal seen by Reuters, paving the way for new measures to support the unemployed in gaining vocational skills.

Conservatives in the Bundesrat upper house had blocked the reform before wrangling with the governing parties to find a compromise that sources said they expect a parliamentary mediation committee to approve at a meeting on Wednesday.

The welfare reform will introduce Buergergeld, or "citizens' money", to replace the Hartz IV system brought in from 2005, which sanctions people who reject job offers.

The overhaul is aimed at putting more money into the pockets of people on state benefits and to address a shortage of skilled workers in Europe's largest economy.

However, conservatives in the Bundesrat upper house arguing that the reform would leave low-income earners with less money than those benefiting from the changes - a charge the government rejected.

Under the compromise proposal, a planned waiting period of two years, during which housing costs would be covered without further review, will be reduced to one year. A so-called trust period of six months, during which sanctions for lack of cooperation would have been waived, will be dropped altogether.