As indicated in the introduction, the global crisis has not yet triggered any substantial reforms in social protection. However, it has to be emphasized that a considerable amount of the fiscal stimulus bill is targeted for improvements in infrastructure, especially schools and universities.
Thus, in a sense the government continues on the path of ‘modernization’ by investing in social infrastructure and is not reverting back towards an approach of increasing compensatory measures.
From a social policy perspective it can be argued that there is no immediate need for significant reforms as a result of the current recession: 1) The pension benefit for the current standard pensioner has not yet been significantly impacted by the reforms of the early 2000s.
The overwhelming majority of pensioners rely on the statutory pension system; additional income from occupational or private pensions is rather residual. The fact that the poverty rate among pensioners is still below average, demonstrates the overall generosity of the pension
system for current pensioners.28 Furthermore, the governing coalition government has agreed a provision that will prevent reductions in pension benefits, which might be triggered by
declining wages due to the linkage of pension benefits to the wage development.29 2) Despite the reforms of the late 1990s and early 2000s, the unemployment insurance system continues to be relatively generous for the short-term unemployed and functions as an automatic stabilizer.
Unemployment insurance provides a net replacement ratio of 60 percent (67 percent for those unemployed with children) for duration of twelve months. Older workers are entitled to two years of receipt. Even as the global economic crisis has not yet had a significant impact on unemployment, those becoming unemployed can rely on the functioning of the welfare state.
As part of the stimulus package parents receive an additional one-off payment of € 100 per child in 2009. The benefits for low-income families were significantly expanded in 2005. In addition to the universal monthly child allowance of € 164 per child, raised by € 10 effective January 2009, parents with low incomes are entitled to an additional € 140 per month.
Furthermore, the social assistance benefit for children (age 6 to 13) will increase from € 211 to
€ 246 per month, effective July 1, 2009.30
Perhaps the most significant policy change has been an expansion of the short-time work allowance (Kurzarbeitergeld). Short-time work allowances, that have been available for most of the post WW II era, have the aim to support employment in companies facing cyclical and structural difficulties. To be entitled to short-term work allowances at least one third of employees at a company must have a reduced monthly income of at least 10 percent, due to a reduction of working hours. Either the company or the works council can apply for the allowance at the local office of the Federal Employment Office. Once the Federal Employment Office has ascertained whether all qualifying conditions are met, it will grant the affected employees a benefit of 60 percent (67 percent for employees with children) of the lost net income. The federal government has extended the maximum duration of benefit receipt from 6 to 18 months, effective January 2009. In April the maximum duration was further extended to a total of 24 months.31 As part of the stimulus package the 30 percent condition
28 At the end of 2006, only 2.6 per cent of women and 1.8 per cent of men and thus a total of 2.3 per cent of all persons aged 65 and over were in receipt of benefits under the scheme for basic protection in old age and in the case of reduced earning capacity. See Bundesregierung (2008) Lebenslagen in Deutschland. Der 3. Armuts- und Reichtumsbericht der Bundesregierung. Berlin. An abridged English-language version is available at http://www.bmas.de/coremedia/
generator/27506/property=pdf/dritter__armuts__und__reichtumsbericht__englis ch__kurzfassung.pdf.
29 Cf. “Änderungsantrag der Fraktionen der CDU/CSU und SPD zum Entwurf eines Dritten Gesetzes zur Änderung des Vierten Buches Sozialgesetzbuch und anderer Gesetze,“ BT-Drucksache 16/12596, May 6, 2009.
30 Cf. Bundesregierung (2009) “Konjunkturpaket: Soziale Aspekte,” in: Magazin für Soziales, Familie und Bildung, No. 073; 03/2009.
31 Cf. http://www.bmas.de/coremedia/generator/33050/
2009__04__29__zusaetzlich__stabilisierende__massnahmen__arbeitsmarkt.html.
has been suspended; in addition the Federal Employment Office will reimburse 50 percent of the employer’s contributions to the various social insurance schemes of certified companies in the years 2009/2010. For those employees on short-time work engaged in further training the Federal Employment Office will reimburse 100 percent of the employer’s social insurance contributions. The costs of this measure are estimated to be € 1.8 billion.32 In December 2008, about 270.000 workers received the short-time work allowance; compared to the previous year the number of recipients was up by 193.000. Based on FTE, the short-time work allowance
‘saved’ 99.000 jobs in December. Newer figures are not yet available, but the number of companies that have applied for the short-time work allowance has significantly increased in the first quarter of 2009.33
As the finances of the social insurance schemes are largely dependent on employment, a rise in unemployment will significantly impact the resources available. However, as social insurance contributions have declined over the past couple of years (see Figure 8), the government could once again opt to increase contribution rates or to increase subsidies to these schemes from general revenues, before having to revert to benefit cuts.
Figure 8. Social Insurance Contrubutions: 1975-2008
Source: BMAS op.cit.
32 For details of the stimulus package see http://www.konjunkturpaket.de/Webs/KP/DE/Homepage/home.html.
33 Bundesagentur für Arbeit (2009) Der Arbeitsmarkt- und Ausbildungsmarkt in Deutschland. Monatsbericht April 2009; available at http://www.pub.arbeitsagentur.de/hst/services/statistik/000000/html/start/monat/aktuell.pdf.
Part IV:
Conclusion
The German welfare state has a number of programs and instruments in place that ameliorate the impact of the economic crisis. Overall its social insurance schemes are robust and their financial condition seems to be healthier than only a few years ago. Nevertheless, the current economic recession constitutes a ‘stress test’ for welfare state arrangements. Should the recession last long and lead to a considerable increase in unemployment, the government will be forced to increase social insurance contributions, raise the subsidies to the social
insurance funds from general revenues or cut entitlements. For those ineligible for the earnings-related unemployment insurance benefits the government provides a monthly means-tested unemployment assistance benefit of about € 350 (for an individual) plus housing allowance.
However, it has to be mentioned that the poverty rate has increased from 12 percent in the late 1990s to 18 percent in 2005. A more differentiated analysis shows that low-wage work has increased significantly; furthermore, the percentage of poor among the unemployed had risen by almost 15 percentage points, i.e. even before the comprehensive reform of the unemployment insurance scheme was implemented in 2004, whilst the poverty rates for pensioners and single parents have only ‘marginally’ increased or stayed constant (see Table 4). It remains to be seen whether the current recession will lead to a further increase in relative poverty or inequality, or whether the recent increase in inequality will even decline, during the current recession.
Table 4: Poverty Rates (60 percent of median income): 1998-2005
Source: Bundesregierung op.cit., p. 306.
Socio-economic group 1998 1999 2000 2001 2002 2003 2004 2005
Employees 6 6 8 9 9 10 10 12
Unemployed 30 31 36 40 42 44 47 53
Pensioners 10 12 13 14 13 13 13 13
Single parent households 36 35 36 37 39 36 37 36
Children below 15 16 16 18 20 22 23 25 26
Total before transfers 21 22 22 23 23 24 24 25
Total after transfer 12 12 13 15 16 16 17 18
좌장: 연하청_명지대학교 국제통상학과 교수
좌장: 연하청_명지대학교 국제통상학과 교수