MarketLine Blog

Youth unemployment in Germany: Low rates disguise true picture of growing Hartz-IV dependency

Compared to many neighboring European countries, of both similar and lesser levels of economic development, Germany’s youth unemployment rate is healthy. It is the lowest of any country in Europe except Iceland and is way below both the Euro Area and EU average.

Whereas many European countries encourage their people to pursue academic studies at university to further themselves, Germany has long had a policy of creating and offering vocational training places for those who either do not want to attend or who are not suited to university and this has helped to stop youth unemployment spiraling out of control. Such apprenticeships offer a good chance for the person who has successfully completed the training to find work as they have specific, usable, relevant skills that increase their employability. This is not always the case with academic qualifications, as has been seen in Italy and Portugal.

While the German system offers the aforementioned advantages, it is not without its problems. Many Lehrstellen (apprenticeships) remain vacant as some young people do not feel they offer the employment opportunities they claim to further down the line, while others have been drawn into a life of social benefits dependency. The latter is a growing problem in Germany.

In March 2016, 150,000 Hartz-IV (a type of unemployment benefit) claimants aged 15-24 were registered as unemployed and their chances of re-integration (or in some cases integration) into the job market are poor.

A third of Hartz-IV claimants that find a job with a salary that requires social security payments are out of employment again within three months and this proportion rises to more than half within 12 months. This does not allow for the learning and cultivation of skills and so does little to boost employability.

The lack of employability among such young people has led to a dependency on benefits, with around 300,000 15-24 year olds dependent on the benefit for at least four years. The fear here is that it could create a lost generation, a generation (or at least a sizeable portion of one) that has little in the way of skills, qualifications or experience, with an estimated 25% of young claimants having no school leavers’ qualifications. This does not position them well in a competitive job market intensified by high levels of immigration and is creating an underclass in areas of deprivation.

Fears of serious economic problems in the future are fanned by claims from sociologists that children growing up in a Hartz-IV household are less likely to work themselves as they are typically disadvantaged (for example, live in areas with poor schools and bad job prospects) and see not working as the norm.

The government must therefore do more to help those young adults wedded to the social welfare system. If it fails to so, it will also fail to reduce the number of children growing up in claimant households. This could see a claiming culture take root in which those receiving the payments feel helpless.

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