Social Policies
#7Key Findings
With a social system that performed well in response to COVID-19, Germany receives a high overall ranking (rank 7) in the area of social policies. Its score on this measure has gained 0.3 points relative to 2014.
The country’s healthcare system proved well-prepared for COVID-19, with a high number of hospital beds and medical staffers. Death rates have been low. Parental leave programs are generous. Child care availability is improving. One consequence of strong family support has been an uptick in fertility rates, rare in the EU context.
Education outcomes have improved in recent years, with access to early education on the rise. Lagging digitalization in schools proved problematic during COVID-19 lockdowns, but massive investment improved the situation. The government expanded income support for workers and the self-employed during the crisis. The population receiving long-term unemployment support has continued to fall.
Pension benefits have been broadened in recent years, requiring rising state subsidies and intensifying sustainability concerns. While the issues of immigration and asylum policy remain political flashpoints, medium-term integration efforts appear to be going well. The government has substantially expanded development and pandemic-related aid.
The country’s healthcare system proved well-prepared for COVID-19, with a high number of hospital beds and medical staffers. Death rates have been low. Parental leave programs are generous. Child care availability is improving. One consequence of strong family support has been an uptick in fertility rates, rare in the EU context.
Education outcomes have improved in recent years, with access to early education on the rise. Lagging digitalization in schools proved problematic during COVID-19 lockdowns, but massive investment improved the situation. The government expanded income support for workers and the self-employed during the crisis. The population receiving long-term unemployment support has continued to fall.
Pension benefits have been broadened in recent years, requiring rising state subsidies and intensifying sustainability concerns. While the issues of immigration and asylum policy remain political flashpoints, medium-term integration efforts appear to be going well. The government has substantially expanded development and pandemic-related aid.
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To what extent does education policy deliver high-quality, equitable and efficient education and training?
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Education policy fully achieves the criteria.
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Education policy largely achieves the criteria.
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Education policy partially achieves the criteria.
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Education policy does not achieve the criteria at all.
Since the first PISA study in 2000, the OECD has often repeated its criticism that educational attainments in Germany are relatively poor for a country of this income level and that educational success strongly depends on pupils’ social backgrounds. However, Germany has shown some improvements since 2000. In the latest PISA test from 2018, the country ranked slightly above the OECD average in mathematics, reading and science, but fell somewhat relative to 2012 (OECD 2018). The impact of students’ socioeconomic background has lessened and is now comparable to the OECD average (OECD 2021). School funding is generous with respect to teacher salaries but less so regarding infrastructure. Teachers in Germany have the highest average salaries within the OECD, with levels at 1.7 times that of the OECD average in 2020 (OECD 2021). Access to preschool early education (ECE) has considerably improved over the past two decades. Today, Germany has more children enrolled in ECE services both aged under three and at pre-primary level than on average in the OECD (OECD 2021).
Science, technology, engineering and mathematics (STEM) fields of study are attractive in Germany, a total of 35% of German university graduates hold a degree in one these fields, which are of particular importance for a country’s technological and innovation capacities, compared to a 25% average across the OECD (OECD 2019). However, women are highly underrepresented in the field of engineering. In addition, regular studies report a persistent labor shortage in STEM professions, which suggests that the educational system does not fully meet the demand of labor markets (Anger et al. 2021).
In addition, the proportion of young people with tertiary education in 2020 still lags behind the OECD average (OECD 2021). In 2000, only 26% of young adults (aged 25-34) held a tertiary degree whereas it increased to 35% in 2020. Despite this increase, tertiary attainment in Germany remains below the OECD average of 45%, and is mostly a result of its strong vocational education system that offers a reliable path into qualified employment as well. The share of upper secondary or post-secondary education again is high compared to the OECD average (52% to 40%).
Concerning vocational training, Germany’s education system is strong and provides skilled workers with good jobs and income prospects. The rate of post-secondary vocational education and training is about 20%, which is much higher than the OECD average. All in all, the German education system excels in offering competencies relevant for labor market success, resulting in a very low level of youth unemployment. Thus, defining educational achievement primarily on the criterion of university degrees (as the OECD does) might not do justice to the merits of the segmented German dual education system.
Before the pandemic, education sector employees had only limited experience with digital teaching formats. The most important problem on the eve of the pandemic was the lack of technological equipment and the respective lack of technological training for teaching staff. The consequence was that German schools were significantly less prepared than schools in northern Europe or the Baltic states for the sudden need to shift to remote education formats in the spring of 2020. However, thanks to massive federal and state-level digital investment packages and rapid learning curves during the pandemic, the situation has improved. By the time the second wave of the pandemic hit at the end of 2020 and resulted in national school closures, the conditions for digital learning formats had clearly improved, both as a result of greater access to digital hardware and substantial learning effects among educators, children and their families. However, as was the case in other OECD countries, educationally disadvantaged groups were often left behind in remote learning contexts because of their lack of access to digital equipment and weak independent learning skill sets. (Grewening et al. 2020).
Citations:
Anger, Christina, Enno Kohlisch, and Axel Plünnecke, 2021: MINT-Herbstreport 2021: Mehr Frauen für MINT gewinnen - Herausforderungen von Dekarbonisierung, Digitalisierung und Demografie meistern. https://www.iwkoeln.de/fileadmin/user_upload/Studien/Gutachten/PDF/2021/MINT-Herbstreport_2021.pdf (accessed 6. February 2022)
Grewenig, Elisabeth / Lergetporer, Philipp / Werner, Katharina / Woessmann, Ludger / Zierow, Larissa (2020): COVID-19 and Educational Inequality: How School Closures Affect Low- and High-Achieving Students. Munich: CESifo Working Paper No. 8648, available at https://www.cesifo.org/de/publikationen/2020/working-paper/covid-19-and-educational-inequality-how-school-closures-affect-low
OECD (2018): Programme for International Student Assessment (PISA), Results from PISA 2018, Germany, Country Note.
OECD (2019): Education at a Glance 2019, Germany, Country Note.
OECD (2020): Education at a Glance 2020, OECD Indicators,
www.oecd.org/education/education-at-a-glance-19991487.htm/?refcode=20190209ig
Science, technology, engineering and mathematics (STEM) fields of study are attractive in Germany, a total of 35% of German university graduates hold a degree in one these fields, which are of particular importance for a country’s technological and innovation capacities, compared to a 25% average across the OECD (OECD 2019). However, women are highly underrepresented in the field of engineering. In addition, regular studies report a persistent labor shortage in STEM professions, which suggests that the educational system does not fully meet the demand of labor markets (Anger et al. 2021).
In addition, the proportion of young people with tertiary education in 2020 still lags behind the OECD average (OECD 2021). In 2000, only 26% of young adults (aged 25-34) held a tertiary degree whereas it increased to 35% in 2020. Despite this increase, tertiary attainment in Germany remains below the OECD average of 45%, and is mostly a result of its strong vocational education system that offers a reliable path into qualified employment as well. The share of upper secondary or post-secondary education again is high compared to the OECD average (52% to 40%).
Concerning vocational training, Germany’s education system is strong and provides skilled workers with good jobs and income prospects. The rate of post-secondary vocational education and training is about 20%, which is much higher than the OECD average. All in all, the German education system excels in offering competencies relevant for labor market success, resulting in a very low level of youth unemployment. Thus, defining educational achievement primarily on the criterion of university degrees (as the OECD does) might not do justice to the merits of the segmented German dual education system.
Before the pandemic, education sector employees had only limited experience with digital teaching formats. The most important problem on the eve of the pandemic was the lack of technological equipment and the respective lack of technological training for teaching staff. The consequence was that German schools were significantly less prepared than schools in northern Europe or the Baltic states for the sudden need to shift to remote education formats in the spring of 2020. However, thanks to massive federal and state-level digital investment packages and rapid learning curves during the pandemic, the situation has improved. By the time the second wave of the pandemic hit at the end of 2020 and resulted in national school closures, the conditions for digital learning formats had clearly improved, both as a result of greater access to digital hardware and substantial learning effects among educators, children and their families. However, as was the case in other OECD countries, educationally disadvantaged groups were often left behind in remote learning contexts because of their lack of access to digital equipment and weak independent learning skill sets. (Grewening et al. 2020).
Citations:
Anger, Christina, Enno Kohlisch, and Axel Plünnecke, 2021: MINT-Herbstreport 2021: Mehr Frauen für MINT gewinnen - Herausforderungen von Dekarbonisierung, Digitalisierung und Demografie meistern. https://www.iwkoeln.de/fileadmin/user_upload/Studien/Gutachten/PDF/2021/MINT-Herbstreport_2021.pdf (accessed 6. February 2022)
Grewenig, Elisabeth / Lergetporer, Philipp / Werner, Katharina / Woessmann, Ludger / Zierow, Larissa (2020): COVID-19 and Educational Inequality: How School Closures Affect Low- and High-Achieving Students. Munich: CESifo Working Paper No. 8648, available at https://www.cesifo.org/de/publikationen/2020/working-paper/covid-19-and-educational-inequality-how-school-closures-affect-low
OECD (2018): Programme for International Student Assessment (PISA), Results from PISA 2018, Germany, Country Note.
OECD (2019): Education at a Glance 2019, Germany, Country Note.
OECD (2020): Education at a Glance 2020, OECD Indicators,
www.oecd.org/education/education-at-a-glance-19991487.htm/?refcode=20190209ig
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To what extent does social policy prevent exclusion and decoupling from society?
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Policies very effectively enable societal inclusion and ensure equal opportunities.
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For the most part, policies enable societal inclusion effectively and ensure equal opportunities.
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For the most part, policies fail to prevent societal exclusion effectively and ensure equal opportunities.
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Policies exacerbate unequal opportunities and exclusion from society.
Germany features a mature and highly developed welfare state that guarantees a subsistence level of income to all citizens. The German social security system is based on the tradition of an insurance model that is supplemented by a needs-oriented minimum income. There are a variety of minimum-income benefit schemes, including income support for the unemployed (the so-called Hartz IV scheme) and disabled, and an old-age minimum income. The number of Hartz IV recipients has been decreasing for years as a consequence of falling long-term unemployment. Between 2017 and 2019, the number of recipients fell from 4.4 to 3.9 million. The deep recession brought on by the pandemic has so far not reversed that trend, with the number of recipients falling further to 3.8 million in 2021 (Statista 2022).
Since 2015, Germany has had a national statutory minimum wage designed to increase and stabilize market incomes within the low-wage segment of the population. The minimum wage was raised to €9.82 in 2022. The new government plans to further lift the minimum wage to €12 (Koalitionsvertrag 2021). No massive job losses have as yet been noticeable.
The past legislative term was characterized by measures that increased the generosity of the welfare systems. Examples include large benefits in the old age care insurance and the introduction of a minimum pension. It aims at reducing poverty in old age, giving benefit recipients a better legal status as citizens and increasing the basic pension to an appropriate level (for details, see “Pension Policy”).
With the outbreak of the pandemic, the welfare system has proven its ability to provide effective social protections, also in an environment of a sudden and deep economic crisis. The government temporarily increased access to the systems in place that are designed to protect jobs and to provide immediate income support to workers and the self-employed. The measures included: a simplified and extended access to short-time work schemes with high and increasing replacement rates including an additional family component; a facilitated access to the system of basic income support targeting small enterprises, freelancers, one-person businesses, older people and people with reduced earning capacity; more generous entitlements for paid-leave for parents with children in case of closures of schools and preschool facilities.
The new government coalition has agreed in principle on various welfare system reforms, but it remains difficult to assess the substance of those reform ideas, as they are vaguely formulated in the coalition agreement. Prominent plans include reforming the Hartz IV system and shifting toward a form of universal basic – or citizen’s income (“Bürgergeld”) – that would involve reduced means testing and establishing a funded pillar for the statutory pension system (Koalitionsvertrag 2021).
Citations:
Koalitionsvertrag (2021): Mehr Fortschritt wagen, Bündnis für Freiheit, Gerechtigkeit und Nachhaltigkeit, Koalitionsvertrag zwischen SPD, Bündnis 90/Die Grünen und FDP.
Statista (2022): Hartz IV: Anzahl der Leistungsempfänger von Arbeitslosengeld II und Sozialgeld im Jahresdurchschnitt von 2011 bis 2021, https://de.statista.com/statistik/daten/studie/242062/umfrage/leistungsempfaenger-von-arbeitslosengeld-ii-und-sozialgeld/ (accessed: 5 January 2022).
Since 2015, Germany has had a national statutory minimum wage designed to increase and stabilize market incomes within the low-wage segment of the population. The minimum wage was raised to €9.82 in 2022. The new government plans to further lift the minimum wage to €12 (Koalitionsvertrag 2021). No massive job losses have as yet been noticeable.
The past legislative term was characterized by measures that increased the generosity of the welfare systems. Examples include large benefits in the old age care insurance and the introduction of a minimum pension. It aims at reducing poverty in old age, giving benefit recipients a better legal status as citizens and increasing the basic pension to an appropriate level (for details, see “Pension Policy”).
With the outbreak of the pandemic, the welfare system has proven its ability to provide effective social protections, also in an environment of a sudden and deep economic crisis. The government temporarily increased access to the systems in place that are designed to protect jobs and to provide immediate income support to workers and the self-employed. The measures included: a simplified and extended access to short-time work schemes with high and increasing replacement rates including an additional family component; a facilitated access to the system of basic income support targeting small enterprises, freelancers, one-person businesses, older people and people with reduced earning capacity; more generous entitlements for paid-leave for parents with children in case of closures of schools and preschool facilities.
The new government coalition has agreed in principle on various welfare system reforms, but it remains difficult to assess the substance of those reform ideas, as they are vaguely formulated in the coalition agreement. Prominent plans include reforming the Hartz IV system and shifting toward a form of universal basic – or citizen’s income (“Bürgergeld”) – that would involve reduced means testing and establishing a funded pillar for the statutory pension system (Koalitionsvertrag 2021).
Citations:
Koalitionsvertrag (2021): Mehr Fortschritt wagen, Bündnis für Freiheit, Gerechtigkeit und Nachhaltigkeit, Koalitionsvertrag zwischen SPD, Bündnis 90/Die Grünen und FDP.
Statista (2022): Hartz IV: Anzahl der Leistungsempfänger von Arbeitslosengeld II und Sozialgeld im Jahresdurchschnitt von 2011 bis 2021, https://de.statista.com/statistik/daten/studie/242062/umfrage/leistungsempfaenger-von-arbeitslosengeld-ii-und-sozialgeld/ (accessed: 5 January 2022).
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To what extent do health care policies provide high-quality, inclusive and cost-efficient health care?
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Health care policy achieves the criteria fully.
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Health care policy achieves the criteria largely.
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Health care policy achieves the criteria partly.
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Health care policy does not achieve the criteria at all.
The German healthcare system is of high quality, inclusive and provides healthcare for nearly all citizens. Most employees are insured by the public health insurance system, whereas civil servants, self-employed persons, high-income individuals and some other groups are privately insured. The system is, however, increasingly challenged by rising costs. Prior to the COVID-19 pandemic, the system’s financial stability was stable due to buoyant contributions resulting from the employment boom. However, aging demographics and increasing healthcare costs are placing growing pressures on the system, which guarantees equal access to all necessary medical services that are of a high standard.
As has been the case for any other country, the COVID-19 pandemic has put the system under severe stress. However, Germany’s health system proved better prepared for such a catastrophic event than many other countries because it features a high number of intensive care beds, regular hospital beds, doctors and nurses relative to the population (Rüb et al., 2021). Shortages occurred but the health sector basically remained functional even in the context of a severe pandemic environment and, unlike in several other countries, COVID-19 patients received professional treatment at the state of the medical knowledge through all phases of the pandemic during the reporting period. The coordination of scarce resources such as intensive care beds across states was successful in reducing scarcity in regional infection hotspots. All this has contributed to an effective protection of lives: Hardly any other comparable country in Europe has been able to protect the lives and health of its population as successfully as Germany during the pandemic, measured in terms of coronavirus-related deaths relative to the population (Heinemann, 2021). At the same time, the pandemic has confirmed some well-known weaknesses, among them the lagging state of the German health system in terms of digitalization and the increasing shortage of highly qualified caregivers. The outgoing government has addressed some of these issues, but it remains to be seen how successful these reforms turn out to be.
The pandemic has further increased the health system’s cost pressure, a problem for which the new government has so far no convincing answer. The coalition agreement features vague statements regarding a “rules-based dynamization of the federal grant to the statutory health insurance” (Koalitionsvertrag, 2021, p. 87) but the agreement is silent on new financing sources or measures to limit increases in spending. In particular, the new government appears as hesitant as its predecessor to open the system to more competition (e.g., with respect to pharmacies).
Citations:
Heinemann, Friedrich (2021): Germany’s Pandemic Fatigue Prevails Despite Glowing Track Record, SGI News, December 06, 2021.
Koalitionsvertrag (2021): Mehr Fortschritt wagen, Bündnis für Freiheit, Gerechtigkeit und Nachhaltigkeit, Koalitionsvertrag zwischen SPD, Bündnis 90/Die Grünen und FDP.
Rüb, Friedbert, Friedrich Heinemann and Reimut Zohlnhöfer (2021): Germany Report, Sustainable Governance in the Context of the COVID-19 Crisis, Sustainable Governance Indicators, BertelsmannStiftung.
As has been the case for any other country, the COVID-19 pandemic has put the system under severe stress. However, Germany’s health system proved better prepared for such a catastrophic event than many other countries because it features a high number of intensive care beds, regular hospital beds, doctors and nurses relative to the population (Rüb et al., 2021). Shortages occurred but the health sector basically remained functional even in the context of a severe pandemic environment and, unlike in several other countries, COVID-19 patients received professional treatment at the state of the medical knowledge through all phases of the pandemic during the reporting period. The coordination of scarce resources such as intensive care beds across states was successful in reducing scarcity in regional infection hotspots. All this has contributed to an effective protection of lives: Hardly any other comparable country in Europe has been able to protect the lives and health of its population as successfully as Germany during the pandemic, measured in terms of coronavirus-related deaths relative to the population (Heinemann, 2021). At the same time, the pandemic has confirmed some well-known weaknesses, among them the lagging state of the German health system in terms of digitalization and the increasing shortage of highly qualified caregivers. The outgoing government has addressed some of these issues, but it remains to be seen how successful these reforms turn out to be.
The pandemic has further increased the health system’s cost pressure, a problem for which the new government has so far no convincing answer. The coalition agreement features vague statements regarding a “rules-based dynamization of the federal grant to the statutory health insurance” (Koalitionsvertrag, 2021, p. 87) but the agreement is silent on new financing sources or measures to limit increases in spending. In particular, the new government appears as hesitant as its predecessor to open the system to more competition (e.g., with respect to pharmacies).
Citations:
Heinemann, Friedrich (2021): Germany’s Pandemic Fatigue Prevails Despite Glowing Track Record, SGI News, December 06, 2021.
Koalitionsvertrag (2021): Mehr Fortschritt wagen, Bündnis für Freiheit, Gerechtigkeit und Nachhaltigkeit, Koalitionsvertrag zwischen SPD, Bündnis 90/Die Grünen und FDP.
Rüb, Friedbert, Friedrich Heinemann and Reimut Zohlnhöfer (2021): Germany Report, Sustainable Governance in the Context of the COVID-19 Crisis, Sustainable Governance Indicators, BertelsmannStiftung.
Graph View
To what extent do family support policies enable women to combine parenting with participation in the labor market?
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Family support policies effectively enable women to combine parenting with employment.
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Family support policies provide some support for women who want to combine parenting and employment.
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Family support policies provide only few opportunities for women who want to combine parenting and employment.
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Family support policies force most women to opt for either parenting or employment.
For decades, a broad consensus among political parties and major societal actors aligned the German system paradigmatically toward the male breadwinner model. Universal family benefits, incentives tailored to the needs of married couples and single-earner families, and a shortage of public childcare contributed to women’s low rate of participation in the labor market.
Today, this traditional approach has been substantially corrected. Parental leave, previously short and lacking adequate compensation, was extended in 2007. Parents can receive a parental-leave subsidy for over 14 months with a wage replacement rate ranging from 56% to 100% with an absolute cap of €1,800 per month. The rules for paternal leave have increasingly improved, for example, by allowing for greater flexibility in terms of part-time employment and by incentivizing male uptake.
The number of public childcare slots has also increased. A legal right to childcare beginning at the age of one year came into effect in August 2013. By international standards, the ratio of children under the age of three enrolled in a childcare-facility is below average but on the rise. It reached 35.0% in March 2020, with a strong regional variation between Eastern Germany (52.7%) and Western Germany (31.0%), which mirrors the different traditions of female employment in both parts of the country (Destatis 2021).
The success in the modernization of German family policy is also reflected in a fertility rate that has significantly increased from 1.25 in 1995 to 1.53 in 2020 (Destatis, 2021), a much more positive trend compared to many aging European countries.
In summary, these measures, in combination with an increasing shortage of skilled labor, have led to a considerable increase in labor-market participation rates among women. While in 2005, only 66.9% of women between 15 and 64 years of age were employed, this figure had risen to 74.9% by 2020 (compared to an OECD average of 65.0%). However, 36.3% of women are working part time, which is well above the OECD average of about 25.4% (OECD 2022).
Since the outbreak of the pandemic, German family policies have reacted in various ways to assist families during lockdowns, school closures and for those parents subject to short-time work or job losses. Measures that were taken since 2020 include: a doubling of children’s sick days that parents can take in the event of school or childcare center closures, a higher short-time work replacement rate for parents, and a flat rate additional pandemic bonus in addition to the normal child bonus (Rüb et al., 2021).
Citations:
Destatis (2020), Betreuungsquote der unter 3-jährigen Kinder auf 35.0 % gestiegen, Pressemitteilung Nr. 380 vom 30. September 2020.
Destatis (2021), Zusammengefasste Geburtenziffer, Stand 16. Juli 2021, https://www.destatis.de/DE/Themen/Gesellschaft-Umwelt/Bevoelkerung/Geburten/Tabellen/geburtenziffer.html (accessed: 10 January 2022)
OECD (2022), Employment database, stats.oecd.org/Index.aspx?DataSetCode=GENDER_EMP (accessed: 10 January 2022).
Rüb, Friedbert, Friedrich Heinemann and Reimut Zohlnhöfer (2021): Germany Report, Sustainable Governance in the Context of the COVID-19 Crisis, Sustainable Governance Indicators, BertelsmannStiftung.
Today, this traditional approach has been substantially corrected. Parental leave, previously short and lacking adequate compensation, was extended in 2007. Parents can receive a parental-leave subsidy for over 14 months with a wage replacement rate ranging from 56% to 100% with an absolute cap of €1,800 per month. The rules for paternal leave have increasingly improved, for example, by allowing for greater flexibility in terms of part-time employment and by incentivizing male uptake.
The number of public childcare slots has also increased. A legal right to childcare beginning at the age of one year came into effect in August 2013. By international standards, the ratio of children under the age of three enrolled in a childcare-facility is below average but on the rise. It reached 35.0% in March 2020, with a strong regional variation between Eastern Germany (52.7%) and Western Germany (31.0%), which mirrors the different traditions of female employment in both parts of the country (Destatis 2021).
The success in the modernization of German family policy is also reflected in a fertility rate that has significantly increased from 1.25 in 1995 to 1.53 in 2020 (Destatis, 2021), a much more positive trend compared to many aging European countries.
In summary, these measures, in combination with an increasing shortage of skilled labor, have led to a considerable increase in labor-market participation rates among women. While in 2005, only 66.9% of women between 15 and 64 years of age were employed, this figure had risen to 74.9% by 2020 (compared to an OECD average of 65.0%). However, 36.3% of women are working part time, which is well above the OECD average of about 25.4% (OECD 2022).
Since the outbreak of the pandemic, German family policies have reacted in various ways to assist families during lockdowns, school closures and for those parents subject to short-time work or job losses. Measures that were taken since 2020 include: a doubling of children’s sick days that parents can take in the event of school or childcare center closures, a higher short-time work replacement rate for parents, and a flat rate additional pandemic bonus in addition to the normal child bonus (Rüb et al., 2021).
Citations:
Destatis (2020), Betreuungsquote der unter 3-jährigen Kinder auf 35.0 % gestiegen, Pressemitteilung Nr. 380 vom 30. September 2020.
Destatis (2021), Zusammengefasste Geburtenziffer, Stand 16. Juli 2021, https://www.destatis.de/DE/Themen/Gesellschaft-Umwelt/Bevoelkerung/Geburten/Tabellen/geburtenziffer.html (accessed: 10 January 2022)
OECD (2022), Employment database, stats.oecd.org/Index.aspx?DataSetCode=GENDER_EMP (accessed: 10 January 2022).
Rüb, Friedbert, Friedrich Heinemann and Reimut Zohlnhöfer (2021): Germany Report, Sustainable Governance in the Context of the COVID-19 Crisis, Sustainable Governance Indicators, BertelsmannStiftung.
Graph View
To what extent does pension policy realize goals of poverty prevention, intergenerational equity and fiscal sustainability?
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Pension policy achieves the objectives fully.
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Pension policy achieves the objectives largely.
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Pension policy achieves the objectives partly.
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Pension policy does not achieve the objectives at all.
The last comprehensive pension reform dates back to 2007. It aimed to make the pension system more sustainable by phasing in a higher retirement age of 67 years and by establishing a link between pension increases and demographic change.
In recent years, reforms had a different intention and have gradually increased the generosity of the system. Critics have argued that these measures would undermine the system’s long-term sustainability. First, the government reduced the retirement age by two years for workers who have contributed to the pension system for at least 45 years. Second, it provided a “catch up” payment for housewives with children born before 1992. The calculation now includes two additional years of (fictive) contributions, allowing this group greater parity with counterparts whose children were born after 1992. Pensions for people with disabilities have been increased. Germany instituted in 2021 a “basic pension” (“Grundrente”) that aims at reducing poverty in old age (BMAS 2021). For insured workers with 35 contribution years, the pension of low-income earners will be increased. The costs will be financed from the federal budget from general tax revenues and are projected to benefit 1.3 million recipients. In addition, the government took some measures to improve private and occupational pension provisions.
Public subsidies from the federal budget for the pension fund have increased strongly over time. In 2017, subsidies totaled €67.8 billion. In the 2022 budget, they already reach €108 billion, which is 24% of the total budget (BMF 2021, p. 88).
Pensions have been increasing quickly in recent years due to the high levels of employment growth and the rising average wage of the active population. Today’s pensioners have a lower risk of poverty compared to the rest of the population, but old-age poverty is projected to increase in future. Measures like the aforementioned basic pension aim to counteract this development. The last government also introduced a “double stop line,” which means that contribution rates should not exceed more than 20% of income by 2025, and that pension levels should not fall below 48% of income by the same year. A raising of the statutory retirement age was explicitly excluded in the coalition agreement of the new government (Koalitionsvertrag 2021: 73). As a consequence, these levels will be financially possible only if federal subsidies are substantially increased, which raises questions regarding the fiscal sustainability of the policy. In sum, the new government has provided no strategy for ensuring the financial sustainability of the pension system as the number of pensioners is destined to increase dramatically with the wave of babyboomer retirement. Critics point to political myopia and a loss of a sense of reality (Börsch-Supan, 2021, see also “Budgetary Policy”). One positive aspect, however, is that the new government announced its intent to introduce additional capital funding for the statutory pension scheme (ibd.).
Citations:
BMAS (2021): Antworten auf die wichtigsten Fragen zu Grundrente, 2. Juli 2021.
BMF (2021): Finanzbericht 2022, Bundesministerium der Finanzen, August.
Börsch-Supan, Axel (2021): Die Verdrängung des demographischen Wandels, Frankfurter Allgemeine Zeitung, 24 December 2021, p. 22.
Koalitionsvertrag (2021): Mehr Fortschritt wagen, Bündnis für Freiheit, Gerechtigkeit und Nachhaltigkeit, Koalitionsvertrag zwischen SPD, Bündnis 90/Die Grünen und FDP.
In recent years, reforms had a different intention and have gradually increased the generosity of the system. Critics have argued that these measures would undermine the system’s long-term sustainability. First, the government reduced the retirement age by two years for workers who have contributed to the pension system for at least 45 years. Second, it provided a “catch up” payment for housewives with children born before 1992. The calculation now includes two additional years of (fictive) contributions, allowing this group greater parity with counterparts whose children were born after 1992. Pensions for people with disabilities have been increased. Germany instituted in 2021 a “basic pension” (“Grundrente”) that aims at reducing poverty in old age (BMAS 2021). For insured workers with 35 contribution years, the pension of low-income earners will be increased. The costs will be financed from the federal budget from general tax revenues and are projected to benefit 1.3 million recipients. In addition, the government took some measures to improve private and occupational pension provisions.
Public subsidies from the federal budget for the pension fund have increased strongly over time. In 2017, subsidies totaled €67.8 billion. In the 2022 budget, they already reach €108 billion, which is 24% of the total budget (BMF 2021, p. 88).
Pensions have been increasing quickly in recent years due to the high levels of employment growth and the rising average wage of the active population. Today’s pensioners have a lower risk of poverty compared to the rest of the population, but old-age poverty is projected to increase in future. Measures like the aforementioned basic pension aim to counteract this development. The last government also introduced a “double stop line,” which means that contribution rates should not exceed more than 20% of income by 2025, and that pension levels should not fall below 48% of income by the same year. A raising of the statutory retirement age was explicitly excluded in the coalition agreement of the new government (Koalitionsvertrag 2021: 73). As a consequence, these levels will be financially possible only if federal subsidies are substantially increased, which raises questions regarding the fiscal sustainability of the policy. In sum, the new government has provided no strategy for ensuring the financial sustainability of the pension system as the number of pensioners is destined to increase dramatically with the wave of babyboomer retirement. Critics point to political myopia and a loss of a sense of reality (Börsch-Supan, 2021, see also “Budgetary Policy”). One positive aspect, however, is that the new government announced its intent to introduce additional capital funding for the statutory pension scheme (ibd.).
Citations:
BMAS (2021): Antworten auf die wichtigsten Fragen zu Grundrente, 2. Juli 2021.
BMF (2021): Finanzbericht 2022, Bundesministerium der Finanzen, August.
Börsch-Supan, Axel (2021): Die Verdrängung des demographischen Wandels, Frankfurter Allgemeine Zeitung, 24 December 2021, p. 22.
Koalitionsvertrag (2021): Mehr Fortschritt wagen, Bündnis für Freiheit, Gerechtigkeit und Nachhaltigkeit, Koalitionsvertrag zwischen SPD, Bündnis 90/Die Grünen und FDP.
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How effectively do policies support the integration of migrants into society?
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9
9
Cultural, education and social policies effectively support the integration of migrants into society.
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7
6
7
6
Cultural, education and social policies seek to integrate migrants into society, but have failed to do so effectively.
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4
3
4
3
Cultural, education and social policies do not focus on integrating migrants into society.
2
1
1
Cultural, education and social policies segregate migrant communities from the majority society.
In 2020, a total of 26.7% of the population living in Germany, or 21.9 million people, have a migrant background. This number has increased from 16.6 million persons in 2013 (Destatis 2021).
According to the OECD (2013), reforms passed in the early 2010s “put Germany among the OECD countries with the fewest restrictions on labor migration for highly skilled occupations.”
The number of asylum applications peaked during the so-called refugee crisis at 745,545 applications in 2016 and has since decreased sharply. In 2020, in part due to pandemic travel restrictions and border closures, this number fell to 122,170 (BAMF 2021). Despite the crowding out of this topic by the pandemic, migration remains one of the country’s top challenges, which has a lasting impact on German politics. Since the refugee crisis of 2015 – 2016, the xenophobic AfD party has gained seats in all state parliaments.
Germany handled the short-run challenges of the large number of refugees that arrived in 2015/16 remarkably well, though the long-term challenge of successfully integrating refugees and asylum-seekers into the education system and labor market remains a crucial concern. Whereas labor market integration is proceeding faster than expected, labor market participation remains lower relative to other groups of the population with a migrant background. In March 2021, 31.8% of refugees in employment age from the main countries of origin were in regular employment. This compares to 46.6% of all migrants and to 63.1% of Germans (Geis-Thöne 2021). The pandemic brought a setback for many refugees employed in the service sector but this is believed to be a temporary phenomenon.
Much will ultimately depend on whether the process of broader cultural integration succeeds. So far, German civil society remains generally in favor of a society open to migrants. However, xenophobia is a manifest problem that is mirrored in a rising number of crime directed at those perceived to be foreigners. Hate crimes, including xenophobic attacks, increased from 8,600 cases in 2019 and to 10,200 cases in 2020 (BMI and BKA 2021).
The new government plans to reform the German nationality law. It wants to simplify and shorten the path to naturalization. Children born in Germany to foreign-born parents are to receive German nationality from birth if one of the parents has had a right of residence for at least five years. Dual or multiple citizenship, which is currently allowed for among EU citizens and under special circumstances, will be allowed as a rule (Koalitionsvertrag 2021, p. 118).
Citations:
BAMF (2021): Das Bundesamt in Zahlen 2020, Asyl, Migration und Integration, Bundesamt für Migration und Flüchtlinge.
BMI and BKA (2021): Politisch motivierte Kriminalität im Jahr 2020, Bundesweite Fallzahlen, Bundesministerium des Inneren, für Bau und Heimat und Bundeskriminalamt.
Destatis (2021): Bevölkerung und Erwerbstätigkeit, Bevölkerung mit Migrationshintergrund, Ergebnisse des Mikrozensus 2020, Fachserie 1, Reihe 2.2.
Geis-Thöne (2021): Deutliche Fortschritte bei der Arbeitsmarktintegration trotz Pandemie, IW-Report 28/2021.
OECD (2013): Recruiting Immigrant Workers: Germany 2013.
Koalitionsvertrag (2021): Mehr Fortschritt wagen, Bündnis für Freiheit, Gerechtigkeit und Nachhaltigkeit, Koalitionsvertrag zwischen SPD, Bündnis 90/Die Grünen und FDP.
According to the OECD (2013), reforms passed in the early 2010s “put Germany among the OECD countries with the fewest restrictions on labor migration for highly skilled occupations.”
The number of asylum applications peaked during the so-called refugee crisis at 745,545 applications in 2016 and has since decreased sharply. In 2020, in part due to pandemic travel restrictions and border closures, this number fell to 122,170 (BAMF 2021). Despite the crowding out of this topic by the pandemic, migration remains one of the country’s top challenges, which has a lasting impact on German politics. Since the refugee crisis of 2015 – 2016, the xenophobic AfD party has gained seats in all state parliaments.
Germany handled the short-run challenges of the large number of refugees that arrived in 2015/16 remarkably well, though the long-term challenge of successfully integrating refugees and asylum-seekers into the education system and labor market remains a crucial concern. Whereas labor market integration is proceeding faster than expected, labor market participation remains lower relative to other groups of the population with a migrant background. In March 2021, 31.8% of refugees in employment age from the main countries of origin were in regular employment. This compares to 46.6% of all migrants and to 63.1% of Germans (Geis-Thöne 2021). The pandemic brought a setback for many refugees employed in the service sector but this is believed to be a temporary phenomenon.
Much will ultimately depend on whether the process of broader cultural integration succeeds. So far, German civil society remains generally in favor of a society open to migrants. However, xenophobia is a manifest problem that is mirrored in a rising number of crime directed at those perceived to be foreigners. Hate crimes, including xenophobic attacks, increased from 8,600 cases in 2019 and to 10,200 cases in 2020 (BMI and BKA 2021).
The new government plans to reform the German nationality law. It wants to simplify and shorten the path to naturalization. Children born in Germany to foreign-born parents are to receive German nationality from birth if one of the parents has had a right of residence for at least five years. Dual or multiple citizenship, which is currently allowed for among EU citizens and under special circumstances, will be allowed as a rule (Koalitionsvertrag 2021, p. 118).
Citations:
BAMF (2021): Das Bundesamt in Zahlen 2020, Asyl, Migration und Integration, Bundesamt für Migration und Flüchtlinge.
BMI and BKA (2021): Politisch motivierte Kriminalität im Jahr 2020, Bundesweite Fallzahlen, Bundesministerium des Inneren, für Bau und Heimat und Bundeskriminalamt.
Destatis (2021): Bevölkerung und Erwerbstätigkeit, Bevölkerung mit Migrationshintergrund, Ergebnisse des Mikrozensus 2020, Fachserie 1, Reihe 2.2.
Geis-Thöne (2021): Deutliche Fortschritte bei der Arbeitsmarktintegration trotz Pandemie, IW-Report 28/2021.
OECD (2013): Recruiting Immigrant Workers: Germany 2013.
Koalitionsvertrag (2021): Mehr Fortschritt wagen, Bündnis für Freiheit, Gerechtigkeit und Nachhaltigkeit, Koalitionsvertrag zwischen SPD, Bündnis 90/Die Grünen und FDP.
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How effectively does internal security policy protect citizens against security risks?
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9
9
Internal security policy protects citizens against security risks very effectively.
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7
6
7
6
Internal security policy protects citizens against security risks more or less effectively.
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4
3
4
3
Internal security policy does not effectively protect citizens against security risks.
2
1
1
Internal security policy exacerbates the security risks.
In general, residents of Germany are well protected against security risks such as crime or terrorism. Following an increase from 2014 to 2016, the total number of recorded crimes has since fallen again. The total number of recorded crimes decreased from 6.4 million cases in 2016 to 5.3 million in 2020. While the year 2020 was unique due to lockdowns and mobility restrictions that strongly decreased the opportunity for crimes such as burglaries, numbers had already reached the low level of 5.4 million in 2019. The downward trend is thus real and has not been driven by the exceptional circumstances brought on by the pandemic (all data from BMI 2021).
The influx of nearly 900,000 refugees in 2015 and the years following fostered a heated discussion about a potential rise in crime. Crime rates differ significantly across migrant communities (Bundeskriminalamt 2019). The share of refugees from Syria, Afghanistan and Iraq among crime suspects is far below these countries’ shares in the total refugee population. Conversely, refugees from the Maghreb and other African countries, as well as from Serbia, comprise a disproportionate share of criminal suspects. In general, the higher crime rates among refugees compared with the native-born population can be explained by the much higher share of young men with low levels of education who are without employment, a group that tends to exhibit higher crime rates in general.
Several terrorist attacks by Islamist extremists have occurred since 2016 with the most severe attack taking place in December 2016, when Anis Amri killed 12 people and injured 62 by driving a truck into a Christmas market in Berlin. Right-wing terrorism is another significant threat with severe attacks in 2019 when an extremist targeted a synagogue in Halle and in 2020 when 11 people lost their lives in a right-wing attack in Hanau.
Politically motivated crimes are increasing (BMI 2021): The total number increased in 2020 strongly by 8.5%. Politically motivated violent crimes are more frequent from the left (1,526 in 2020) than from the right (1,092) and the recent increase of violence in 2020 is higher for criminals from the left (+45%) than from the right (+11%). For all kinds of political crimes, including non-violent incidents such as hate crimes and demagoguery (“Volksverhetzung”), the numbers for the right (23,604 in 2020) more than double those for the left (10,971). Political crimes related to foreign ideologies have fallen sharply in the first year of the pandemic (-46.6% in 2020) and are relatively infrequent overall (1,016 in 2020).
Citations:
BMI and BKA (2021): Politisch motivierte Kriminalität im Jahr 2020, Bundesweite Fallzahlen, Bundesministerium des Inneren, für Bau und Heimat und Bundeskriminalamt.
BMI (2021): Polizeiliche Kriminalstatistik 2020, Ausgewählte Zahlen im Überblick, Bundesministerium des Inneren, für Bau und Heimat.
Bundeskriminalamt (2019): Kriminalität im Kontext von Zuwanderung, Bundeslagebild 2018.
The influx of nearly 900,000 refugees in 2015 and the years following fostered a heated discussion about a potential rise in crime. Crime rates differ significantly across migrant communities (Bundeskriminalamt 2019). The share of refugees from Syria, Afghanistan and Iraq among crime suspects is far below these countries’ shares in the total refugee population. Conversely, refugees from the Maghreb and other African countries, as well as from Serbia, comprise a disproportionate share of criminal suspects. In general, the higher crime rates among refugees compared with the native-born population can be explained by the much higher share of young men with low levels of education who are without employment, a group that tends to exhibit higher crime rates in general.
Several terrorist attacks by Islamist extremists have occurred since 2016 with the most severe attack taking place in December 2016, when Anis Amri killed 12 people and injured 62 by driving a truck into a Christmas market in Berlin. Right-wing terrorism is another significant threat with severe attacks in 2019 when an extremist targeted a synagogue in Halle and in 2020 when 11 people lost their lives in a right-wing attack in Hanau.
Politically motivated crimes are increasing (BMI 2021): The total number increased in 2020 strongly by 8.5%. Politically motivated violent crimes are more frequent from the left (1,526 in 2020) than from the right (1,092) and the recent increase of violence in 2020 is higher for criminals from the left (+45%) than from the right (+11%). For all kinds of political crimes, including non-violent incidents such as hate crimes and demagoguery (“Volksverhetzung”), the numbers for the right (23,604 in 2020) more than double those for the left (10,971). Political crimes related to foreign ideologies have fallen sharply in the first year of the pandemic (-46.6% in 2020) and are relatively infrequent overall (1,016 in 2020).
Citations:
BMI and BKA (2021): Politisch motivierte Kriminalität im Jahr 2020, Bundesweite Fallzahlen, Bundesministerium des Inneren, für Bau und Heimat und Bundeskriminalamt.
BMI (2021): Polizeiliche Kriminalstatistik 2020, Ausgewählte Zahlen im Überblick, Bundesministerium des Inneren, für Bau und Heimat.
Bundeskriminalamt (2019): Kriminalität im Kontext von Zuwanderung, Bundeslagebild 2018.
Graph View
To what extent does the government demonstrate an active and coherent commitment to promoting equal socioeconomic opportunities in low- and middle-income countries?
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The government actively and coherently engages in international efforts to promote equal socioeconomic opportunities in low- and middle-income countries. It frequently demonstrates initiative and responsibility, and acts as an agenda-setter.
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6
7
6
The government actively engages in international efforts to promote equal socioeconomic opportunities in low- and middle-income countries. However, some of its measures or policies lack coherence.
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4
3
4
3
The government shows limited engagement in international efforts to promote equal socioeconomic opportunities in low- and middle-income countries. Many of its measures or policies lack coherence.
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1
1
The government does not contribute (and often undermines) efforts to promote equal socioeconomic opportunities in low- and middle-income countries.
In recent years, Germany has increased its ratio of official development assistance (ODA) to GNI substantially, and has reached the ODA target of 0.7% of GNI with an actual spending of 0.73% in 2020, putting it into a top position only surpassed by Turkey (due to the country’s expenses for hosting refugees), Sweden, Norway, Luxembourg and Denmark (OECD 2021). In the first year of the pandemic, Germany increased its development assistance, for example, to support vaccination campaigns, by more than $3 billion. This is the largest absolute increase in 2020 among OECD states (OECD 2021).
The country’s trading system is necessarily aligned with that of its European partners. In trade negotiations within the European Union, Germany tends to defend open-market principals and liberalization. This position is in line with the country’s economic self-interest as a successful global exporter. For agricultural products in particular, the EU’s Common Agricultural Policy (CAP) still partially shields European farmers from international competition, thus limiting the ability of developing countries to export their agricultural products to Europe. However, Germany has been more willing than peers such as France to consider a more liberal and open CAP that would provide greater benefits to developing countries and emerging markets.
Germany played a leading role in organizing and financing international efforts to mitigate the pandemic burden for developing countries, in particular by strengthening health systems, support for refugees, food security and crisis management, and by being an active player in and major donor to the international vaccination initiative COVAX (Rüb et al. 2021, Auswärtiges Amt 2022).
In 2021, Germany has enacted a supply chain law which defines clear and operational obligations based on the principle of due diligence. This implies that companies have to set up risk management systems that detect human rights violations. The requirements relate to the full supply chain but are more intense with respect to direct suppliers than for indirect suppliers. Beginning in 2024, the law will be gradually phased in and affect all companies with more than 1,000 employees.
Citations:
Auswärtiges Amt (2022): Deutschlands Einsatz gegen Covid-19, https://www.auswaertiges-amt.de/de/aussenpolitik/themen/gesundheit/covax/2395748 (accessed: 12 January 2022).
OECD (2021): Development Co-operation Report 2021, Shaping a Just Digital Transformation.
Rüb, Friedbert, Friedrich Heinemann and Reimut Zohlnhöfer (2021): Germany Report, Sustainable Governance in the Context of the COVID-19 Crisis, Sustainable Governance Indicators, BertelsmannStiftung.
The country’s trading system is necessarily aligned with that of its European partners. In trade negotiations within the European Union, Germany tends to defend open-market principals and liberalization. This position is in line with the country’s economic self-interest as a successful global exporter. For agricultural products in particular, the EU’s Common Agricultural Policy (CAP) still partially shields European farmers from international competition, thus limiting the ability of developing countries to export their agricultural products to Europe. However, Germany has been more willing than peers such as France to consider a more liberal and open CAP that would provide greater benefits to developing countries and emerging markets.
Germany played a leading role in organizing and financing international efforts to mitigate the pandemic burden for developing countries, in particular by strengthening health systems, support for refugees, food security and crisis management, and by being an active player in and major donor to the international vaccination initiative COVAX (Rüb et al. 2021, Auswärtiges Amt 2022).
In 2021, Germany has enacted a supply chain law which defines clear and operational obligations based on the principle of due diligence. This implies that companies have to set up risk management systems that detect human rights violations. The requirements relate to the full supply chain but are more intense with respect to direct suppliers than for indirect suppliers. Beginning in 2024, the law will be gradually phased in and affect all companies with more than 1,000 employees.
Citations:
Auswärtiges Amt (2022): Deutschlands Einsatz gegen Covid-19, https://www.auswaertiges-amt.de/de/aussenpolitik/themen/gesundheit/covax/2395748 (accessed: 12 January 2022).
OECD (2021): Development Co-operation Report 2021, Shaping a Just Digital Transformation.
Rüb, Friedbert, Friedrich Heinemann and Reimut Zohlnhöfer (2021): Germany Report, Sustainable Governance in the Context of the COVID-19 Crisis, Sustainable Governance Indicators, BertelsmannStiftung.