> I'd also point out that the current situation forces an "all or nothing" employment system. In Aus, if you're working part time you don't quality for any benefits, so the incentive to work while on unemployment is lowered.

Germany has a fundamentally different system. If you're unemployed, you can take a "mini job" or "midi job" (up to 405/1300 Euros respectively, they are lower maintenance for businesses and have no/low/blanket contributions to social security) and the first 100€ will not affect your benefits, only 80% of whatever you make on top of that will be considered. It does not really change anything, so that's apparently not what's holding people back.