German government, opposition fail to reach welfare compromise

Feb 7, 2011, 5:18 GMT

Berlin - The German government and opposition were unable to reach a compromise over benefit payments for the long-term unemployed and agreed to meet Tuesday after nearly 10 hours of overnight talks.

'We need another break,' Labour Minister Ursula von der Leyen said.

The main point of contention is how much the so-called Hartz IV payments should be increased. The two sides narrowed their differences on increased benefits for recipients with school-age children, but questions remained about how money for the benefits would be transferred to local authorities.

No progress was reported on demands for the same wages for the same work for temporary jobs.

The negotations were called after a previous deal on the payments was rebuffed in the Bundesrat, the upper house of parliament.

The negotiations are a test of strength for Chancellor Angela Merkel, whose coalition of the Christian Union and Free Democrats last year lost its majority in the Bundesrat.

Merkel's government has proposed increasing the 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 argued is too miserly.

The centre-right coalition argued 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.

An agreement 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.

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