Demography

Germany's pension and immigration policies

The taboos that long paralyzed population and family planning policies in Germany are disappearing, but it could already be too late to prevent steep ...
Colour pencils are pictured as children draw at a nursery school in Eichenau near Munich. German .../ Credits: Reuters

Family Policy

The fact that the Nazis pushed German mothers to have as many children as possible during the 1930s and 1940s has cast a long shadow over post-war governments' willingness to tackle population issues. Even though the birth rate has been sinking since the early 1970s, politicians have been reluctant to intervene for fear of being branded as far-right extremists.

But after over thirty years of neglect, German politicians can no longer ignore population issues. To soften what is likely to be a bumpy demographic descent from the baby boom of the 1960s, the quickest solution would be to start having more children—fast. But with more women in the workforce than forty years ago, fewer are willing to sacrifice their careers early to start families.

Since 2005, government has tried to enable young women to have both a career and children. The centerpiece of this new family policy is Elterngeld (‘parent money’), a concept taken from successful Scandinavian family policies begun in the 1970s. The German government now pays one parent per household two thirds of their net wage (up to 1,800 euros) while they take up to a year off to care for their baby. Elterngeld is extended by another two months if another parent—usually the father—also wants to stay home.

The government has also pledged to invest at least 4 billion euros to triple the number of child daycare places in Germany by 2013, and give parents a legal right to a daycare place for all children under three years old. Nurseries will also stay open later into the afternoon, whereas they traditionally closed around lunchtime.

Another instrument to foster more flexibility for parents in the first years after the birth of a child has been caught up in controversy. The Betreuungsgeld (child care subsidy) was originally conceived of as a state benefit for parents who don’t want to make use of a daycare place and go to work but instead want to care for their offspring themselves.

The government plan to offer a monthly benefit of 150 euros starting in 2013 has been massively criticized by opposition parties, unions and other sections of society.

They argue that only a few mothers would give up their jobs for just 150 euros. Instead of providing parents with freedom of choice the Betreuungsgeld would only be attractive for those who are jobless anyway or work on a part-time basis.

Opponents claim the Betreuungsgeld consolidates rather than transforms the role of women and they demand instead that the money be used instead to support the expansion of daycare places.

Pension Reform

Even if the new family policies work wonders for the country's birth rate, Germany still faces a huge cohort of aging baby boomers who will retire over the next twenty years. Germany, which has a tax-funded retirement system dating back to 1889, has tried to make its social security system viable for future retirees, but the changes have been unpopular with many.

Over the last few years, the government has enacted many of the reform proposals suggested by the Riester (2001) and Rürup (2003) commissions, which sought to strengthen and improve private old age provisions. Another law will gradually increase official retirement age from 65 to 67. Other changes include cutting pension benefits by a maximum 18 percent, taking measures to discourage early retirement, and introducing a "stability factor" that adjusts annual pension benefits based on the country's ratio of retirees to workers.

Just how much more Germany can cut from its traditionally generous pension scheme seems limited, particularly when the aged are becoming an increasingly important political force. Over half of the likely voters going to the polls in the federal election 2013 will be over 50, raising fears over a ‘pensioner's democracy’ resistant to painful, but necessary reforms.

Immigration and Integration

The last reform of German immigration policy was the 2005 Immigration Act, which kept the country's door open to asylum seekers, but maintained the country's restrictions on both skilled and unskilled migrant labor, even from within the European Union.

A shortfall of skilled workers like engineers and programmers, which costs the German economy billions of euros a year, may soon push the government to actively recruit qualified workers from abroad.

There are also efforts underway to better integrate foreigners already in Germany. Battling disproportionately high unemployment and poor performance in school among people with ‘migration backgrounds’—about 15 million people in all—is the focus of a National Integration Plan, launched in 2006.

One aspect of this scheme requires spouses of non-EU migrants to speak a basic level of German before joining their husband or wife in Germany. Some groups have criticized the law as a form of social screening, particularly because anyone from the EU or other visa-exempt countries is not required to prove their language skills.

Still, the British Council's Migrant International Policy Index rates Germany favorably for its political participation and family reunion policies. The country, however, scores below the European average in long-term residence and anti-discrimination.

Find more information in the ALLIANZ KNOWLEDGE DATABASE!

Delve into our world of knowledge. The Open Knowledge Database offers you insights in the knowledge, skills and experience Allianz has accumulated in over 120 years of business.


Search for related articles