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The German Social Welfare System. Introduction. The social welfare system of a state … is a key factor for the economy. shapes the social structure. prevents poverty. Introduction. Role of Social Policy in the EU Concepts to describe different welfare states

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introduction
Introduction

The social welfare system of a state …

  • is a key factor for the economy.
  • shapes the social structure.
  • prevents poverty.

Euro 200: France, Germany and Modern Europe

introduction3
Introduction
  • Role of Social Policy in the EU
  • Concepts to describe different welfare states
  • Historic development of the German welfare system and its basic characteristics
  • Situation of today

Euro 200: France, Germany and Modern Europe

the eu social agenda
The EU – Social Agenda
  • Lisbon Agenda 2000 / Review 2005:
    • Focus on Growth and Jobs
    • 20 million jobs, 70% employment rate by 2010
  • Social Agenda: European labour market
    • enable workers to take pension and social security entitlements with them
    • support the Member States in reforming pensions and health care

Euro 200: France, Germany and Modern Europe

the eu the charter of fundamental rights 2000
The EU - The Charter of Fundamental Rights (2000)

Article 33

Family and professional life

  • […]
  • To reconcile family and professional life, everyone shall have the right to protection from dismissal for a reason connected with maternity and the right to paid maternity leave and to parental leave following the birth or adoption of a child.

Euro 200: France, Germany and Modern Europe

the eu the charter of fundamental rights 20006
The EU - The Charter of Fundamental Rights (2000)

Article 34

Social security and social assistance

  • The Union recognises and respects the entitlement to social security benefits and social services providing protection in cases such as maternity, illness, industrial accidents, dependency or old age, and in the case of loss of employment, in accordance with the rules laid down by Community law and national laws and practices.

Euro 200: France, Germany and Modern Europe

describing welfare states
Describing Welfare States
  • Three Types of Welfare States
    • Liberal
    • Social-democratic
    • Conservative

(Esping-Andersen (1990): The Three Worlds of Welfare Capitalism)

Euro 200: France, Germany and Modern Europe

liberal welfare states
Liberal Welfare States
  • Market-based social security schemes
  • Private schemes
  • Means-testing
  • Limited benefits
  • “[…] a blend of a relative equality of poverty among state-welfare recipients, market differentiated welfare among the majorities.”(Esping-Andersen, p.27)
  • Examples: USA, UK

Euro 200: France, Germany and Modern Europe

social democratic welfare states
Social-democraticWelfare States
  • Universalism and equality
  • Redistribution of wealth
  • High benefits
  • State organized childcare
  • Encourage women to work
  • Examples: Scandinavian countries

Euro 200: France, Germany and Modern Europe

conservative welfare states
Conservative Welfare States
  • Maintain the differences between social classes
  • No redistribution of wealth
  • Traditional role models are protected
  • Example: Germany

Euro 200: France, Germany and Modern Europe

german social welfare system
German Social Welfare System
  • Unemployment insurance
  • Health care insurance
  • Pension insurance
  • Long-term care insurance
  • Social assistance

Euro 200: France, Germany and Modern Europe

bismarck area and weimar republic
Bismarck Area and Weimar Republic
  • 1883 Workers’ health insurance
  • 1884 Industrial accident insurance
  • 1889 Invalidity and old-age insurance
  • 1911 Reich insurance system extended to civil servants / white-collar workers
  • 1927 Unemployment insurance
  • Characteristics:
    • Contribution financed, not tax financed, no pay-as-you-go
    • Contributions shared: 50% paid by employer, 50% by employee
    • Widely supported by middle class

Euro 200: France, Germany and Modern Europe

post war germany konrad adenauer 1949 1963 cdu ludwig erhardt 1963 1966 cdu
Post war GermanyKonrad Adenauer (1949-1963 ), CDU Ludwig Erhardt (1963 – 1966), CDU

The Social market economy(Alfred Müller Armack)

“A system which allowed business and finance to operate under the conditions of free market trading yet which worked within the legislative framework of industrial democracy at plant, company and industry level and within a statutory social security scheme seemed to enjoy the best of both worlds.”(Nigel Reeves, 1995, 213)

Euro 200: France, Germany and Modern Europe

the social market economy die soziale marktwirtschaft
The Social Market EconomyDie soziale Marktwirtschaft
  • Free market trading
  • The industrial harmony

Laws of Codetermination

      • Mitbestimmungsgesetz 1951
      • Betriebsverfassungsgesetz 1952
  • Monetary policy of the Bundesbank (Federal Bank of Germany)
  • Extensive social security scheme

Euro 200: France, Germany and Modern Europe

post war germany the economic miracle
Post War Germany - The Economic Miracle
  • 1957 Pension reform (Rentenreformgesetz)
    • Pay-as-you-go principle
    • Pension adjustments linked to gross wages
  • Characteristics of the welfare system:
    • Based on traditional role models: Women as mothers and carers, male breadwinner, “family wage” / splitting of incomefull-employment, standard employments
    • Core aim: securing the achieved standard of living of families

Euro 200: France, Germany and Modern Europe

slide16
Growth of the government sector from the 60s to mid 70sGrand Coalition (1966-1969), SPD and FDP (1969–1982)
  • 1966 / 67 Recession: government investment programme (7.5 billion DM)
  • 1967 Stability Law (Law for the Promotion of Economic Stability and Growth)
  • Public sector grew about 1.3 million employees between 1960-1973 (~60%)
  • 1968 Average unemployment benefit: 68% of prior net wage
  • 1972 Pension reform law: age of entitlement 63

Euro 200: France, Germany and Modern Europe

the social expenditure rate sozialleistungsquote
The Social Expenditure Rate Sozialleistungsquote

Source: Wewer, G. (1998), Bilanz der Ära Kohl, p. 348, Statistisches Bundesamt

rolling back the welfare state in the 80s helmut kohl 1982 1998 cdu
Rolling back the welfare state in the 80s?Helmut Kohl (1982 – 1998), CDU
  • 1992 Pension reform: pension adjustments linked to the net wage, age of entitlement 65
  • 1992 Social expenditure rate: ~70% in the former GDR
  • 1995 Long-term / nursery care insurance, pay-as-you-go (Pflegeversicherung)
the safety net
Social security

Pension

Unemployment

Health care

Long-term / nursery care

Insurance-based

Wage-related benefits

Financed by contributions

“Conservative”

Social assistance

Alleviation of the poor

Means-tested

Fixed levels of benefits

Tax financed

“Liberal”

The Safety Net

social assistance rate
Social Assistance Rate
  • Social assistance rate: claimants of social assistance not living in care institutions / population
  • Before 1991: former FRG
  • Source: Stastisches Bundesamt (2003) Sozialhilfe in Deutschland,
  • http://www.destatis.de/presse/deutsch/pk/2003/sozialhilfe_2003i.pdf
the situation of today reforms gerhard schr der 1998 2005 spd
The Situation of today – ReformsGerhard Schröder (1998-2005), SPD
  • „In an ageing society it is fair to expect people to take more responsibility for themselves, especially concerning health care and pensions. It is fair not to cripple citizens‘ willingnes to work by excessive non-labour costs“ (Agenda 2010,p.4)
  • 2002: Gesetz zur Reform der Rentenversicherung („Riester“-pension):
    • Promotion of capital-covered private pensions,
    • Times of child-raising taken into account
    • no adjustments of pensions in 2004
  • 2004: Reform of Health Care:
    • quarterly fee of 10 €
harz laws
“Harz”-Laws
  • Hartz I (2001):
    • Personnel Service Agencies
    • Job-AQTIV Laws
  • Hartz II (2003):
    • Jobcenters
    • “Ich-AGs” / “Me-plcs”: support for one-person start-ups
  • Hartz III (2004):
    • Restructuring and renaming of the Bundesanstalt für Arbeit (= Bundesagentur für Arbeit, Federal employment agency)
  • Hartz IV (2005):
    • Means-tested Unemployment Benefit II