Riester's New Employment Plan for Germany:
How the Government Pays to Find You a Job
By Mary Petersen, Germany Career Advisor

Ignoring the wave of criticism from German unions and employers, Germany's Minister for Employment, Walter Riester (Labor Party- SPD) on February 28, 2002, launched his plans to reform the fundamental legislation of the National Employment Plan. The new legislation, which abolishes the requirement that private employment services need permission from GermanyÍs Federal Employment Service (BfA) to operate legally, went into effect on April 1, 2002.

Under the new law, registered recipients of unemployed benefits that cannot find a job within three months automatically receive a voucher from the BfA. The voucher allows the job seeker to use a private employment agency of his or her own choice. If the employment service is successful in finding the unemployed person a job, the agency receives an agent's commission equal to the voucher amount, varying between EUR 1,500 and EUR 2,500. The employment agency only receives the full payment when the job seeker has been employed in the new position for six months.

The amount of commission also increases with the degree of difficulty—for example, agents will receive more if they find employment for job seekers over 50 or who have been unemployed for several years.

Riester anticipated that some employers might be tempted to fire employees, only to re-hire them three months later and share the commission with private employment agents. The new legislation avoids this loophole by ensuring that no commission will be granted if an employee is re-hired by his or her former employer. Riester hopes that many of these private employment agents will set up a general lobby and certification process to reinforce the integrity of the new entrepreneurship.

To help reduce the National Bureau for Employment's dependence on foreign labor, Riester's plan also began offering financial 'bonuses' to local Bureaus for Employment that hired a substantial number of private job-seeking agents. This turned sour, however, when it became obvious that some local bureaus were lying about their success figures. The government is planning surprise audits to ensure that this does not happen again, and to reassure the German public that the project is functioning successfully.

A specially selected committee, including government officials, union representatives, international consultancy agencies, and company board members, is looking into other ways of reducing Germany's record high unemployment rate.


About Mary Petersen
Mary Petersen works as a career trainer at Executive Link, a professional career services agency in Munich, Germany. She is currently organizing Executive Link Outplacement: a network of professional trainers, management consultants, recruiters, companies, lawyers and psychologists in the Munich area. Email Mary.