‘New politics’ in German labour market policy? The implications of the recent Hartz reforms for the German welfare state

Abstract:

The twin predicaments of German labour market performance and welfare state performance triggered an ongoing debate on reforming the German model. Recently, this debate has yielded an outcome in the form of the so-called Hartz laws, a bundle of labour market policies aimed at the reduction of unemployment and the decrease of non-wage labour costs. The Hartz reforms have played a prominent role in the public discussion, but are they really a watershed as both optimists and pessimists claim? In this article we investigate in what sense the Hartz reforms mark a substantive political change and how they are related to similar processes in other countries. To characterise the policy output we discuss three views of policy reform: reform as a process of policy-learning, reform as a process of competitive realignment and reform as a process of reinforcing path dependence. We show which of the three paradigms accounts for which part of the political result. We find evidence for both policy diffusion and retrenchment, but it is too early to speak of a change of regime. Rather, both the changes thus far and the blocked proposals follow a traditional German logic of strong institutional resistance.