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Employment / Social affairs

2020 Annual report No. 9 - Absence of adequate controls in the artists’ social security fund places a burden on the state and businesses

08 December 2020

The artists’ social security fund has no adequate control mechanisms in place to verify the data provided by the insured. As a result, no assurance can be provided on whether the requirements for compulsory insurance are still met.

Self-employed artists and publicists have access to the statutory pension, health and long-term care insurance schemes under the artists' social security scheme. The prerequisite is that their expected income from this activity exceeds the income threshold of €3,900. The insured people estimate the income level for the year ahead themselves and report it to the insurance fund. Since no control mechanisms are in place, excess estimates that slightly exceed the insurance limit are not adequately processed. Although applicable statutory requirements are not met, the insurance remains valid.

The state and employers pay half of the contributions for such ineligible insured. To address the problem, the current control system needs to be strengthened. 

 

2020 Annual report No. 8 - Amend biased insurance requirements of artists’ social security scheme

08 December 2020

The requirements of the artists’ social security scheme give preferential treatment to those insured compared to other classes of insured people.

Self-employed artists and publicists have access to the statutory pension, health and long-term care insurance schemes under the artists' social security scheme. Until 2001, their compulsory insurance limit income threshold was linked to the limit for marginal employment (for mini-job workers). While the mini-job limit has risen by a third since then, the compulsory insurance limit has remained the same. For a total of 19 years in a row, the level has been €3,900 annually.

Low income earners enrolled in the artists’ social security scheme also pay a lower minimum rate than similar low-income groups, such as students and self-employed people. Since these classes of insured people pay their contributions in full, their financial burden is more than twice as high.

We recommend reviewing the insurance requirements of the artists’ social security scheme seeking to ensure that similar classes of insured people are treated in the same way. The compulsory insurance limit should be raised to a minimum subsistence level.

 

2020 Annual report No. 6 - €150 million disability inclusion initiative II:  Unclear funding guidance of the Labour Ministry puts additional jobs at risk (equalisation fund)

08 December 2020

The Federal Ministry of Labour and Social Affairs refuses to clearly define the funding guidelines for the federal inclusion initiative II. In doing so, the Ministry jeopardises the creation of new jobs for severely disabled people.

In accordance with a parliamentary resolution, the programme serves to provide start-up funding for creating new vocational training and jobs in businesses employing severely disabled people (inclusive employers). The states’ integration offices are eligible to a total of €150 million from the equalisation fund. However, new jobs are only those that have not been projected beforehand. The Ministry’s funding guidelines permit the states to use federal funds for jobs already proposed beforehand. As a result, the states often used the federal funds for jobs that they would have had to finance from their own budgets at any rate. This undermines the goal of the parliamentary resolution to create new jobs with inclusive employers.

The Severely Disabled People Compensation Levy Ordinance stipulates that exclusively temporary programmes are eligible for funding. Still, the Ministry has chosen not to set an eligibility deadline. This means tolerating that the incentive of creating new jobs within three years will fail to be effective. Instead, the programme will lag behind for many years ahead.

The Ministry needs to amend the guidelines and specify in more detail the meaning of the term additional vocational training and jobs. The Ministry also needs to impose a programme eligibility deadline.

 

2020 Annual report No. 3 - Efficient refugee integration programmes require reliable partnerships across all government levels

08 December 2020

The multitude of integration programmes impairs the efficiency and effectiveness of social and labour-market integration of refugees. The current approach is characterised by a fragmentation of responsibilities and a high coordination effort both among government levels and within the federal government level.

Each year, federal budget spend on integration programmes alone makes up more than €2 billion. In addition, the federal government co-funds regional integration programmes with a total of up to some €2.4 billion annually. No government body has the overall overview needed to steer the programmes. There is no clear separation of responsibilities between the federal government and the federal states level. The federal government’s initiative to collect information on all integration programmes run by the states was doomed to failure because the states were reluctant to provide input. So far, the federal government has not been able to look into the consistency or overlaps of the integration programmes (if any).

The federal government should initiate a legislative amendment to clearly define the tasks and responsibilities associated with refugee integration and to develop a regulatory framework governing cooperation with the states. We do not concur with the government's view, that constitutional constraints impede the cooperative effort. Responsibilities should also be clearly allocated within the federal government level. In a resolution adopted by the Federal Council of Constituent States, the states announced their general support for clear regulations and partnerships to assign responsibility for integration policies to a specific government level.

 

2019 Annual report – spring report No. 08 – Federal Ministry of Labour and Social Affairs refuses to give funds accrued from the compensatory levy to job centres

Without good reason, the Federal Ministry of Labour and Social Affairs refuses to transfer funds accrued from the compensatory levy also to job centres and not only to the Federal Employment Agency. Employers failing to meet their quotas of hiring severely disabled people are required to pay the levy. Unemployed individuals with severe disabilities should benefit from these funds irrespective of whether they are supported by the Federal Employment Agency and its employment agencies (Social Security Code, Volume III) or by job centres (Social Security Code, Volume II). In fact, the funds go to the Federal Employment Agency only but not to job centres. As a result, we hold that there is a need to reallocate the funds accrued from the levy. The Federal Ministry of Labour and Social Affairs should urge for a respective legal amendment.

 

2019 Annual report – spring report No. 11 – Child support advance payments: Federal government does not assert compensation claims against state governments 

Although we have repeatedly drawn attention to the situation, the Federal Ministry for Family Affairs, Senior Citizens, Women and Youth has not brought claims for damages against state governments because these improperly implemented the Child Support Advance Payment Act. We found that the offices responsible for making child support advance payments did not consistently bring and conclude claims against defaulting absent parents. As a result, past-due obligations are no longer recoverable because of statutory limitation or forfeiture. Major causes for this are organisational management shortcomings and little or insufficient knowledge of the staff in charge. Since the federal government funds 40 per cent of past-due child support obligations of the states, these revenues forgone place a continuous burden on the federal budget. The Ministry needs to regularly engage with state governments to assess shortfalls in revenue, pursue possible cases of liability and use available enforcement remedies.

 

2018 Annual report No. 06 - Federal government lacking oversight: federal states inaccurately charge housing allowance to the federal budget

In 2016, the federal government spent about €1.1 billion on housing allowance granted to 630,000 households. The federal states implement the Housing Allowance Act on behalf of the federal government. We had already found grave errors in the calculation of housing allowance in the years 1998 and 2000 which resulted in undue burdens on the federal budget. Current audits again revealed accounting errors.

The Federal Interior Ministry failed to ensure that the federal states carry out sample checks of the accounts produced by municipalities of revenues and expenditures under the Housing Allowance Act. The federal government and the states had not noticed that the municipalities accounted for housing allowance either not at all, with delay or inaccurately to the detriment of the federal budget.

To prevent accounting errors for housing allowance, the Federal Interior Ministry must provide better oversight of the states in implementing the Housing Allowance Act. We expect the Federal Interior Ministry to better comply with its oversight duty.

 

2018 Annual report No. 15 – Basic income support: Federal states unduly grant benefits funded from the federal budget

In several audit missions, we found that the federal states unduly granted basic income support in the event of reduced earning capacity. For instance, the authorities responsible did not arrange for review by the pension bodies to gain assurance on whether the beneficiary’s earnings capacity was in fact permanently reduced. Instead, they decided on the basis of information provided in the files available and granted the benefits.

The Ministry chose not to implement our recommendations and failed to ensure that all federal states address the shortcomings when reviewing grant eligibility. Such inaction continuously causes excess federal expenditure.

In our view, the Ministry’s oversight is inadequate. The Ministry needs to step up monitoring of legal compliance of federal states and urge the federal states to identify erroneous grant decisions in a structured way and to revise these accordingly.

 

2018 Special report – Audit compendium on youth unemployment and the integration of young people into the labour market

Tailor employment programmes better to the needs of the young jobseekers, adapt education systems more the demands of the labour market and enhance job placement work: These are the conclusions drawn in the audit compendium that EU member SAIs compiled on “Youth unemployment and the integration of young people into the labour market.”

EU Member SAIs and the European Court of Auditors individually conducted audit missions on how young people could be placed in jobs or apprenticeships in a more effective way. The various audit findings of the work across the EU have been complied in an audit compendium. The EU and its Member States have accommodated the recommendations made by the auditors.

The EU and its Member States have made some initial progress in fighting youth unemployment. For example, in the Member States that were most affected (Greece, Italy and Spain), the rate of unemployed young people between 15 and 24 years decreased by up to 11 per cent in 2016 against its peak in 2013. In 2016, the EU-wide youth unemployment rate reached 18.7 per cent which is still twice as high as the overall unemployment rate. Germany was the Member State with the lowest youth unemployment rate of 7 per cent.

The audit compendium serves as pilot project to provide the (expert) public with concise information on EU member SAIs’ audit and follow-up work done to strengthen the proper and efficient use of public funds. The audit compendium is available in the official EU languages at: https://www.eca.europa.eu/sites/cc/Lists/CCDocuments/CC_AUDIT_COMPENDIUM/CC-AUDIT_COMPENDIUM_EN.pdf

 

2017 Annual report No. 09 – Ambiguous regulations on jobseekers’ absences from place of residence– job centres treat entitled individuals inconsistently

After more than six years, the Federal Ministry of Labour and Social Affairs has still not clearly defined how an employable person entitled to benefits needs to be available for job centres. The Ministry failed to put into force new statutory provisions adopted by Parliament in 2011concerning absences. As a consequence, the Ministry tolerates that the job centres apply different criteria to entitled individuals.

Individuals entitled to basic income support for jobseekers (entitled individuals) need to be available for the job centres pursuant to Book II of the Social Security Code. They need to stay close to the job centres to be able to immediately take up any acceptable employment. In 2011, Parliament passed new statutory provisions on temporary absences of entitled individuals. However, the new provisions have not yet come into force because the Federal Ministry of Labour and Social Affairs did not promulgate a statutory instrument (ordinance) to regulate the details.

That is why the job centres have been using the former regulations and various guidance issued by the Federal Employment Agency. These regulations are ambiguous and not easy to understand. Moreover, the guidance of the Agency only applies to some of the job centres. As a result, the job centres do not use consistent criteria for permitting absences.

We request that the Federal Ministry of Labour and Social Affairs put into force the new statutory provisions passed in 2011 as soon as possible and thus harmonise the decisions made by the job centres. The ordinance should consistently and clearly define the area in which entitled individuals may stay as well as the duration of and the 46 requirements for absences.

 

2017 Annual report No. 8 – Lacking oversight: federal states’ accounting errors raise federal expenditure on basic security in old age

The Federal Ministry of Labour and Social Affairs did not check whether serious accounting errors in basic security in old age and in case of reduced earning capacity found in some states can also be found in other states. Furthermore, it does not ensure that the federal states spot-check the work of the authority in charge of providing basic security.

The basic security in old age and in case of reduced earning capacity supports people in need who reached the retirement age of the statutory pension fund or who are permanently fully unable to work. The federal states provide the basic security on behalf of the Federal Government. Administrative districts and independent cities but also supra-local basic security authorities are in charge of that task. The Federal Ministry of Labour and Social Affairs needs to supervise how the federal states provide basic security.

The Federal Government fully reimburses the federal states for net expenditure on basic security cash benefits. Net expenditure is gross expenditure minus income.

We found significant shortcomings in net expenditure accounting in selected federal states during our audit. Due to these flawed accounting practices of the federal states, the Federal Government incurred increases in expenditure of approximately €10 million. The Ministry did not check whether the other federal states appropriately accounted for the expenditure even though such a check was obviously needed. It did not adequately carry out its oversight responsibilities vis-à-vis the federal states.

We requested that the Ministry supervise net expenditure accounting consistently and more thoroughly. We expect the Ministry to agree with the federal states that they regularly spot-check the work of the basic security authorities.

 

2017 Annual report No. 10 – Long period of entitlement to unemployment benefit II – little support by job centres to self-employed people

For many years, job centres have not made adequate efforts to place self-employed beneficiaries of unemployment benefit II into jobs. As a result, the entitled individuals continued to receive unemployment benefit II.

If self-employed people earn a low income, they are also entitled to unemployment benefit II. In accordance with applicable law, they need to seize every opportunity to end their need for assistance so that they no longer need unemployment benefit II. The job centres need to support the self-employed people and to also place them in dependent employment if necessary (principles of rights and responsibilities).

We found that the job centres did not adequately fulfil their duty so that entitled individuals continued to receive unemployment benefit II. Even if the entitled individual only earned a low income and the self-employment did not offer realistic career prospects, the job centres tolerated this situation. The income of self-employed beneficiaries of unemployment benefit II remained permanently at a low level or even decreased in 80 per cent of the cases reviewed. In many cases, the self-employed people earned a monthly income of less than €450 and received unemployment benefit II for more than four years.

For a continued granting of benefits, it was usually enough for the job centres – in some cases for years – that the self-employed people stated that they expected to be able to increase their income in the future. Documents to prove income were held only by individual job centres. Therefore, we cannot exclude that self-employed people received benefits without fulfilling the respective requirements.

In our opinion, the job centres need to step up their efforts to place self-employed people who have already received unemployment benefit II for some time. For this purpose, the Ministry needs to ensure in its oversight of the Federal Employment Agency that the Agency enforces and complies with the applicable law and the respective directions. The responsible federal state authorities which supervise the municipal authorities of basic security benefits for jobseekers are also expected to ensure compliance.

However, if the efforts of the job centres, the authorities of which they are part and the oversight authorities fail to address this situation, we consider a legal provision to be appropriate. The purpose of such provision is to be that job centres place self-employed beneficiaries more speedily so that they no longer receive unemployment benefit II for an unreasonably long period. In line with a proposal of the Agency, self-employed beneficiaries of unemployment benefit II could thus be required after a certain period of time to accept any reasonable employment and to participate in all reasonable integration programmes.

 

2017 Annual report No. 12 – €55 million paid for vacant places in training programmes 

The Federal Employment Agency did not fill all places of pre-vocational training programmes. Between September 2013 and December 2015, the Agency bought places for almost €55 million throughout Germany without filling them.

The Federal Employment Agency can provide assistance to young people for making the transition between school and work by means of pre-vocational training programmes. The Agency reimburses the costs incurred by the providers of training programmes. A framework agreement with a term of two years developed by the Agency serves as the basis. As a rule, the young beneficiaries participate in the pre-vocational training programme from autumn until summer of the following year. For being able to respond flexibly to fluctuating numbers of participants during the term, it is possible to have more or fewer participants than the number of places agreed. However, the Agency needs to take and pay for a minimum number independent of whether the places have actually been filled.

We reviewed the capacity utilisation of pre-vocational training programmes. From September 2013 to December 2015, the Agency spent a total of €425.7 million on pre-vocational training programmes throughout Germany. Expenditure of up to €54.5 million (12.8 per cent) for vacant places could have been avoided if the Agencies had made better national plans.

We noted with concern that the Agency purchased more pre-vocational training programmes than needed. Thus, the Agency failed to take action when the training programmes were not filled which resulted in significant cost on vacant places. We demand that in the future the Agency reasonably estimate the places needed for the participants. The Agency needs to increase the number of participants in the pre-vocational training programmes and thus decrease the expenditure on vacant places. The Agency is also expected to adapt the term of the framework agreements to the typical duration of the programme of ten months.

 

2017 Management Letter – Federal Employment Agency provides grant-funded German language start-up courses

Between October and December 2015, the field offices of the Federal Employment Agency were authorised to fund German language start-up courses, if these were necessary to support job integration. We have studied the requirements for the start-up courses set and implemented by the Federal Employment Agency. “We acknowledge the efforts made by the Federal Employment Agency to foster integration of refugees in a difficult situation”, emphasizes Kay Scheller, President of the German SAI, when issuing the management letter. “Particularly in such a case, however, some baseline rules governing the design and implementation of language courses need to be in place.” In a similar future situation, the Federal Employment Agency should set the terms and conditions required to ensure that the aims of the measures taken can be achieved in the best way possible. “We particularly highlighted that certain requirements were not complied with although the Federal Employment Agency had set them in advance”, Kay Scheller stated. Even if the Federal Employment Agency developed product and service specifications and parameters applicable to start-up courses prior to their implementation, the Agency later chose not to rely on them. As a result, service providers did not keep attendance records. In our opinion, the effectiveness of start-up courses is at least doubtful. A major portion of the funds have likely been wasted since attendance of the courses steadily declined over time.

9 February 2017

0 Summary

Pursuant to section 421(1) phrase 1, book III of the German Social Code, the Agency’s field offices were authorised to grant funding to foreign citizens who attended German language start-up courses between 24 October 2015 and 31 December 2015. The prerequisite for funding was, however, that such participants had the right of abode pending proceedings for asylum and were likely to be granted a permanent and proper right of residence, and that such courses were necessary to support job integration.

We studied the requirements for the start-up courses set and implemented by the Federal Employment Agency.

We have duly taken into account the comments made by the Agency, and confirm the following audit findings as final:

0.1

Pursuant to section 421(5) of book III, German Social Code, German language start-up courses are an instrument used in active employment promotion within the meaning of section 3(1) and (2) of book III, German Social Code. However, the Agency found such start-up courses “not to be an instrument of employment promotion but a task for the benefit of society as a whole”. Therefore, the Agency took the internal management decision to provide such courses as “rapid and unbureaucratic immediate assistance”.

Due to the statutory provisions that do not leave much room for interpretation, however, the Agency’s position is not legally tenable. The supporting legislative documents are unambiguous in this respect.

0.2

Prior to the enactment of section 421, book III, German Social Code, the Agency had developed parameters for implementing the start-up courses and product and service specifications. However, the Agency chose not to rely on them since the start-up courses had to be implemented rapidly and lead times were very short. As a result, management made the internal decision to provide such courses as an “immediate assistance”. Even against the background of time constraints in providing the start-up courses, the Agency would have had the duty to develop or retain at least minimum requirements in order to ensure that unemployment insurance funds were used in line with the purpose for which they had been appropriated. Hence, in a similar future situation, the Agency should set clear and compulsory terms and conditions such as product and service specifications.

0.3

The Agency, however, chose not to define a refundable maximum cost rate but used a local cost rate instead, although the Agency had carried out a prior market survey and identified an adequate cost rate of €4.50 for private-sector service providers.

The reasons given by the Agency for not choosing to rely on the maximum cost rate that had previously been defined are not fully convincing (e.g. a higher unit cost rate in the case of courses in small groups). The Agency successfully reduced the required funding needs by realigning the system several times during the later programme stages. The Agency was able to reduce expenditures by renegotiating excess unit cost rates and by recovering funds paid to individual service providers as a result of the findings issued by its internal audit service for labour market services.

0.4

The Agency only gradually tightened the requirements for reviewing the cost calculation. Private-sector service providers that had submitted invoices in a timely manner were thus exempt from review of their cost rates. Moreover, the Agency’s regional directorates imposed differing requirements on how to handle excess unit cost rates. The Agency needs to rely on transparent and comprehensive requirements to ensure a consistent procedure to be adhered to by all responsible organisation units. In view of the practices applied by the various regional directorates, the Agency stated that at the early stages of the reimbursement process there had been avoidable frictions in communication between the central unit and regional directorates. Against this backdrop, the Agency pledged to further refine communication channels.

0.5

Although the start-up courses are an instrument of employment promotion, the Agency tolerated service providers’ billing practices that included children as course participants. As the review of a sample of 136 start-up courses showed, a total of 88 children up to the age of 13 had attended the courses (4.3 per cent).

In this respect, the Agency reiterated its view that start-up courses were no instrument of employment promotion. Since this view is not in line with law, the Agency should have excluded children from attendance right from the start.

0.6

When performing field work, the Agency’s internal audit service detected a number of major shortcomings in quality. Since the Agency issued only little guidance on implementing start-up courses, it is hardly possible to hold service providers liable for compensation.

We acknowledge that the Agency has addressed cases in which it detected shortcomings. However, it is likely that other measures not reviewed also have similar shortcomings. Since after programme expiry field work can be done to a limited extent only, all these efforts will largely remain futile.

0.7

In violation of article 7(2), Federal Budget Code, the Agency failed to put into place a structured system for adequately assessing the results of start-up courses. For example, the fact that service providers did not have the duty to keep attendance records impairs conducting a robust assessment. In our opinion, the effectiveness of the start-up courses can at least be doubted. A major portion of funds used have likely been wasted since attendance of the courses declined so sharply over time that a number of courses was even discontinued.

In its comment, the Agency points out that the start-up courses do not aim at achieving a certain language level. The Agency also contests that a major portion of funds has been wasted.

 

2017 Management Letter – Audit on support for young people with skills gaps

Final audit report on support for young people with skills gaps pursuant to Art. 54a of the German Social Security Code, Volume III (Förderung der Einstiegsqualifizierung)

25 January 2017

0.1

Employers who provide support to young people through entry-level on-the-job training (Einstiegsqualifizierung), can obtain grants pursuant to Art. 54a German Social Security Code Volume III. The German SAI has audited the support for young people and produced the following final findings.

0.2

In 13 out of 142 cases audited, the local employment agencies either failed to assess whether the eligibility criteria for entry-level training support had been met, or failed to do so in a timely manner. The Federal Employment Agency concurred with the opinion of the German SAI and pointed out various options for improving technical oversight to ensure local agencies check eligibility on a timely basis.

0.3

In seven cases audited, the apprenticeship seekers supported would not have been eligible in the first place because they had been ill-suited to the training objective or had already completed professional training abroad. The Agency rightly argued that developing vocational aptitude might also be a legitimate purpose of entry-level on-the-job training. The Agency also acknowledged that its local agencies should not have funded entry-level on-the-job training for young people who already had completed vocational training abroad. However, the Agency said it was considering a modification of its internal guidance so as to limit exclusion from financial assistance to vocational qualifications formally recognised in Germany.

0.4

The local agencies have the legal duty to incorporate into integration agreements to be concluded with apprenticeship seekers the objectives and stipulate what is expected of both themselves and the prospective apprentice, along with the benefits to be provided. In 52 per cent of the cases audited, valid integration agreements were lacking. In a further 26 per cent of the cases audited, the agencies did not specify, in a valid integration agreement that support for entry-level training was one of the benefits provided. The Federal Employment Agency intended to improve administrative practices by means of implementing various measures at the regional directorates.

0.5

Entry-level training support is a discretionary benefit of employment promotion. In all cases audited, the agencies funded entry-level training to the maximum amount and full duration of 12 months without providing any relevant justification. In July 2016, the Federal Agency amended its internal guidance to the effect that entry-level training was to be funded with the statutory maximum amount, if the remuneration was equal to or exceeded the maximum amount of financial support. As a result, the Agency instructed its local agencies not to rely any longer on the leeway provided for by legislation. Therefore, this instruction and any administrative action to this effect are illegal.

0.6

In some cases, the apprentices supported for entry-level training simultaneously received grants for professional integration pursuant to Art. 45 Social Security Code Volume III. In some cases, the employer also sponsored these other measures, meaning that the employer received benefits under both schemes. However, duplicative funding of two full-time measures pursuant to Art. 45 Social Security Code Volume III and Art. 54a Social Security Code Volume III is not permitted. The Federal Employment Agency concurs with the opinion of the German SAI. The Agency stated that the regional directorates concerned had reviewed the measures and not found any further duplicative funding and that in the future, they would check potential cases of duplicate funding.

0.7

In half of the entry-level training programmes lasting at least three months, the agencies did not contact the apprentices. Nor, in more than a quarter of these cases, did they make any contact with the employer. The agencies should mentor apprentices and employers more closely during entry-level training than they had done to date, in order to avoid drop-outs, and support apprentices in finding subsequent vocational training. The Federal Employment Agency wants to provide better service in the future.

0.8

In 30 of 41 of cases, where entry-level training was not followed by vocational training, no certificates of the skills and knowledges imparted, were provided to the young people. In 11 of these 30 cases, agencies failed to consistently manage the procedure, for example via the confirmation templates and thus did not ensure that they obtained a copy of the certificate. According to the Federal Employment Agency better use should be made of information on the knowledge and skills acquired at entry-level training when matching apprentices to positions. The Agency pointed out that the regional directorates had also alerted the local agencies to the importance of obtaining and documenting the knowledge and skills acquired during entry-level training.

 

2016 Annual report Volume I No. 30 – Unlawful reimbursement of Deutsche Bahn AG for free transport of severely disabled persons

The Deutsche Bahn AG is reimbursed for transporting severely disabled persons free of charge. For decades, the Ministry did nothing to stop the Federal Office of Administration from unlawfully reimbursing Deutsche Bahn for its loss of income caused by the free transport of severely disabled persons.

Under certain conditions, severely disabled persons are eligible to receive discounts on passenger transport services, even transport services free of charge. The Federal Office of Administration reimburses transport companies for their losses; in the case of Deutsche Bahn, such losses amounted to hundreds of millions of euros. The Ministry instructed the Federal Office of Administration to do so. According to these instructions, the Federal Office of Administration is required to make prepayments. Although Deutsche Bahn failed to submit the required evidences triggering the reimbursement in due time for decades, the Federal Office of Administration did not recover such prepayments. Instead of closing pending cases, it even made further advance payments in addition to the first prepayment and called them final payments with reservation.

The ninth German Social Code stipulates that losses from free local passenger transport are to be reimbursed at local rates. Deviating from this rule, the Ministry agreed with Deutsche Bahn that such losses be reimbursed at a national rate and irrespective of local agreements. In 2012, the Ministry reimbursed €38 million at this national rate.

We requested the Ministry to adhere to applicable statutory provisions.

 

2016 Annual report Volume I No. 29 – Compensation fund Federal Ministry of Labour and Social Affairs uses funds in violation of applicable regulations 

The Ministry misused the compensation fund resources to sponsor nationwide projects to enhance the employment opportunities of severely handicapped persons by exclusively using such funds to promote the database REHADAT. REHADAT comprises information about aids for disabled and severely disabled persons. However, resources of the compensation fund may only be used to enhance the employment opportunities of severely disabled persons.

REHADAT comprises detailed information about aids for disabled and severely disabled persons in the fields of medical rehabilitation and their participation in social and working life. The Ministry has sponsored REHADAT since 1988 with some €35 million. The funds exclusively stem from the compensation fund resources to sponsor nationwide projects to enhance the employment opportunities of severely handicapped persons. The compensation fund is an earmarked fund managed by the Ministry. The Ministry may use the funds only to promote the employment opportunities of severely handicapped persons (para 77(5), first sentence of the ninth German Social Code).

We criticized that the Ministry funded REHADAT exclusively with funds taken from the compensation fund. Funds from the compensation fund may only be used to enhance the employment opportunities of severely handicapped persons. We requested the Ministry to only fund those parts of REHADAT that are eligible to funding from the compensation fund.

 

2016 Annual report Volume I No. 28 – Inclusion: Awarding of grants for young people is unlawful

Compensation fund resources to sponsor nationwide projects to enhance the employment opportunities of severely handicapped persons are earmarked for a specific purpose. The Ministry acknowledged that the federal states promote young people with these funds without any evidence of severe disability. However, this would require a prior change of legislation by the Ministry.

The Ministry launched a programme for inclusion and earmarked €80 million for guidance on the professional qualifications of severely disabled young people. The aim of this programme is to provide young people with severe disabilities with advice and information about vocational opportunities. Programme funds stem from the compensation fund resources to sponsor nationwide projects to enhance the employment opportunities of severely handicapped persons. The compensation fund is an earmarked fund that may exclusively be used to promote the employment opportunities of severely handicapped persons. The federal states are responsible for implementing the programme. When launching the programme, the Ministry pointed out to the federal states that a disabled person’s pass is not a necessary condition for sponsoring.

We criticized that the Ministry advocated the sponsoring practice of the federal states although it was contrary to the law. In order to promote young people without any evidence of severe disability, the Ministry should have determined the statutory conditions prior to programme launch.

We expect that the Ministry uses the funds taken from the compensation fund pursuant to statutory requirements.

 

2016 Annual report Volume I No. 34 – Providing more thorough placement advice is inefficient

The Federal Employment Agency deployed additional staff for better supporting certain customer groups without providing evidence of added value of this additional staff deployment. It was unable to cover the respective expenditure by savings in unemployment benefit and additional contribution revenues as planned.

The Federal Employment Agency deploys additional job placement staff for better supporting certain job seekers. The target group includes persons who return to the labour market after a longer period of absence or who did not apply for a job for a long time. The Agency expects better service to help integrate more job seekers into the labour market. As a result, it intends to save unemployment benefits and receive additional contributions for unemployment insurance thus offsetting additional expenditure incurred.

However, the Agency failed to achieve the expected effects. Additional expenditure is not matched by the savings made. The Agency’s calculations reveal methodological flaws and do not provide evidence for the efficiency of the additional staff deployment, e.g. they did not take into account a part of the personnel costs incurred due to the enhanced support service offered.

We calculated a deficit of €33 million for 2014. We hold that deploying additional agency staff is inefficient. We asked the Agency not to assign additional staff to this service task if it is unable to ensure that costs will be matched by an equivalent amount of savings in the long run.

 

2016 Annual report Volume I No. 33 – Federal Employment Agency has to provide justifications for its radio service

The Federal Employment Agency’s radio service provides radio broadcasts free of charge even though it has so far not provided justifications for this service.

The Federal Employment Agency’s radio service prepares radio broadcasts ready for transmission and provides them free of charge on a website. According to the Agency, about 250 users are registered. 55 per cent of these users are Agency staff.

It justified setting up this service on the ground that its issues have hardly been covered by the programme of the radio broadcasters. However, it has never identified the broadcasting quotas of the Agency’s issues.

We doubt that there is a need for this service and recommend that the Agency only continue operating its radio service if it can provide justifications for its need and the efficiency of the approach taken.

 

2016 Annual report Volume I No. 32 – More senior management members than provided for by law

The Federal Employment Agency deploys four members of senior management in some of its regional directorates even though law provides for only three management members. As a result, the Agency causes unnecessary personnel and material costs of about €600,000 a year.

The Federal Employment Agency has ten regional directorates in Germany. The law provides that senior management is composed of three members. In addition, he Agency deploys “authorised agents” in the four largest regional directorates to support senior management.

By deploying authorised agents, the Agency actually expanded senior management to four members. Tasks, responsibilities and remuneration do not differ from those of the other management members. This does not only violate the law but also causes costs for staff and goods of about €600,000 a year. The Agency intends to abolish the function of the authorised agents. However, it intends to replace them by “senior management staff” with the same remuneration level.

We expect the Agency to delete the posts for authorised agents.

 

2015 Annual report No. 32 – Issuance and clearing of vouchers for private job placement services is improved

The Federal Ministry of Labour and Social Affairs has pledged to help improve the procedure for issuing and clearing vouchers for private job placement services. It intends to propose that our audit findings be discussed regularly by the joint working group of the Federal Government and the states.

Job centres are run either jointly by the Federal Employment Agency and municipalities or by municipalities under licence.

One of the tasks of the job centres is to assist beneficiaries who are able to work with obtaining or retaining a job. Entitled beneficiaries may be given an ‘activation and placement voucher’ for the use of private placement services. These services may present the vouchers for payment, if they have successfully placed a beneficiary in a job.

We found that the job centres

  • issued vouchers to ineligible claimants;
  • paid for vouchers presented for payment by private placement services although the requirements for payment were not met;
  • failed to investigate the circumstances in spite of evidence suggesting a misuse of a voucher and
  • did not know the number of cases in which beneficiaries were able, by using the vouchers, to do without further assistance for a short period or permanently.

The Ministry took up our recommendations. The Federal Employment Agency has promised to revise its technical guidance for job centres run as joint services. Staff are to be given assistance and training, technical supervision is to be enhanced and steps are to be taken to ensure that the vouchers have a long-term impact. Furthermore, the Ministry intends to exert its influence to the effect that our audit findings will be discussed regularly by the joint working group of the Federal Government and the states.

We consider the steps envisaged and initiated as appropriate for improving the procedure.

 

2015 Annual report No. 31 – Due amount of basic subsistence benefit for senior citizens often not accurately calculated during the first months of receipt  

Pensioners with a claim to basic subsistence benefit for senior citizens and persons with reduced earnings capacity often received excessive benefits during the first month of payment. The Federal Ministry of Labour and Social Affairs needs to ensure that the competent authorities accurately calculate the amount of claim.

Senior citizens and those with reduced earnings capacity who cannot adequately support themselves out of their income and wealth have a claim to basic subsistence benefit. The benefit scheme is administered by the German states on behalf of the Federal Government. The Federal Government supervises them and reimburses their related expenditures.

Basic subsistence benefit is means-tested. Pensions are to be taken into account in the month in which they are received in the beneficiary’s bank account. However, many pensions are paid only at the end of the month, while basic subsistence benefit is paid already at the beginning of the month. Therefore, most of the responsible authorities did not set off the pensions against the benefit claim during the first month in which the pension and the benefit were paid. As a result, they paid excessive basic subsistence benefits, causing considerable additional expenditure for the Federal Government.

The Federal Ministry of Labour and Social Affairs acknowledged the deficiencies pointed out. However, for more than one and a half years, it failed to take any steps to ensure that the responsible authorities of the states administer the benefit adequately.

We demanded that other income be set off against the claim to basic subsistence benefit. We note that the Ministry has the duty to ensure that the responsible authorities take the beneficiaries’ monthly income into account accurately when calculating the claim to the benefit.

 

2015 Annual report No. 33 – Means-testing for basic income support for job seekers: simplified determination of income to be set off against claim

Own income of claimants under the basic income support scheme for jobseekers is normally set off against the benefit claim. However, contributions to state-subsidised private pension insurance (known as Riester-Pension) are deducted from the income to be set off against the claim. To simplify this deduction, the Federal Ministry of Labour and Social Affairs intends to introduce a lump-sum deduction of such contributions and a separate legal provision in Book II of the Social Code concerning provisional benefit payment. Thus, it intends to simplify means-testing for beneficiaries under the basic income support scheme for jobseekers.

For purposes of means-testing under the basic income support scheme for jobseekers, all revenues of the claimants are to be taken into account as own income. However, contributions to state-subsidised private pension insurance are to be deducted from the income to be set off against the benefit claim. In doing so, the job centres must comply with the eligibility cap for such deductible contributions, which requires a cumbersome calculation of the beneficiaries’ income to be set off against the benefit claim. If a beneficiary’s income is uncertain, the job centre may grant the benefit provisionally. If, once the claim has been finally determined, it is found that the amount of the claim is lower, the beneficiary has to refund excess payments.

We found that the job centres deducted the contributions to state-subsidised private pension insurance from the income to be set off against the claim without obtaining proof. Neither did they check whether the deduction claimed complied with the applicable provisions. In addition, they often finally awarded the benefits although the beneficiary’s monthly income varied so that corrections of the amount of claim had to be expected.

We recommended that the Ministry

  • simplify the procedure and fix a lump-sum deduction from the income to be set off against the claim and
  • introduce an unambiguous provision on the provisional award of benefits in cases where the claimant’s monthly income varies.

 

The Federal Ministry of Labour and Social Affairs has taken up our recommendations. It intends to fix a lump-sum for the deduction of contributions to state-subsidised private pension insurance from income to be set off against the claim. It also intends to amend Book II of the Social Code by a provision on the provisional determination of the amount of the benefit claim.

 

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