Interesting piece in the FT today about the imagined consequences of the new German “Hartz IV” laws. These laws will among other things reduce non-means-tested unemployment benefits to one year’s duration. The measure forms part of the package of labour market ‘structural reforms’, and personally I see little to argue with here.
The interesting part relates to the perceived consequences:
Last week in the eastBerlin suburb of Hellersdorf a man forced three youngsters at gunpoint to take off their clothes, burn them, and dance around an improvised bonfire. The incident may have looked perplexing, but local reaction quickly blamed the usual suspect: the reform of Germany’s unemployment laws.
“When the new rules about unemployment benefits take effect, incidents like this will multiply,” a resident told the Berliner Zeitung daily. “I’ll have to get a pit-bull.”
Now as the article quickly goes on to point out, there is no reason whatsoever to imagine that the two events (the Hartz laws and the “bonfire of the vanities”) are in any way related, what is interesting is to note that some people see them as being so. This must be some reflection of the national mood in Germany.
As the Hellersdorf incident shows, anything that goes wrong in Germany, it seems, can be blamed – however wrongly – on Hartz IV. In another case, press reports warned that unemployed parents would be forced to raid their children’s piggy banks before they receive benefits.
Adding to the gloom is last week’s news that industrial production in Germany declined in June at the fastest rate in the last ten months. I just don’t see where people get the ‘recovery round the corner’ idea here.
Just back to the FT article for a moment, ‘our Elga’ is still as much in fashion as ever I see:
For Elga Bartsch, economist at Morgan Stanley, “Some people used to say the proof that Agenda 2010 did not go far enough was that no-one had taken to the streets. Well, now they are taking to the streets.”
My only difficulty this time is that I’m not sure whether this is meant to be a good thing :).