Germany Table of Contents
THE DEVELOPMENT OF SOCIAL POLICY in Germany has followed a unique historical path. During a long process of growth and social experimentation, Germany combined a vigorous and highly competitive capitalist economy with a social welfare system that, with some exceptions, has provided its citizens cradle-to-grave security. The system's benefits are so extensive that by the 1990s annual total spending by the state, employers, and private households on health care, pensions, and other aspects of what Germans call the social safety net amounted to roughly DM1 trillion (for value of the deutsche mark--see Glossary) and accounted for about one-third of the country's gross national product (GNP--see Glossary). Unlike many of the world's advanced countries, however, Germany does not provide its citizens with health care, pensions, and other social welfare benefits through a centralized state-run system. Rather, it provides these benefits via a complex network of national agencies and a large number of independent regional and local entities--some public, some quasi-public, and many private and voluntary. Many of these structures date from the nineteenth century, and some from much earlier.
The legislation that established the basis of this system dates from the 1880s and was passed by imperial Germany's parliament, the Reichstag, with the dual purpose of helping German workers meet life's vicissitudes and thereby making them less susceptible to socialism. This legislation set the main principles that have guided the development of social policy in Germany to the present day: membership in insurance programs is mandated by law; the administration of these programs is delegated to nonstate bodies with representatives of the insured and employers; entitlement to benefits is linked to past contributions rather than need; benefits and contributions are related to earnings; and financing is secured through wage taxes levied on the employer and the employee and, depending on the program, sometimes through additional state financing.
These insurance programs were developed from the bottom up. They first covered elements of the working class and then extended coverage to ever broader segments of the population and incorporated additional risks. Over time, these programs came to provide a wide net of entitlements to those individuals having a steady work history.
By international standards, the German welfare system is comprehensive and generous. However, not everyone benefits equally. In the mid-1990s, the so-called safety net was deficient for the lower-income strata and the unemployed. It was also inadequate for persons needing what Germans term "social aid," that is, assistance in times of hardship. In 1994, for example, 4.6 million persons needed social aid, a 100 percent increase since the 1980s. Germans who had been citizens of the former German Democratic Republic (GDR, or East Germany), which became part of the Federal Republic of Germany (FRG, or West Germany) in 1990, tend to be overrepresented in each of these groups.
Women are more at a disadvantage than any other social group. This fact stems from the bias of German social insurance programs in favor of a male breadwinner model; most women receive social and health protection by virtue of their dependent status as spouse. Hence, despite the existence of a comprehensive interlocking social net, women face inequalities in accruing benefits in their own right because of periods spent rearing children or caring for an elderly parent. Divorced women also fare poorly because of the welfare system's provisions, as do widows, whose pensions are low.
In addition to these problems or shortcomings, Germany's social welfare and health programs have had to contend with the unification of the former West Germany and East Germany in 1990. West Germany's approach to social insurance, health insurance, unemployment insurance (which did not exist in the former GDR), accident insurance, and social aid and assistance has been applied to East Germany. This fact has meant that the complex and heterogeneous organizational and financial arrangements present in the former West Germany to deliver health and social services have had to be built up in the former East Germany, in many cases entirely from scratch.
The need for this extension of social welfare programs follows logically from the former East Germany's transition to a free-market economy in which employment, health care, and social insurance benefits have always been highly contingent upon each other. In the absence of an East German democratic tradition and attitudes supportive of the new institutions and, as well, of adequate private organizational resources and skilled manpower, Germany's attempt to integrate two entirely different systems of social protection, education, and health care purely by means of law, administrative provisions, and financial resources is bound to produce problems for years to come.
In the mid-1990s, representatives of Germany's political parties, businesses, unions, and voluntary social services agencies continued to wage a vigorous debate over social policy. At issue is the role to be played by state and/or nongovernmental voluntary charitable agencies, churches, and other social service providers and how to find a politically acceptable mix of public and private institutions. Ever since the nineteenth century, especially during periods of economic and social crisis, there has been a recurrent demand to shift from insurance-based programs to a universal flat-rate and tax-financed program in order to secure a minimum income for all. However, there has never been sufficient political support for eliminating insurance-based programs. In the postwar period, business groups and the Christian Democratic Union (Christlich Demo-kratische Union--CDU), with the exception of the left wing within the CDU, tended to support the continued segmentation of the labor force into separate insurance-based programs for various occupational groups. In contrast, the labor unions and the Social Democratic Party of Germany (Sozialdemo-kratische Partei Deutschlands--SPD) tended to support unitary programs for the entire labor force.
The great costs of unification have raised the possibility of ending the steady expansion of social welfare programs that had been going on for more than a century. The current conservative governing coalition has proposed reductions in benefits to finance unification. Other factors such as the increasingly competitive global economy and structural changes in the labor market have also raised questions about the continued affordability of German social policy. As a result, the government is increasingly listening to employers who insist that their share of employee benefit payments be reduced in order that German business remain competitive in a global economy.
The integration of the two entirely different education systems that emerged after the 1945 division of the country has also raised many controversial issues. No consensus has emerged on whether Germany should adopt the unified school system found in the former East Germany or the heterogeneous three-tiered system of the former West Germany. Nor is there consensus on whether to increase the number of school years by one year for students in eastern Germany or to reduce the thirteen years of schooling in western Germany to twelve years. A greater uniformity within the country's education system is also needed because the plethora of school tracks and the diversity of curricula and qualifying examinations might indeed endanger the mobility of students and teachers within Germany and within Europe in general.
Data as of August 1995
Germany Table of Contents