New Economy Short Cut² ReLive: Enzo Weber on Labour Market Policy and Bürgergeld

The current debate on Germany’s “Bürgergeld” often suggests that financial pressure or tougher sanctions are the key to getting people back to work. Yet the New Economy Short Cut² (a cooperation with the OECD Berlin Centre) discussion with OECD economist Anne Lauringson and Enzo Weber from the Institute for Employment Research (IAB) painted a more nuanced picture.

Thomas Fricke noted that of the five million people receiving Bürgergeld, about one third are children and another third not fit for work. Only around 30 per cent are actually unemployed. The stereotype of the “total refuser” who rejects any job applies to a very small minority.

Anne Lauringson presented OECD findings on active labour market policies (ALMPs). Across member countries, these policies have broadened: they no longer target only the unemployed registered for benefits but also those at risk of job loss and the inactive. The focus has shifted from “activation” through pressure towards more proactive and supportive measures. Effective policies combine counselling, training, wage subsidies, or start-up aid, and increasingly involve employers. Crucially, multiple barriers such as poor skills, health issues or lack of childcare must be addressed in a coordinated way. Evaluations show that personalised, comprehensive support is often cost-effective and leads to more sustainable employment than sanctions alone.

Enzo Weber outlined the German context. Since 2022, the economic slowdown has sharply reduced hiring opportunities. Job openings are at historic lows, which particularly hurts the long-term unemployed. While Bürgergeld reforms – with higher benefits and fewer sanctions – had some minor dampening effect on job uptake, the main driver of stagnation has been weak demand.

Sanctions, Weber argued, can push people into jobs but often low-paid and short-term ones, while undermining trust. The better path is a balanced strategy: clear rules and obligations, but not excessive pressure. What works best is stronger caseworker support, more training (also alongside employment), and targeted assistance. Despite reform pledges, investment in upskilling has barely increased so far.

Weber stressed the heterogeneity among recipients: most face one or several barriers to employment, but only few are truly “unemployable”. This requires tailored responses rather than black-and-white labelling. Improving incentives – such as a consistent 30 percent earnings disregard – could bring hundreds of thousands into work. He also recommended simplifying and merging social benefits to ensure transparency and stable incentives.

The broader message from the debate: public discourse often fixates on abuse or refusal, while research highlights structural and individual complexities. To overcome entrenched unemployment, policymakers must “pull all levers”: combine incentives, support, training and rules, embedded in a stable economic environment. Bürgergeld should be seen not as a problem but as a system that, if properly designed, can effectively help people into sustainable jobs.