Welfare and poverty
In the United Nations Global Welfare Survey (HDI), Germany 2015 ranked fourth among 188 countries in the world and the country is very rich in an international perspective. As in other EU countries, the national poverty line is at 60% of median income, and in 2010, 15.5% of the population was at or below that level. The trend is a rising poverty and this is mainly explained by the increase in the number of low-income earners (working poor). The biggest problems are in households with single mothers. Contrary to conditions in other post-industrial countries, rising poverty is not a result of rising unemployment.
After the reunification in 1989, the differences in prosperity were very large between eastern and western Germany. This general difference has been replaced by a more fragmented picture. The lowest proportion of poor (10.8%) was found in Bavaria in 2011, while several old industrial cities in the Ruhr area had about 19%, as did Berlin, and for Hannover and Bremen the proportion was poor 21%. In eastern Germany, southern Thuringia reached the German average while Mecklenburg-Western Pomerania had just over 22% poor.
German social insurance has its roots in the Middle Ages, when work-injured miners and survivors of victims in the mines were awarded compensation. At the end of the 19th century, laws were added that more generally guaranteed sickness and age insurance and accident insurance (Bismarck’s workers’ insurance; compare social policy).). These types of insurance were expanded significantly after 1949 and now apply to the whole of Germany. All employees whose salaries are below a high annual income limit set by the government are compulsorily linked to social insurance. This includes health insurance, nursing insurance, pension insurance, accident insurance and unemployment insurance. The accident insurance premium is the sole responsibility of the employer, while the other social insurance contributions are paid to equal parts by employees and employers. Self-employed persons are also part of the social insurance system. Government officials (the official) and a few other occupational groups are insured in other ways. Persons who work only to a small extent with an income that does not exceed EUR 400 a month are exempt from the insurance requirement.
In addition to social insurance, there are also social assistance and minimum benefits for jobseekers, the elderly and people with reduced working capacity as well as housing allowances and various family benefits, mainly child benefits.
In international comparison, the social protection network is extensive in Germany. But a growing proportion of older people, high unemployment and low birth rates have since the end of the 20th century brought increased financial burden for both social insurance and the state. From the beginning of the 1990s, a number of major changes have been made in tax systems and labor law, as well as cuts in the welfare system. These changes have led to an increased proportion of poor people. In 2009, however, nearly half of the public sector’s total social protection expenditure, the highest proportion in any EU country, still went.
The labor market and its changes
The social partnership ideology is important in the German labor movement. Trade unions see themselves as guarantors of social peace, and strikes within the framework of the law. However, the social and economic changes during the 1990s, as in other countries, have meant a shift in the power relations between workers and employers. The German labor market has undergone major changes and insecurity has grown. The German unions are still strong, but they now have less power, mainly because the number of members has decreased significantly. The union rate was at its highest, 36%, in 1991 and in 2009 was down 19%.
Eight major unions are part of the central organization Deutsche Gewerkschaftsbund (DGB), which in 2011 had 6.2 million members. The largest associations within the DGB are IG Metall, which gathers employees in the engineering industry, and the civil service association Vereinte Dienstleistungsgerekschaft(ver.di), with 2 million each connected. Government officials make up nearly half a million people in the labor market. They have the right to organize trade unions, but are not allowed to negotiate collective agreements and not strike. Their wages and working conditions are determined by the Bundestag. The right to strike for others is established by law and is derived from the right to organization which is enshrined in the Constitution. According to practice, there are no political strikes or general strikes, and wild strikes have been very uncommon since the 1970s. Employers are organized to a much greater extent. The two largest employers’ umbrella organizations are the Bundesvereinigung der Deutschen Arbeitgeberverbände (BDA), and the Bundesverband der Deutschen Industrie(BDI). More than half of the employees are covered by collective agreements, which have been used to create more flexible employment.
Growth in the German economy stopped at the end of the 1990s. The labor market was strictly regulated, the employees had strong protection and the social costs were high for the employers. In order to increase flexibility and international competitiveness and to reduce unemployment, the Social Democratic government implemented a number of reforms, the so-called Hartz Laws I-III, 2003. They mainly involved measures to activate the unemployed, eg. through tax-exempt “mini-jobs” (part-time work with a salary of a maximum of EUR 400 a month), deregulation in the labor market and simplified employment services. It became easier for companies to create low-paid part-time jobs and the employment protection in small companies was relaxed. In 2005, Hartz IV came, which was a more pervasive reform, which meant above all a reduced and reduced unemployment benefit. As a result of the Hartz teams, the number of part-time jobs has increased significantly. In the fall of 2010, more than 7 million Germans had mini jobs, exclusively or as a supplement to other work.
Until the mid-1990s, Germany had a high unemployment rate and in 2005 it reached just over 12%. The Hartz laws led to progressively falling unemployment. During the 2008–09 crisis years, the state also granted subsidies to companies that did not release staff when working hours had to be reduced. In 2011 and the first half of 2012, unemployment was around 7% (measured as the number of active jobseekers as a percentage of the entire labor force), which was the lowest figure in all EU countries. Nearly half were long-term unemployed, a much larger proportion than in other countries (in Sweden about one-sixth). Youth unemployment is also low, 7.8% in 2012 and thus the lowest in Europe. This is mainly a result of the focus on vocational education for young people who have not been able to transition from elementary school to high school. In a multi-year program, workplace internships are interspersed with studies at state-funded vocational schools. For many, the practice becomes an entrance to employment.
Hartz IV means that unemployment benefits are now paid for only 12 months (18 months for those who are 55 years and older). Those who have children receive the highest compensation, 67% of the net salary. Those who are unemployed for longer receive aid only if they are active job seekers and their income and assets are below a low threshold level.. This government payments (Arbeitslosengeld II) is thus a need and means-tested social assistance for those who are able to work and are during the poverty line. For those who receive this support, the state also covers health care costs but since 2010 does not cover pension payments. Hartz IV is a very debated reform.
Wages, working hours and pensions
During the period 2000–10, the average real wage in Germany fell by 4%. This was mainly due to the fact that the coverage ratio of the collective agreements gradually decreased and that the companies had local opportunities to “open” collective agreements, e.g. in times of recession. It has become increasingly common for companies to demand from their employees that they accept salaries that are below the levels of the central industry agreements and that working hours must be adapted to company-specific conditions and economic conditions. Many employees worry that their job will be relocated to a low-wage country, and they may therefore be inclined to accept deteriorating conditions and increased job insecurity.
The scope of full-time work varies between different occupations and is between 35 and 42 hours per week. The statutory holiday is four six-day weeks, ie. 24 days, but most have six (five-day) weeks paid leave entered in their collective agreements.
The general retirement age is gradually increased from 65 years to 67 years beginning in 2012. The size of the pension depends mainly on how much has been paid into social security contributions during the active period. People with mini-jobs and other part-time workers are affected by it at retirement.
Health insurance and health care
Everyone who is covered by statutory health insurance through social insurance or who has their own private health insurance will have access to and for family members access to and contributions for the care of general practitioners, specialists and dentists affiliated to any of the nearly 150 health insurance funds, which is more than 90% of all practitioners are. The care program reimburses most of the costs of treatment, prescription drugs, aids and hospital care. In dental care, half or more of the costs for major treatments are reimbursed. Since 2007, the policyholder who wishes to choose a less comprehensive protection can be responsible for all possible additional costs.
The employer usually pays full salary during the first six sick weeks. Thereafter, the sick person can receive sickness benefit, which constitutes 70% of the normal salary, but no more than 78 weeks during a three-year period. The health insurance also includes care for sick children for ten days per year.
In 2010, the state accounted for 77% of all healthcare costs (in Sweden 81%), and health care costs then represented 11.6% of GDP (in Sweden 9.6%). About half of the hospitals are state or municipal, while the rest are run by churches, organizations or private companies. In 2009, there were 36 doctors per 10,000 residents (in Sweden 38) and 111 nurses and midwives (in Sweden 119). The number of sick beds per 10,000 residents was considerably higher in Germany than in Sweden, 82 and 28. The average length of care is also considerably longer in Germany. Around 2010, infant mortality was 3 ‰ (in Sweden 2 ‰). HIV/AIDS is about as common in Germany as in Sweden and is borne by 0.1% of the population aged 15-49. The proportion of obese residents (with BMI 30 and above) is increasing and accounted for just over 22% in Germany in 2010,
Child allowance and childcare
Everyone living in Germany is entitled to child support and parental allowance for their own children, adopted children and stepchildren. Child allowance is paid to the child aged 18 or in some cases 25 years. The amount is slightly lower for the first two children than for the following. Need-tested parental allowance is paid as long as the child is 14 months, and it can be shared between both parents. Maternity leave lasts for 16 weeks and maternity allowance is paid out for 12-14 weeks.
Around 1990, there were very large differences between eastern and western Germany in both the employment rate of women and in access to child care. In the West, only about 55% of women worked, in the East about 90%, and childcare showed similar differences. In the West, childcare was mainly resolved in homes or in private, e.g. church-affiliated institutions, in the East there were state nurseries for everyone.
During the 00s, public childcare was expanded, but there are still major differences between eastern and western Germany, especially with regard to day care centers for smaller children. More than 90% of children aged 3-6 are now enrolled in organized childcare in Germany as a whole, while less than 20% of younger children are. In western Germany, the proportion is extremely small. Child care is a state concern, and both rules and design and development of the business therefore vary between different states. A significant part of childcare, especially for the young children, is solved by daycare providers or parent co-operatives. Morning homes are common, which can work well for some women who work part-time. At the same time, it makes it more difficult for those who wish to improve their position in the labor market.
In the past 50 years, the trend towards an equal society has been slower in Germany than in the Nordic countries, especially in western Germany. Traditionally, German society has been hierarchically based on male conceptions and needs. The man’s role as a sole family provider in the community has been obvious, as has the woman’s role as a mother in the home. In western Germany, a majority of residents are still negative to full-time working mothers, which affects the employment rate of women. Favorable tax and social insurance rules for housewives help many women still prefer to stay at home. The fact that many primary schools only teach half the day is also important. In 2010, 46% of all employed persons in Germany were women. About 60% of them worked part-time.
The difficulties for women to work full time and make a career are reflected in society. The percentage of women in the Federation Day was previously remarkably low, but it increased to 33% after the 2009 election. At the end of the 1990s, 16% of all senior executives in the public and private sectors were women (in Sweden 30%) and 10% of the German professors were women (in Sweden 26%). The Constitution provides for equality between women and men, but there are significant actual differences between the sexes. In 2010, men received just over 23% higher pay than women for equal work (in Sweden close to 16%).
Violence against women and domestic violence is still a major problem, although considerable efforts have been made in recent years to curb it. By law, violence is explicitly prohibited when raising children. German sex-buying legislation is considered to be the most liberal in Europe. Prostitution is recognized as a profession and prostitutes have access to the social security system. Human trafficking has increased significantly in the 2000s. The victims are in many cases young women from EU countries in Eastern and Central Europe who have the right to live in Germany. The extent of such activities is therefore difficult to determine.