Reform of placement services

Transcription

1 Mutual Learning Programme 2010 Peer Reviews Autumn MUTUAL LEARNING PROGRAMME: HOST COUNTRY OFFICIAL PAPER - GERMANY Reform of placement services Peer Review on Systematic Preventive Integration Approach (Support) for Jobseekers and Unemployed Germany, October 2010 A paper submitted by the Federal Ministry of Labour and Social Affairs Date: 14/10/2010

2 In ,2 million people took up employment in Germany, 3,5 mio of which had previously been registered as jobseekers or unemployed. It is the role of the public employment service to provide free and impartial services for maintaining the supply and demand balance on the labour market and to make jobseekers fit for the labour market. As such, it is one of the main pillars of social security in Germany. The public employment service (hereinafter PES) provides placement services through its 178 employment agencies and around 610 local offices to persons entitled to unemployment benefits because of contributions to unemployment insurance and to persons not eligible for social benefits because of sufficient means of livelihood. In Germany, the Federal Employment Agency represents the traditional employment service. The introduction of a basic income support scheme for jobseekers in 2005 has improved the support available to persons in need of assistance, as a rule people having been long-term unemployed. Various pilot projects have shown vocational reintegration of these recipients of transfer benefits to be successful only if the principle of "challenge and support" is implemented by one agency. In order to make better use of the competencies and services of the local authorities (e.g. child care, debt and drug counselling) in the reintegration process, agencies administered jointly by the PES and the local authorities provide the services for recipients of basic income support. In some regions, the local authorities have assumed full responsibility for the services provided to basic income recipients. Organisation of the basic income support scheme for jobseekers with a total of 437 agencies is currently being further developed. There are two statutory frameworks that govern the public employment services: the unemployment insurance scheme financed by contributions is provided for in Book Three of the Social Code (SGB III), the tax-funded basic income support scheme for jobseekers is provided for in Book Two of the Social Code (SGB II). The law sets the procedure for the placement process: o o o The placement efforts should begin as early as possible. Therefore, there is a requirement in Germany to register without delay with the PES after receiving notice of dismissal. The PES needs to know a jobseeker's strengths and shortcomings. Therefore, a differentiated profiling is the starting point of all placement efforts. This is the only way to provide targeted support and placement. An integration agreement between the placement counsellor and the jobseeker commits both sides to the targets of the placement process and the scope for support and challenge. This provides for transparency throughout the whole placement process

3 o Whenever necessary, the employment agencies may call upon the competencies and capacities of private service providers. This enlarges the range of support available to bring people into employment. o Finally, an important role of the PES lies in making employment opportunities known. The PES' internet-based job pool provides access to information on all known job openings in Germany. Thus it is possible to quickly establish contacts between employers and employees and to encourage jobseekers to become active on their own. The PES' job pool has 674,232 visitors and more than 9,1 mio page-views per day and is the most popular online job portal in Germany; it contains data on 3,523,323 applicants, on 413,983 vacancies that the PES is mandated to fill and on 587,915 openings that employers posted directly (August 2010). The implementation of the statutory provisions is regulated by the PES or the bodies responsible for basic income support by means of operation guidelines. In order to structure the placement process and make it more systematic the PES has developed an integration concept applicable under both statutory frameworks. This so-called "4-Phases Model" provides a structure for interaction with jobseekers. The integration concept is based on statutory provisions according to which an initial "potential analysis" or profiling takes place to identify labour market related support needs and to set out the integration objective. An integration agreement based on the initial profiling is to define concrete steps for eliminating obstacles to placement and the jobseeker's obligation to undertake personal efforts. Progress concerning the measures set out in the agreement is to be examined at specified intervals in order to amend the placement strategy as necessary. In order to allow for such an individualized, needs-oriented and flexible placement process, a number of provisions were introduced in Germany that provide the local employment agencies and the bodies responsible for basic income support with more leeway and discretion. Additionally to the organisational changes of processes and of the structure of the employment services, placement staff has been reinforced time and again. Simplifications in benefit legislation have made it possible to reassign staff for better placement services. In Germany, the framework conditions for successful placement services are quite favourable allowing placement counsellors to help soften the effects of the financial and economic crises by developing a placement strategy based on jobseekers' potentials, using labour market instruments to eliminate obstacles to placement and offering concrete placement proposals. An excerpt taken out of the factsheet Social Security at a Glance (ed. Federal Ministry of Labour and Social Affairs) is attached

4 Promotion of employment Arbeitsförderung Book III of the German Social Code As many people as possible should have work. The employment promotion policies enacted in Volume III of the Social Code aim to achieve this by improving the earnings prospects of people without work and by matching up supply and demand on the labour market. These policies are implemented by the Federal Employment Agency in Nuremberg (Bundesagentur für Arbeit) and its local employment agencies (Agenturen für Arbeit). Tasks and benefits The main tasks of the Federal Employment Agency are: Careers guidance and orientation Job and traineeship placement Improving people s chances on the jobs market Integrating people into employment in other ways Income replacement benefits Employer guidance The Federal Employment Agency is there for employers and employees alike. It provides various kinds of help: For the unemployed and for job seekers Choosing a career Finding jobs, training places, workers and trainees Safeguarding and creating jobs Vocational training Placement assistance Integration into working life Fighting long-term unemployment Becoming self-employed When employers become insolvent The careers guidance and orientation, and the job and traineeship placement may be used whether contributions or not being have paid. To receive other help - such as unemployment benefit - the applicants need to have been in work and paying statutory insurance contributions in the past

5 Career orientation Systematic career orientation can help people in choosing an occupation and thus positively influence the career paths of young and old alike. It can also aid the careers guidance process by providing in-depth information on issues concerning career choice, occupations, job requirements and opportunities, routes into a chosen career path, funding for vocational training and education, and work-related developments in business, local administrations and the jobs market in general. The service includes visits to schools to talk with 12th and 13th graders, career orientation events in careers information centres (Berufsinformationszentren, or BIZ) and online and print media published by the Federal Employment Agency (BA). Local employment agencies can also promote upcoming school-leavers from lower-level schools (the equivalent of non-grammar schools) by providing in-depth career orientation and career choice courses. Careers Guidance Careers guidance targets both young people and adults. It involves the provision of advice and information concerning career choice, occupations and the respective requirements, funding options for vocational education and training, important developments in the working world, the situation and expected trends in the jobs market, and finding a training place or permanent job. For young people wanting to study at college or university, the careers advice officers at local employment agencies provide a specially designed advisory service for those leaving school with a certificate of higher education (Abitur). They advise on choosing a course of academic study, explain the acceptance requirements and what is expected of students on particular courses, outline the job opportunities and go through the various funding options. They work with teenagers and young adults to identify their personal goals, employment options and possible alternatives. Labour Market Advisory Service The labour market advisory service provided by the local employment agencies targets employers and is designed to support them in filling trainee places and vacant positions. Employers are informed about the current situation in the labour market, expected trends and available occupations. They are schooled in job structuring, employment conditions, working hours, on-the-job training and education, and integration of hard-to-place trainees and employees. Vocational training and work placement Anyone seeking work can use the services of an employment agency, whether they are unemployed, are about to lose their job or are looking for a career change. Young people seeking vo

6 cational training are also entitled to assistance. Work placement is the employment agencies main task. The remaining benefits and assistance services for employment promotion are only provided where long-term integration into the labour market or the vocational training market cannot succeed without them. As soon as people know when their current employment will come to an end, they are automatically required to register in person at the local employment agency. Registration must take place at least three months before their employment is due to end. If the time between receiving the notice and the last day of work is shorter than three months, the people must report to the employment agency no later than three days after receiving the notice. To comply with the deadline, the people may register by telephone on the condition that they make an appointment to register personally afterwards. Employment agencies can assign job placement or job placement activities to third parties to facilitate occupational integration. Anyone who is unemployed for longer than six months is entitled to make use of such measures. In certain circumstances, unemployed workers are entitled to a placement voucher, allowing them to use a private job placement service at the employment agency s expense. Guidance and placement assistance Placement budget If people are looking for work or a training placement and are unemployed or in danger of becoming unemployed, they may be able to claim help obtaining guidance or a work or training placement from the local employment agency. Placement guidance and assistance provided via the placement budget take a flexible, targeted and needs-oriented approach to removing potential obstacles while taking account of the specific needs of people looking for work or vocational training. The placement budget thus offers broad scope in promoting individual employment or training prospects to ensure the right type of assistance is provided in each case. Accordingly, rather than applications for assistance being governed by detailed requirements, placement and advisory staff look at each case individually to assess the specific type of support and assistance that can be applied for from the placement budget. Approval of applications is subject to the requirement that the guidance and placement assistance is necessary in order to remove a real obstacle in searching for or taking up a training placement or an offer of work and the employer in question does not provide the services involved. The amount claimed from the placement budget must also be commensurate with the services provided

7 Guidance and placement assistance may also be provided to help in searching for or taking up a training placement or offer of work in another EU member state, in a Signatory State to the Agreement on the European Economic Area (EEA) or in Switzerland. This is based on the condition of a minimum of 15 hours of training or work per week. Improving prospects for integration These measures include training courses and practical activities that aim to improve the prospects of those seeking vocational training, the unemployed and those facing unemployment and seeking new work for integration into the labour market. They may also be a means of assessing a person s readiness and ability to work, to identify, alleviate and reduce obstacles to their entering the labour market, to place them in an employment relationship in which they pay compulsory contributions, assist them in becoming self-employed or stabilise their employment prospects. Costs of taking part in the measures are paid for up to a reasonable amount. Unemployment benefit continues to be paid if the person is entitled to it. The duration of the measures provided must be commensurate with their purpose and content. The measures may also be provided by employers, either in whole or in part, up to a maximum period of four weeks. Participation is proposed or approved by the local employment agency. Help becoming self-employed Start-up grants Workers who end their unemployment by taking up self-employment as a main occupation are entitled to a start-up grant (Gründungszuschuss) to cover living expenses and social insurance contributions for the first few months of self-employment. How to claim The start-up grant is available to workers who still have at least 90 days entitlement to unemployment benefit on entering self-employment. To qualify for the grant, applicants must demonstrate that they have the necessary knowledge and skills to carry out the occupation concerned. They must also present to the employment agency a statement from a knowledgeable authority that their self-employment is potentially sustainable. This statement can be provided by various bodies, including chambers of commerce, guilds, industry associations and banks. A start-up grant cannot be approved if there are or would be grounds for the applicant s entitlement to unemployment benefit to be suspended under sections of Book III of the Ger

8 man Social Code (SGB III). Claimants who reach the age of 65 while still receiving the grant cease to be entitled to it on the first of the month following their 65th birthday. The grant is not available for 24 months after the end of a grant of assistance with entering into self-employment under SGB III. Amount and duration The start-up grant is paid out in two phases. For the first nine months, self-employed start-ups receive a grant matching their last unemployment benefit to cover living expenses plus 300 a month for social insurance. The 300 a month for social insurance can be paid for a further six months if the claimant can demonstrate that they are actively trading and working for the business on a self-employed basis as their main occupation. Initial financial support Applicants in need who claim unemployment benefit II under Book II of the Social Code (SGB II) can receive initial financial support (Einstiegsgeld) to help them enter employment or self-employment. The support is provided by the local agency responsible for them - that is, the local Arbeitsgemeinschaft (joint employment agency) or municipal authority. How to claim The initial financial support can be granted on taking up employment or self-employment and is provided as a supplement to unemployment benefit II. Other assistance is available for self-employed start-ups (such as to purchase equipment) if this is necessary for successful integration into working life. The case manager, who is best placed to judge the applicant s individual situation, can approve initial financial support in the form of a variable grant together with other work integration benefits if he or she thinks it necessary. It is a precondition that the employment or self-employment must be capable of ending the claimant s dependence on assistance. Amount and duration Case managers are not bound by statutory rules as to the amount of initial financial assistance. The amount depends on the length of unemployment and the size of the claimant s household. There is no legal entitlement to initial financial assistance. Promotion of vocational training Promotion under Book III of the Social Code (SGB III) Initial vocational training is becoming increasingly important in the jobs market due to the sharp drop in the number of jobs available for unskilled and semi-skilled workers. Employment promotion policies thus offer a variety of opportunities to assist young people in their search for vocational training: - 8 -

9 Vocational training grants (BAB) Requirements To provide opportunities for vocational training in a recognised occupation, including vocational training provided in accordance with the Federal Act on Senior Citizen s Nursing Care (Altenpflegegesetz), either with a company or in an external training institute, the Federal Employment Agency offers vocational training grants (Berufsausbildungsbeihilfe) to trainees who are unable to live at home with their parents during their training because the training venue is too far away. Trainees over the age of 18 or who are or have been married and have at least one child may also receive a vocational training grant even if they do not live with their parents. Under certain circumstances, vocational training grants (BAB) may be provided for a subsequent course of vocational training where it is considered appropriate. Despite having completed their vocational training and possessing the associated qualifications, some young people still lack employment opportunities in their chosen occupation. A second course of vocational training that would improve their employment prospects should not be jeopardised because a young trainee or apprentice lacks the financial means to cover their living expenses. Foreigners who have a temporary suspension of deportation ( Duldung ) and are resident in Germany may receive assistance while receiving on-the-job training with an employer provided that they have been in the country either legally or subject to permission to remain ( Aufenthaltsgestattung ) or to temporary suspension of deportation for at least four years without interruption. Type and scope of promotion The amount of the grant depends on the type of accommodation involved, the amount of pay the trainee receives and the annual income earned by the trainee s parents or partner. In some cases, living expenses, travel expenses, child care costs and outlay for educational materials and working clothes can be taken into consideration on a lump-sum basis. Vocational training grants are also used to promote participation in pre-vocational training schemes. In such cases, course costs, travel expenses, child care costs and outlay for educational materials and working clothes are reimbursed directly regardless of how much the trainee earns. Pre-vocational training schemes (BvB) Young people who are unable to enter into vocational training for whatever reason can be given grants by employment agencies to take part in pre-vocational training schemes. These serve career orientation, career choice and targeted preparation for vocational training

10 Under the pre-vocational training scheme, young people who have left school have a right to receive support in pursuing further education to attain a school leaving certificate (Hauptschulabschluss). Entry qualifications The Federal government programme to promote initial vocational training supplements the commitment made by Germany s top industry associations to make some 40,000 job placements available for initial vocational training with an employer. Requirements Entry qualifications received in initial practical training give young people with limited placement opportunities new perspectives for entering into vocational training. They also build bridges for young people who do not yet have the skills required for entry into a vocational training or who have learning difficulties or are socially disadvantaged. Type of scope of promotion Under the programme, employers who take on young workers in a pre-vocational training position for between six and twelve months receive 212 per month plus a combined amount for social insurance. Training bonus Many young people fail to make the transition from school to work in the year they leave school because they are unable to find a training placement or apprenticeship. This largely applies to school-leavers who either have a school-leaving certificate from a Hauptschule or no school leaving qualifications at all. To improve employment opportunities for this group of young people, a training bonus has been introduced in the form of a single, lump-sum grant paid to employers who create additional training placements for young people who are difficult to place. Conditions The training bonus is paid to employers who create a new training place in order to take on an older applicant with no school qualifications or with a school-leaving certificate from a special needs school or a Hauptschule. The bonus is also paid to employers who create a training place for a young person with learning difficulties or who is socially disadvantaged and left general education in the previous year or earlier. Employers may also receive the training bonus in the form of a discretionary grant if they fill an additionally created training place with an older applicant who possesses a general education school-leaving certificate (mittlerer Schulabschluss). The training bonus may also be claimed for

11 trainees with higher school-leaving qualifications if they have been looking for a training placement without success for two years or more. Further, employers may receive the training bonus if they take on additional trainees whose training contract or apprenticeship was terminated on grounds of insolvency or if their place of training has been decommissioned or closed down. Type and scope of grant The bonus amounts to 4,000, 5,000 or 6,000, the amount paid being dependent on the trainee s pay in the first year of training. The bonus is increased by 30 percent for disabled and severely disabled young people in order to improve their chances of receiving employer-provided training. The bonus is paid in two instalments: 50 percent upon completion of a probationary period and the remainder when the trainee is registered for the final exam. The training bonus is available for a limited period only, until the end of Educational support (abh) If there are difficulties in training, trainees or trainees who either prematurely end their training or successfully complete it can in certain circumstances receive additional educational support during vocational training with a company. Vocational training in training institutes (BaE) Young people who for reasons relating to their own person are unable to enter into a traineeship with a company can receive additional help in commencing and even completing vocational training in a state-recognised training occupation at a training institute and thus gain a recognised vocational qualification. Socio-educational support and organisational support Small and medium-sized businesses can receive administrative and organisational support when taking on trainees who are socially disadvantaged or have learning difficulties. This is also available along with socio-educational support for young people participating in initial training or pre-vocational training schemes under the Vocational Training Act (Berufsbildungsgesetz). Integration support Seamless transition from school to vocational training is the best start to working life. To enable as many young people as possible to make this transition, the German government has borrowed from existing voluntary initiatives to devise an integration programme which will initially run as a pilot scheme. At 1,000 secondary schools, full-time vocational integration specialists will support up-coming school leavers in the transition from school to vocational training. Activities may be supported as long as they begin no later than 31 December

12 Integration support involves one-on-one support in the lead up to school-leaving exams, in career choices and in the search for a training placement or apprenticeship. The period of support begins two years prior to the date of school leaving exams and usually ends six months after vocational training begins. The aim is to increase the number of school leavers who leave school with school-leaving qualifications and reduce the number of trainees who abandon their training prematurely. Promotion of further vocational training How to claim If people take part in further training activities, they can claim a vocational training grant if They are unemployed and further vocational training will assist their integration into the labour market, is necessary to avoid possible unemployment or if it becomes apparent that training is needed to compensate for a lack of initial vocational training. They have taken part in an advisory session at the employment agency prior to training. The training measures are approved and the training provider is accredited. Type and Scope of Promotion Education vouchers (Bildungsgutschein) are issued to all entitled workers. The voucher is usually allocated for a specific educational goal and is limited to a particular geographic area. It allows anyone interested in further training to choose an accredited training provider and recognised training measure. The employment agency provides information on available training measures (for example via the KURS online database). Selection of the actual training provider lies solely with the voucher holder. The education voucher must be handed over to the training provider who bills the employment agency directly. If people enter into further training, the employment agency can assume the following costs: Course costs (course fees, including the costs of educational materials, working clothes, exam fees for state or generally recognised interim and final exams, partial exams) and any costs arising from having to take part in aptitude testing (say a health check) prior to starting the training course. Travel expenses Accommodation and meals expenses at a training centre that is too far away for them to live at home. Child care costs ( 130 per child). Special vocational training schemes are also in place for people already in work

13 1. Further on-the-job training for low-skilled and older workers (WeGebAU) is available for: Low-skilled workers with no school qualifications or with school qualifications but who were either trained on the job or perform unskilled work and have done so for at least four years and can no longer work in the job they originally trained for. Workers aged 45 and over who are employed by an employer with a workforce of less than 250. Further training measures can involve those which: Provide knowledge and skills which can generally be used in the employment market Lead to a recognised occupation Conclude with a certified partial qualification or a cross-industry or cross-sectoral qualification Conclude with a certified partial qualification or a cross-industry or cross-sectoral qualification Employees wishing to take advantage of the scheme receive education vouchers which allow them to choose from recognised further education and training courses. The employment agencies reimburse employees and training providers the full amount of the cost of training and also pay a grant towards the cost of any other further training that may be necessary. Employers receive a grant towards the continued payment of wages and salaries and social insurance contributions during such training-related absences. 2. Training while working short-time An entitlement to this type of support is dependent on receipt of short-time pay. A distinction is made between low-skilled and skilled workers. The duration of the training should not exceed the expected period of short-time work. The amount of funding made available is subject to the type of training, the size of the workforce and the target group. Also, foreigners and people with immigrant backgrounds may also make use of a special training advisory and information service run by a nationwide network (IQ-Beratung durch Qualifizierung). The service offers information on specific integration opportunities

14 Promotion of the integration of disabled persons into the jobs market through In accordance with Book III of the German Social Code, disabled persons are those whose chances of participating or continuing to participate in the labour market are reduced (not just temporarily) on account of a disability as defined in Section 2 (1) of Book IX of the German Social Code and who need help integrating. Persons who are threatened by a disability that threatens to hinder their integration are deemed equivalent to disabled persons. Under Section 2 (1) of Book IX of the German Social Code, a person is disabled if their physical ability, mental capacity or psychological health is likely to be impaired for longer than six months to the extent that they deviate from that typical for the person s age and thus hinder their participation in society. They are deemed at risk from disability if such impairment is anticipated. Integration support includes advise and job placement that offers improved perspectives for integration along with the promotion of employment, self-employment, initial vocational training and further vocational training. Initial and further vocational training are provided in specially equipped rehabilitation centres. Under Book III of the German Social Code, promotion of initial and further vocational training may also take place in a workshop for the disabled. Employers can receive support in helping disabled and severely disabled people to integrate: Integration subsidy and subsidies to reimburse the costs of vocational training Trial or pre-employment for disabled persons Work aids Individuals who because of their disability and despite making use of all available support to compensate for their disadvantages are unable to enter into vocational training, supported employment can result in them being placed in work. Under supported employment, disabled persons with special assistance needs are placed in new job opportunities that meet their abilities and leanings. In line with the principle of placement first, training second, they are trained and supported on the job with the ultimate aim of them becoming permanently employed with the respective employer. This provides new opportunities on the general employment market. The benefits and services take in individual in-house training and supported employment. In-house training is possible for a period of two and no more than three years. The provision of non-workrelated learning materials, key skills and measures towards personal development are integral components of the training provided. Participants are covered under the social insurance scheme. Contributions are paid by the integration services, usually the employment agency. If continued support is necessary following integration into an employment relationship in which the employee pays compulsory contributions, it is usually provided by the integration offices in the form of supported employment

15 Wage replacement benefits Unemployment Benefit To receive unemployment benefit (Arbeitslosengeld), people must: be unemployed have personally registered as unemployed have completed the qualifying period be actively seeking work and be available for work. People are classed as unemployed if they have no work at all or if they work for less than 15 hours a week for an employer or on a self-employed basis. To register as unemployed they must visit the employment agency in person and report that they have become unemployed; they cannot register by phone or by post. They can register for a maximum of three months, and must renew the registration before it expires if they are likely to remain unemployed. To complete the qualifying period, the unemployed must accumulate at least twelve months (360 days) of Federal Employment Agency contributions, either by working or otherwise (for example, by claiming sickness benefit), within the timeframe of the last two years. Anyone who provides home nursing care for a dependant, is self-employed for at least 15 hours per week or is employed outside Germany in a non-eu country or in a country not associated with the EU, may make voluntary unemployment insurance contributions. This gives people who are not required to pay mandatory contributions the opportunity to pay a low, voluntary contribution to safeguard their entitlement to unemployment benefit. The applicant must, however, have paid mandatory contributions at an earlier date. The amount of unemployment benefit they receive is based on their average weekly pay on which statutory insurance contributions were levied in the last year before becoming eligible to claim (the assessment period). The resulting gross earnings figure (gross assessed earnings) is then subject to deductions at a fixed rate. These deductions take the form of social insurance contributions in an amount of 21 per cent of the gross assessed earnings, income tax and solidarity tax. The unemployment benefit is 67 per cent of the net assessed earnings (gross assessed earnings after deductions) if they have at least one child who they can claim tax relief for, and 60 per cent if they do not

16 While they are drawing unemployment benefit, the employment agency pays their statutory health insurance, long-term care insurance and pension contributions. The benefit is transferred at the end of each month onto a bank account they specify. How long they can claim unemployment benefit for depends on their age and how long they have been in contributory employment within the reference period (which has been extended by three years) and their age at the time they became unemployed. Entitlement periods: Minimum time paying Age Period of entitlement contributions 12 months 6 months 16 months 8 months 20 months 10 months 24 months 12 months 30 months months 36 months months 48 months months Any entitlement to unemployment benefit expires if they complete another qualifying period. Any remaining entitlement is then added to the new entitlement, up to the maximum period for their age. Short-time allowance When trade is slack, companies sometimes temporarily cut working hours and put the workforce on short time. In this event, the local employment agency pays a short-time allowance (Kurzarbeitergeld). Continued payment of the allowance depends among other things on the jobs being retained. People can claim the short-time allowance if: They are on reduced pay or receive no pay at all and there has been a cut in working hours The cut in working hours is substantial Requirements relating to the employer and employees have been met The employer or works council reported the cut in hours to the local employment agency The cut in working hours is deemed substantial if it is temporary and unavoidable and if at least a third of the workforce at the same establishment suffers a cut in gross monthly pay of 10 per

17 cent or more. In light of the impact of the financial crisis on the economy, the threshold for substantial cuts in working hours has been lowered. Until 31 December 2010, a cut in working hours is still deemed substantial if in the respective month less than a third of the workforce suffers a cut in gross monthly pay of 10 percent or more. The allowance is usually paid out by the employer and refunded by the local employment agency on application by the employer or works council. The amount of the short-time allowance is a percentage of the net loss in pay resulting from the difference between the gross pay on full time and the gross pay on short time: 67 per cent if they have at least one child who they can claim tax relief for and 60 per cent if they do not. Until 31 December 2010, employers may apply to be reimbursed for half of the employer s portion of insurance contributions paid for short-time work. Contributions paid for training during short-time work will be reimbursed in full. Insolvency allowance Insolvency allowance (Insolvenzgeld) is paid if the employer becomes insolvent and the worker has not received all outstanding pay. The workers can claim insolvency allowance if they re owed pay from the last three months they worked before insolvency proceedings started, before a petition to start insolvency proceedings was dismissed on account of insufficient assets, or if the employer has not filed for insolvency and manifestly does not have sufficient assets to do so, before the employer finally ceased trading in Germany. That is, insolvency allowance covers outstanding net pay if the gross earnings do not exceed the gross assessed earnings (2010: 5,500 in western Germany and 4,650 in eastern Germany). The employment agency also pays outstanding mandatory social insurance contributions (health, pension and long-term care insurance) and unemployment contributions for the last three months. Insolvency allowance must be applied for at the relevant local employment agency within a limitation period of two months after before insolvency proceedings started, before a petition to start insolvency proceedings was dismissed on account of insufficient assets, or if the employer has not filed for insolvency or before the employer finally ceased trading. Seasonal short-time allowance: Promoting all-year work in the building trade In the main building trade, the roofing trade and the gardening and landscape gardening trade, pay lost due to a cut in working hours during the bad-weather season (1 December to 31 March) can be replaced by seasonal short-time allowance (SaisonKurzarbeitergeld), which is

18 financed out of unemployment insurance. The amount of seasonal short-time allowance is the same as that paid for short-time working allowance. A number of supplementary benefits can be paid out of a winter employment fund financed by trade employers and workers: For trade employees, a winter expenses allowance (Mehraufwands-Wintergeld) of 1 (after deductions) per actual hour worked between 15 December and the last day of February. For trade employees, an additional winter allowance (Zuschuss-Wintergeld) of 2.50 (after deductions) for each hour lost that has been made up out of a flexible working time account. For employers, a refund of the employers social insurance contributions paid for employees receiving seasonal short-time allowance. This relieves employers of much of the expense of keeping workers on through the winter months. Seasonal short-time allowance and the related supplementary benefits are generally paid out by the employer and refunded by the responsible employment agency on application from the employer or works council. Transfer benefits Transfer short-time allowance Workers are entitled to transfer short-time allowance (Transferkurzarbeitergeld) if a major change in their employer s business causes them to suffer a sustained unavoidable loss of working time and pay, and: The change in the business results in adjustments to the workforce. The affected workers are brought under an organisationally separate unit (usually a Transfergesellschaft) and taken out of the production process. Certain other requirements relating to the employees are met. The sustained loss of working time is reported to the employment agency by the employer or works council. The objective is for the workers to be transferred from their existing employment to other employment without an intervening period of unemployment. The amount of transfer short-time allowance is the same as that of short-time allowance. The maximum period of entitlement is 12 moths. While claiming transfer short-time allowance, the employer must offer the employees other work opportunities and where they lack the necessary skills must take action to improve their integration opportunities. Where funds are avail

19 able, the employment agencies may be subsidised in training costs under the provisions of the European Social Fund. Transfer short-time allowance is generally paid out by the employer and refunded by the responsible employment agency on application from the employer or works council. Transfer programmes Workers at risk of unemployment due to a change in their employer s business or on completion of vocational training are entitled to funding to take part in a transfer programme if: The programme is carried out by a third party The employer makes a suitable financial contribution The purpose of the programme is to help integrate workers into the labour market Quality assurance criteria are adhered to The aim of transfer programmes is to provide incentives for employers to provide funds for meaningful integration activities during the period of notice. The employment agency pays half the cost of the programme as a grant, the maximum grant being 2,500 per grant-assisted worker. Worker integration Integration subsidies How to claim Employers can receive wage subsidies to help integrate workers who are difficult to place on grounds of their personal circumstances. The subsidies are based on the extent to which a worker s productivity is reduced and the degree of help they need to settle in. Integration subsidies are paid against the regular payments employers make in accordance with collective agreements or locally accepted wage rates and a fixed amount for social insurance contributions. One-off wage payments are not covered by the subsidies. Integration subsidies may also be paid to employers who employ people who have already worked for them for up to three months or were employed in a job that was not subject to mandatory contribution payments. Amount and duration of subsidy payments The amount of the integration subsidy may not exceed 50 percent of the subsidizable wage including the employer s full share of social insurance contributions and may be paid for no longer than twelve months

20 For severely disabled persons or persons with other degrees of disability, the subsidy can amount to up to 70 percent of the subsidizable wage including the employer s full share of social insurance contributions and be paid for up to two years. If claimed for longer than twelve months, the integration subsidy is reduced after the twelfth month commensurate with the increase in the worker s productivity, subject to a minimum reduction of 10 percent. For workers aged 50 and over, integration subsidy may be paid for up to 36 months. This subsidy is reduced by 10 percent each year after an initial twelve month period. Employers are under no obligation to continue the worker s employment or repay the subsidy once the subsidy ceases. This rule for older workers is valid until 31 December Integration subsidy for severely disabled persons with special needs How to claim Employers can receive wage subsidies to help integrate severely disabled persons with special needs; that is, workers who need help integrating and who are classed as severely disabled persons under Section 104 (1) 3 a-d of Book IX of the German Social Code or whose disability is deemed equivalent to a severe disability by the Federal Employment Agency under Section 2 (3) of Book IX of the German Social Code. The subsidy may also be paid in the form of subsidised limited pre-employment (e.g. job creation schemes). Amount and duration of the subsidy The subsidy may be paid in an amount up to 70 percent of the subsidizable wage for a maximum of 36 months; or up to 60 months for severely disabled persons aged 50 or over and 96 months for severely disabled persons aged 55 or over. The decision as to the duration of the subsidy must also take reasonable account of any other subsidized employment with the same employer. The decision as to both the amount and the duration also includes consideration of whether the disabled person was employed other than by statutory obligation or in a manner that exceeds the employment obligations set out in Part 2 of Book IX of the German Social Code. After a period of twelve months (24 months for older severely disabled persons) the integration subsidy is reduced by 10 percent each year commensurate with the anticipated increase in the worker s productivity. The employer is not required to refund the subsidy or continue to provide employment for workers aged 50 or over

21 Integration subsidy for young workers For young workers under 25 with a recognised vocational qualification, an integration subsidy is paid for a maximum twelve months. The amount of the subsidy may not be less than 25 percent or exceed 50 percent of the subsidizable wage (limited to a maximum 1,000). The training grant for young workers is also available to employers who take on young workers aged under 25 who do not have a recognised vocational qualification and have been unemployed for more than six months. The subsidy equals 50 percent of the subsidizable wage (also limited to a maximum 1,000) and comprises a grant towards wage costs and a grant to cover vocational training costs. At least 15 percentage points must be used for training purposes. The duration of the subsidy depends on the employer s integration needs, although it may be paid for no longer than twelve months. It must be remembered that benefits provided under Book III of the Social Code which lead to a recognised vocational qualification training take priority over the grant to cover the costs of vocation training. The vocational training grant enables employers to combine daily work needs with the provision of vocational training. The rules for the integration subsidy for young workers and the vocational training grant for young workers apply to employment that begins up to and including 31 December Integration vouchers for older workers The vouchers may be claimed by workers aged 50 and over who are entitled to at least twelve months unemployment benefit (the subsidy is equal to between 30 and 50 percent of the subsidizable wage for 12 months). Anyone who has been unemployed for more than a year has a right to receive an integration voucher (subsidy of 50 percent of the subsidizable wage for 12 months). Promotion of job creation schemes The Federal Employment Agency supports sponsors of job creation schemes (Arbeitsbeschaffungsmassnahmen) if they provide new jobs for unemployed assigned to them, the work involved is in the public interest and the creation of the new jobs has no adverse effect on the economy. The provision of support for and assignment of employees to job creation schemes is the sole responsibility of the employment agencies. Support is provided for contribution-based employment relationships (without unemployment insurance contributions) between sponsors and employees and takes the form of lump-sum grants towards wage costs and other costs incurred by the employer

22 Placement on a job creation scheme is possible for people who are unemployed, are unable to take up employment without funding for such a scheme and are entitled to some form of income-replacement benefit during unemployment or integration into employment. A place may still be available if these criteria are not met, for example for people who are unemployed and under 25 and have not completed a course of vocational training, are needed as an instructor or helper on a job creation scheme, or are severely disabled and their job prospects cannot be safeguarded or improved by other means. There is also a 10 per cent rule, under which exceptions can be made from the above criteria for 10 per cent of scheme places each year. Priority is given to schemes that substantially improve the employment opportunities for workers placed with them. The sponsors of a jobs creation scheme receive a subsidy towards wage costs. The subsidy is paid out on a flat-rate basis. The size of the subsidy depends on the type of work undertaken by workers on the scheme. The maximum monthly subsidies for work requiring various levels of qualification are as follows: University or other tertiary education: 1,300 Career advancement training: 1,200 Training in a recognized training occupation: 1,100 No formal qualification: 900 The employment agency may increase the flat-rate subsidy by up to 10 per cent to account for the regional situation and the work involved. Additionally, subsidies of up to 300 per worker per month may be paid for costs of materials used for the scheme, employer s flat rate contributions or part contributions, and for the training of workers on the scheme if funding for the scheme cannot be secured by other means and there is an overriding labour market interest in the operation of the scheme. Places on job creation schemes are usually funded for a maximum of one year, or up to two years if there is an overriding labour market interest in the operation of the scheme or if the employer gives an undertaking that the employee will be taken on permanently when the funding expires. Funding can be extended to 36 months for workers aged 55 and over. Income security for older workers Income security for older workers provides persons aged 50 and over with an additional incentive to terminate - at the earliest possible opportunity - their unemployment or to avoid unemployment by accepting a non-subsidised job