Germany is undertaking its most wrenching reappraisal ever of its social welfare policies. Dr. Kurt Biedenkopf, minister-president of Saxony, looks at the causes.
DRESDEN: The issue of social policy is very much alive today in the post communist democracies. Because living standards and inequality were low under socialism, an individual had in a way little to lose. On top of this, the state delivered an extensive system of benefits. As the regime changed, the supply of desirable goods increased conspicuously and growing income disparities made individuals realize that their social position was insecure. The cost of social services also came to constitute a heavy burden on state budgets, and the impact of high income transfers on the economy had to be considered. As the new democracies re-think their approach and look to the more advanced European models, it is important to ask what lessons they can draw from countries such as Germany, which have many more years of experience.
Germany is a very rich country and its social system looks enviable from the perspective of those who must anxiously struggle for the necessities of daily life. But there are also some disquieting lessons as well.
What makes the German "social state" more and more disputable is it’s expansion over the years that now reaches far beyond those who really need social protection. There is overall consensus in Germany that people without their own means of survival and without families or smaller local communities upon which to lean in hard times must be helped by the state. But nowadays, the social system is donating too large amounts to the middle class, rather than the poor. The middle class now makes up about 80% of the cost. We are talking about a system that has expanded to roughly 90% of the German population and that itself employs over 250,000 people. It is a tremendously expensive scheme with a troublesome impact on smaller communities and individual incentives.