The German cabinet on Wednesday approved proposed legislation that would reform state benefits for the long-term unemployed.

The new policy would see the basic welfare payments, known as Hartz IV, raised to 364 euros ($505) per adult recipient per month - a five euro increase over the current rate.

In order to satisfy a constitutional court ruling, the bill must be passed into law by year's end. Chancellor Merkel's center-right coalition government doesn't have a majority in the upper house of parliament, the Bundesrat, and the opposition has said that it will only approve the bill if signifigant amendments are made.

Merkel defends reforms against criticism

Since Chancellor Merkel's center-right coalition government unveiled its proposals last month, opposition parties have criticized the increase as being too small.

"A failure to massively raise [welfare] rates will mean a permanent state of poverty and marginalization," said Gregor Gysi, the head of the Left party's parliamentary group.

The Chancellor meanwhile defended the welfare reforms.

"Hartz IV is not a way of life," Merkel said in Berlin on Wednesday, adding that the payments were "meant as a bridge back to employment."

More money for education

The new measures, which are expected to cost an additional 900 million euros, include 700 million to improve education for children in welfare recipient households.

Yet opponents say the education package is not enough either. Gysi said it was "not enough to finance a sports club or a music school and certainly not remedial courses."

Chancellor Merkel expressed some sympathy for welfare beneficiaries, saying, "I know that [these cuts] can be hard. But there must be some motivation to go back to work."

The new regulation needs to be passed into law before the end of the year, to satisfy a court ruling that deemed the way the payments have been calculated up until now to be unconstitutional. The government hopes to be able to implement the reforms on January 1, 2011.

Labor Minister Ursula von der Leyen called on all parties to work together in order to make the reform work, saying that the “this tight deadline means we all have to take responsibility.”

Author: David Levitz (AFP/AP/dpa)

Editor: Chuck Penfold