Family dissolution and public policies in Germany: Social provisions and institutional changes since the 1980s
Germany has long been faced with low birth rates and a pronounced aging of society. Recently divorces and single parenthood have been on the rise. Family policies and regulations dealing with family break-up are thus confronted with new and greater challenges. After describing important changes in household and family composition in more detail, this paper outlines the regulation of the consequences of family break up in relation to alimony and child support. The main part of the paper focuses on public policies in support of families. Here monetary benefits as well as child care services are considered. Because of the increase of single-parent families a small-subsection specifically looks at special benefits for single parents. The analysis of child care and parental benefits, and their evolution in Germany, reveals considerable increases in benefits since the mid-1980s. The changes in child benefits and parental allowance can be broadly classified into three periods where benefits rise from low to high: 1) until 1985, benefits were very low; 2) in 1986, parental allowance was introduced, so that from 1986 to 1995 the level of benefits was moderate; 3) in 1996, the period of high benefits began and benefits were increased considerably. The 2007 reform of parental allowance led to an implicit indexation in which the benefit is now related to formerly earned income. This reform entailed clear increases for middle and high earners. However, low income earners and recipients of social transfers clearly lost when the benefit duration was reduced. Not only have cash benefits been increased, but child care services have also been extended in the western federal states. In terms of institutional reforms regarding alimony and child support, there has been little change compared to the development of family policy benefits.
Do new labour activation policies work? A descriptive analysis of the German Hartz reforms
The German Hartz reforms, introduced by the Red-Green coalition government in the years 2003 to 2005, form part of a broader pattern of European activation policies which have become known as new labour policies. The idea of these reforms was to reduce welfare dependency and to boost activity rates by making work pay, and by transforming the welfare state from a passive instrument of social protection to an enabling social investment that fosters universal labour force participation as the ultimate form of social inclusion. The German variety of these policies abolished earnings-related benefits to the long-term unemployed, partly fused the unemployment compensation scheme with the minimum income social assistance scheme and increased activating pressures on ablebodied people at working age by combining new sanctions with an extension of placement services. Based on a description of the relevant institutional changes, we show that means-tested benefits have become the major form of social transfer payments to the unemployed. The reforms also entailed a massive growth in German employment and especially in low-wage employment. As non-standard forms of employment proliferated, growing proportions of economically active people joined the ranks of the working poor by combining earnings from work with means-tested in-work benefits. Based on survey data from the German Socio-Economic Panel (GSOEP), we show that the working poor enjoy higher life satisfaction, social integration and civic engagement than the nonworking poor. However, these individual and social benefits of employment critically depend on pay levels and overall job quality, as our own analyses confirm for the case of men's life satisfaction. The welfare gains achieved by Germany's recent reforms may therefore be smaller than suggested by employment rates alone, because people near the poverty line are now more willing to make concessions and to accept job offers even if the jobs they get are of minor quality.
Social Security: Raising or Eliminating the Taxable Earnings Base
This report discusses the Social Security taxes that are levied on covered earnings up to a maximum level set each year. In 2010, this maximum—or what is referred to as the taxable earnings base—is $106,800.