4 - 2003

Reforming the welfare state

Long on proposals – short on agreement

It is hard to keep track of the debate on social welfare reform. Almost every day, commissions appointed either by the government or by the opposition, or set up by various interest groups, offer new proposals. In addition, many previous proposals continue to be discussed publicly, and some have already received government executive approval. Others have been adopted by the lower house of the parliament; many of these require confirmation by the Bundesrat, the upper house which represents the Bundesländer, while others do not. The Christian Democratic and Liberal opposition parties currently have the majority in the Bundesrat, so the agreement of the opposition has to be sought for important reform projects.

The following is a list of terms and major proposals made by various commissions and groups.

Agenda 2010

A comprehensive government proposal presented in March 2003 for reform of the labour market, restructure of the social welfare system, (pensions and health care), restoration of state finances (tax reform, reduction of subsidies) and for economic growth.

Hartz Commission(s)

A government commission, primarily concerned with the labour market. Labour offices would be turned into job centres. Unemployment compensation would be combined with social welfare.

Rürup Commission

A government commission, primarily concerned with pensions and health insurance systems. It calls for the retirement age to be raised and for a flat rate premium to be paid for health insurance. This would mean that not only workers and employees have to pay health insurance premiums, as usual, but also government officials and self-employed persons. There would be reduced rates for families and low wage earners.

Herzog Commission

Appointed by the Christian Democratic Party, it calls for shortened periods for unemployment compensation, raising the retirement age, reduced health insurance benefits (no more dental care benefits), and eliminating one annual bank holiday to pay for long-term care insurance.

Koch/Steinbrück proposals

The prime ministers of the German Bundesländer Hesse and North Rhine-Westphalia are calling for a gradual reduction (4% a year) of about half of all government subsidies. This would affect subsidies which total some 77 billion euros annually.

Proposals from the left wing of the governing Social Democratic party

Their critique is that the government proposals are a giveaway to the rich and big business. Their demands include billions in investments, higher inheritance taxes, and citizens’ (social security) insurance, for which everyone pays, to finance a minimal pension.