Germany reaches compromise plan on landmark welfare reform - sources

Germany's ruling coalition parties and opposition conservatives reached a compromise on a major welfare reform on Tuesday, according to a proposal seen by Reuters, paving the way for measures to support the unemployed in gaining vocational skills.

Germany's ruling coalition parties and opposition conservatives reached a compromise on a major welfare reform on Tuesday, according to a proposal seen by Reuters, paving the way for measures to support the unemployed in gaining vocational skills. Conservatives in the Bundesrat upper house had blocked the reform and then wrangled with the governing parties to find a compromise that sources said they expect a parliamentary mediation committee to approve at a meeting on Wednesday.

Among other things, the proposed resolution seen by Reuters provides for tougher sanctions against benefit recipients and a lower level of "protected assets". The welfare reform will introduce Buergergeld, or "citizens' money", to replace the Hartz IV system brought in from 2005, which sanctions people who reject job offers.

The overhaul is aimed at putting more money into the pockets of people on state benefits and to address a shortage of skilled workers in Europe's largest economy.