Unemployment compensation in Germany: provisions and institutional changes since the 1980s

Abstract

Social protection in case of unemployment has always been a particularly contentious issue. This paper focuses on institutional changes in the unemployment compensation system in Germany since the 1980s. It starts with a description of key features and the structure of the unemployment insurance system. The paper goes on to show how insurance coverage, benefit generosity (in terms of amount and duration of benefits), and eligibility requirements for drawing on unemployment benefits have evolved over time. Nearly all aspects of unemployment benefits have been reduced since the 1980s. An exception to this rule can be seen in the duration of benefits; they were first extended and then subsequently reduced. Elsewhere, the pattern has been of cutbacks. For example, the scope of insurance (measured as the proportion of the labour force being insured) was reduced. This decline, however, was due more to changes in the labour force than to direct government intervention. Replacement rates for unemployment benefits and assistance were cut. In the case of the latter these were transformed into a flat-rate benefit. Finally, regulations regarding eligibility and criteria for qualification and disqualification became increasingly strict. (author's abstract)