analysis
Five years ago, the Participation Opportunities Act came into force – a funding program in which the federal government temporarily pays wages for long-term unemployed people in new jobs. What has it accomplished since then?
Kathrin W. was unemployed for 16 years. She lived into the day and could hardly find any reason to pull herself together. “I applied, but I knew there would either be no response or a rejection.” The frustration was great, Kathrin W. felt ignored by official authorities. “I then let myself go physically.” Psychological problems and an eating disorder were the direct effects.
The trained administrative assistant was one of the first to get a job in 2019 through the Participation Opportunities Act: as a nail designer in a hairdressing salon. The law was intended to create 150,000 jobs. The idea: The state pays 75 percent of the wage costs for people who have been unemployed for more than two years and 100 percent for those who have been without a job for more than seven years. So the job center paid 100 percent of Kathrin W.'s wages for two years. A new perspective.
A Glimmer of hope for Long-term unemployed
When she took up the funded position in 2019, Kathrin W. was highly motivated. “I will do everything to ensure that I have built up a good customer base in two years and can continue to work here as an employee,” she said at the time. In doing so, she expressed what the aim of the new instrument was: to create a “sticking effect” and to keep people in the company after their support has ended, if possible with a permanent employment contract in their pockets.
But it failed: first her employers changed and she had to chase after her wages. “My second boss claimed that he hadn't received any money from the job center. I even had to go to court.” The money was there, and Kathrin W. was finally paid. Because of the argument, she resigned and, full of hope, was taken on by the nearest barbershop. But shortly before the end of the two-year, 100% funding, the new boss terminated her contract. After the disaster, Kathrin W. found a job in telecommunications on her own. She still works there today.
Some employers take advantage of the system
The German Federation of Trade Unions (DGB) criticized in 2019 that many employers initially only gave the long-term unemployed a fixed-term employment contract for two years, even though the Participation Opportunities Act allows for five years. This has to do with the fact that the positions are funded at 100 percent for two years, after which the employers have to pay their own contribution: ten percent in the third year, 20 percent in the fourth and 30 percent in the fifth. Do some employers take advantage of the first two years and then end the employment relationship so that they don't have to pay anything?
Kathrin W.'s employers do not comment on this. Some of their shops no longer exist. For Stefan Würzbach, head of the labor market and social policy department at the DGB Hesse-Thuringia, Kathrin W.'s case shows how important it is to provide close support and check where the money is going. Because not every job really makes sense.
“I see the problem primarily in the fact that individual companies decide: Okay, we're now going to hire someone with 100 percent funding who we normally wouldn't have even considered.” If it then involves an activity that might otherwise not have been considered, it doesn't make sense. “It's a double-edged sword in this law because it's difficult to check what really makes sense and what doesn't,” says DGB representative Würzbach.
Law demands a lot
Nationwide, 36,057 long-term unemployed people are currently employed through the Participation Opportunities Act. According to a study by the Institute for Labor Market and Occupational Research (IAB), only half of the companies are aware of the funding instrument. And some feared the intensive support, Würzbach suspects: “The long-term unemployed are people who have practically no chance on the job market. So you have to see to what extent you can get them into regular employment, and to what extent you can get them fit again so that they can become one be able to pursue regular employment.”
The Participation Opportunities Act is an opportunity to slowly lead these people back into the job market. But this is only possible through intensive coaching, because there are always health reasons that make it difficult for them to organize their lives. Because these people have been away from the labor market for a long time and are struggling with many problems. “You have to accompany people well and give them help.”
And that demands a lot from companies. Employers must also accept this challenge and bear social responsibility. There is also a need for dedicated job centers that do not lose sight of their clients and closely support all parties – always with the aim of providing professional prospects even after the funding has ended.
There are exemplary examples
In Schlüchtern, Hesse, Bea H. experienced this process in an exemplary manner. The trained retail clerk is a single parent, was sick for a year and a half and unemployed for five years. “I didn't get any childcare. I was told I would only get a place if I had an employment contract.” Everything changed for them with the Participation Opportunities Act. The Gelnhausen job center placed Bea H. in a large construction company. “My self-confidence increased immediately, it's logical, working in this company is fun.”
Here she received intensive support and coaching from Jolanda Dedio from the Social Labor Market Department in the Main-Kinzig district. The administrative employee sees providing security as a central task. “We have found that many long-term unemployed people are lonely, socially withdrawn and also have a lot of problems. There is no client who has not had negative experiences.”
This is where Jolanda Dedio's work comes in: regaining the ability to work socially is the central goal. For Bea H., the intensive coaching was worth it: her support program will be over in a few days and she can stay at Jökel Bau with a permanent employment contract in her pocket.
The Continued employment remains the optimum
Her boss Mathias Zarse, head of the human resources, purchasing and accounting department at Jökel Bau, thinks highly of his newly hired colleague and ultimately also of the Participation Opportunities Act. “The financial risks have been completely eliminated. The first two years are fully covered by the municipal employment center, after which we cover a small part of the wage costs.” This gives the company and employees time to get to know each other – and also the chance to minimize risks in advance. “The nice thing is, you notice that they want this opportunity, want to take advantage of it and do take it.”
Nevertheless, continued employment after subsidized probation remains the optimum, which is not always achieved. Because only 40 percent of those supported, like Bea H., receive a permanent employment contract after the measures expire and thus remain “sticked” to the company.
Often the lowest point is after twelve months
Corinna Geßinger, head of the Gelnhausen job center, is pleased with her client's successful outcome, because the Participation Opportunities Act is an expensive measure that ties up the job centers' budgets. “I deliberately don't want to talk about only 40 percent of those receiving funding who remain 'stuck' in the company, precisely because we have to take into account the people we work with here. Some of them are so far away from the job market and have personal conditions that… Making it incredibly difficult to get back into the game.”
Things often go very well at the beginning, but after twelve months there is a low point where it becomes more difficult to maintain motivation. The model simply takes time. Geßinger still hopes that the funding instrument will remain in place for a long time because it is an effective opportunity for long-term unemployed people to be able to live freely and independently of transfer payments again at some point.
