Limit the entitlement period for unemployment benefits to twelve months
Shortening the entitlement period for receiving unemployment benefits – i.e., a return to the situation that prevailed until the mid-1980s – would increase incentives for the unemployed to take up paid work and cheapen the labor factor by lowering the contributions to the statutory unemployment insurance fund. This would strengthen the demand for labor.
(Proposal 7, section 441)
[ . . . ]
Integrate unemployment assistance and social assistance
The amalgamation of unemployment assistance and social assistance would lower fiscal costs, yield efficiency gains, and enhance the incentive to work.
(Proposal 8, sections 442 et seq.)
[ . . . ]
More employment in the low-wage sector requires a structural reform of the social assistance scheme
In order to improve the incentive of social assistance recipients, the standard rate paid to social assistance recipients who are able to work should be reduced – in return, social assistance recipients should be able to keep a larger part of any income earned on the labor market than is currently the case. Those who cannot find a job on the primary labor market would have to agree to make their labor power available to municipal employment agencies if they wish to retain their current level of benefits.
(Proposal 9, sections 446 et seqq.)
[ . . . ]
Component III: Improve coordination on the labor market
31. The overall strategy of the German Council of Economic Experts further envisages improving the coordination between demand and supply on the labor market by reducing labor market inflexibility. The third component shows what wage negotiators and lawmakers can do to increase wage flexibility:
Greater flexibility – responsibility of wage negotiators
Wage negotiators could create greater flexibility in employment contracts, especially in the field of compensation, by establishing procedures according to which firms would be able to deviate from the standard framework agreement, for example by means of variable wage components with profit-related bonuses or through agreements that take job security into account (opt-out clauses [Öffnungsklauseln]). More widespread use should also be made of lower-than-standard starting pay rates [Einsteigertarife] for unemployed persons taken on.
(Proposal 10, sections 462 et seqq.)
Change the statutory rules in favor of decentralized wage-setting
The statutory rules need to be changed in key areas in order to create a legal basis for decentralized wage-setting. Job security should be taken into account within the framework of the favorability principle [Günstigkeitsprinzip], and the current prohibitory provisions of Section 77 (3) of the Industrial Constitution Act [Betriebsverfassungsgesetz] that apply to enterprises not covered by collectively negotiated wage agreements should be scrapped.
(Proposal 11, sections 466 et seqq.)
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