German government seeks deal on welfare plan

Feb 6, 2011, 16:43 GMT

Berlin - The German government was due to meet Sunday with opposition leaders to seek a compromise over benefit payments for the long-term unemployed, after a previous deal was rebuffed in the upper house of parliament.

The negotiations are a test of strength for Chancellor Angela Merkel, whose coalition of Christian Union (CDU/CSU) and Free Democrats (FDP) last year lost its majority in the Bundesrat, or upper house, which represents the 16 federal states.

Merkel's government proposes to increase so-called Hartz IV payments by 5 euros, to a total of 364 euros (495 dollars) monthly, on top of rent, heating and social contributions - an amount that the opposition Social Democrats (SPD) argues is too miserly.

Yet, the centre-right coalition insists that greater unemployment pay reduces the incentive to find work, estimating that a salary of more than 1,200 euros monthly would be necessary for individuals to be better off in work than on welfare benefits.

If all parties reach an agreement, this would enable both houses of parliament to approve the deal Friday and apply it retroactively, from January 1.

The need for change was brought about by a constitutional court ruling that the current Hartz IV payments to 4.7 million adult welfare recipients were not calculated in a transparent manner.

The new proposals are also to earmark funds for children of welfare recipients to participate in extra-curricular activities and afford school meals and excursions.

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