The Future of the Social State in Germany 26 th C.I.F. Conference 29.07.2005, Bonn-Germany

1. The Future of the Social State in Germany 26th C.I.F. Conference 29.07.2005, Bonn-Germany Prof. Dr. Peter F. Lenninger Kath. Stiftungsfachhochschule München p.lenninger@ksfh.de

2. The Future of the Social State im Germany 1. Social State and Social Policy in Germany 1.1 The Iinstitutional basics1.2 The Three pillars of Social Security in Germany 2. Changing Social Security 2.1 Challenges for welfare state and Social Work in Germay 3. Reactions of the welfare state to the Challenges 3.1 Alternative models of the activating welfare state 3.2 Workfare as a central element of the activating state 3.3 Concrete reactions 4. Corrections at the prevailing social policy

3. 1. Social State and Social Policy in Germany 1.1 The institutional basics • The state but also the society of the Federal Republic of Germany must comply with the principles of a social state. The institutional basics are codified in the basic law: According to its constitution, the country’s basic law, the Federal Republic of Germany is a democratic and social federal state (Art 20 Abs. 1 GG) • The constitutional rules of the Federal States must comply with the principles of a republican, democratic and social state in the sense of the basic law.“ (Art. 28 Abs. 1 Satz 1 GG). • The principle of the social state empowers the legislature to act to provide services and influence social matters. The legislature has a mandate to • equalize social differences in order to ensure social justice and 2. To create and maintain the social security of the citizens of the country

4. 1. Social State and Social Policy in Germany • The Three pillars of Social Security in Germany • In Germany, social security rests on three pillars: • Self-help (e.g. families, neighbourhood, Self-help groups) • Self-precaution (e.g. private insurance, real estates) • Social Policy • Within the frame of the so called pillar social policy, you can differentiate between four types • Social Insurance, Maintenance, Public Welfare, Special assistance

5. 1. Social State and Social Policy in Germany 1.2.1 Successes • Collective security of contribution payers and citizens against social risks and income losses • Rearrangement of earned incomes in favor of income-weak and social security benefit-needy person's and their relative • Measures for the vocational qualification of the economically active population

6. 2. The Change of Social Security Social security is based either on the factor work or public welfare. Both social security principles contain specific risks, which appear ever less calculable in view of the rapid economic, demographic and social change. Thereto comes the financial situation of the public budgets and the increasing pressure of globalization.

7. 2.1 Challenges for welfare state and social work in Germany. 2.1.1 Economics A) Challenges • Minimal economic growth but increasing resources requirements according to social provisions B) Effects • Indebtedness of the public budgets • Opposite development between public incomes and expenditures • Increasing pressure on the social security systems

8. 2.1 Challenges for welfare state and social work in Germany. 2.1.2 Globalization A) Challenges • Expansion and intensification of the world trade • Reinforcement of international financial relations • Economical networking of the national economies B) Effects • Division of labor and integration of national economies in a world economy increase the competition of different locations • Pressure on wages and additional wage costs • National states becomes competition states

9. 2.1 Challenges for welfare state and social work in Germany. . 2.1.3 European Union A) Challenges • Free competition within the European domestic market • Compliance of the stability criteria (national indebtedness and budgetary deficit) in the context of the European monetary union B) Effects • Pressure on wages, additional wage costs • Drift of capital and production into the new member states • Pressure on the public budgets; renunciation of required investments

10. 2.1 Challenges for welfare state and social work in Germany. 2.1.4 Reunification of Germany A) Challenges • Collapse of the economic and social order of the former GDR • Creating social security after the economical collapse in the Federal States of eastern Germany with the means of the pension and unemployment insurance system B) Effects • High transfer benefits into the construction of the Federal States of eastern Germany (especially infrastructure) • Increase of insurance-strange benefits to create social security after the collapse

11. 2.1 Challenges for welfare state and social work in Germany. 2.1.5 Job Market A) Challenges • Continuous high rate of unemployment in Germany as a whole • Strong mismatches between east and west Germany • High rate of long-term unemployment • B) Effects • Personal prosperity losses • Psychological distress • Economical costs • Danger for the existence of the social security systems

12. 2.1 Challenges for welfare state and social work in Germany 2.1.6 Population a) Challenges • Demographic development of the population (low birth rates, increasing of the older age groups) b) Effects: • Pressure on social security systems (in particular acquisition-referred security systems) • Pressure on the health system • High growth risks with shrinking population • Age poverty and polarization of live situation • Increased support and care requirement especially in favor of the very aged population

13. 2.1 Challenges for welfare state and social work in Germany 2.1.7 Social Change A) Challenges: • Individualizing of socio-economic situations in life • Plurality of life-styles (milieus) - change of the family structures and the forms of living together B) Effects: • Decrease of familial resources - increased support need • Insecurity and increased orientation requirements in questions of life planning • The disintegration of traditional cultures and life-styles requires new solidarities in the local community

14. 3. Reactions of the welfare state to the challenges 3.1 Alternative model of the activating welfare state • The sole responsibility of the citizens must be strengthened - the high rates of the social expenditures must be reduced • Social justice may not be equated with the demand after equality - • social justice means in particular equal chances • High unemployment does not have to be, if one determines rights and duties better - the goal remains full employment • Labor policy is at the same time also the best social politics • The state and the public administration must become more efficient

15. 3. Reactions of the welfare state to the challenges 3.2 "Workfare" as central element of the activating state 3.3 Concrete reactions 3.2.1. Cuts in the area of application and in the Level of the social benefits - tendentious break with the principle of the Protection of the living standard; Strengthened privatization of social risks

16. 3. Reaction of the welfare state to the challenges3.1 Concrete reactions 3.2.2 Job market reforms • Merger of the former unemployment relief with the social assistance in a new welfare system: for assistance-needy persons between 15 and 65 who are capable of earning a living (Hartz IV) (Social statutes book II) B) Loosening of the legal regulations on the job market (e.g. protection against dismissal) C) Time limit of the reference duration of the unemployment benefit on 1 year 3.2.3 Reinforced privatization within the range of the social and health services 3.2.3 Reduction of the direct taxes as flanking measures

17. 4. Corrections at the prevailing social politics • Examples for new solidarity • Reduction of Poverty • Disadvantaged children and families enable • Corrections at the job market reform • More jobs for low-qualified people • Public promoted labor market for disadvantaged

18. 4. Corrections at the prevailing social politics • Disadvantages of the Anglo-Saxon social model • Effects of the Collapse of the economic and social order of the former GDR • Alternatives to the Anglo-Saxon model in Scandinavia • Arguments for a common European Social Policy