Long-term unemployed people in Germany could soon benefit from government-subsidized jobs for up to five years, after the German Cabinet on Wednesday approved a corresponding draft bill presented by Labor Minister Hubertus Heil.

Four billion euros ($4.65 billion) are to be set aside over the next few years for the project, entitled "social labor market." It was initiated by the center-left Social Democrats (SPD), the junior coalition partner to Chancellor Angela Merkel's conservatives.

The Labor Ministry calculates that each subsidized job will cost €24,000 ($27,895) annually. Employers are to receive subsidies at the level of Germany's minimum wage (€1,498 per month) for two years, which are then to be reduced by 10 percent annually for the next three years.

People who have been receiving state welfare payments — known as "Hartz IV" — for at least seven years and are over 25 years of age will be eligible under the plan.

Read more: German issues in a nutshell: Hartz IV

Longer-term perspective

Heil on Wednesday rejected criticism that five years of subsidies was too long, saying that people who had been out of employment for such an extended period needed the time to make them fit to work again.

"These people need a longer-term perspective," he told broadcaster ZDF before the Cabinet meeting.

Some 800,000 people in Germany could theoretically fall into the category covered by the plan. Employment agencies are to decide who is eligible or not.

The draft bill still needs approval from parliament to become law.

Read more: Rich vs. poor: How fair and equal is Germany?

tj/kms (dpa, Reuters)

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