Germany

   

Social Policies

#8
Key Findings
Showing gains across its social system, Germany receives a high overall ranking (rank 8) in the area of social policies. Its score on this measure has gained 0.3 points relative to 2014.

Education outcomes have improved in recent years, with the quality of primary and higher education showing consistent gains. The country’s dual vocational-training approach is closely tied to labor-market demand, resulting in low youth-unemployment rates. The employment boom has resulted in record low level of households on social support, despite the recent influx of refugees.

The mixed public and private health care system is of high quality, but cost pressures are growing. Parental-leave programs are generous. Child-care availability is improving. Women’s employment rates are quite high, though many women work only part time. Pension benefits have been boosted 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. However, a xenophobic party has capitalized on public concerns, becoming the third-largest parliamentary group. The government has expanded development aid particularly to North Africa, seeing to address drivers of emigration.

Education

#9

To what extent does education policy deliver high-quality, equitable and efficient education and training?

10
 9

Education policy fully achieves the criteria.
 8
 7
 6


Education policy largely achieves the criteria.
 5
 4
 3


Education policy partially achieves the criteria.
 2
 1

Education policy does not achieve the criteria at all.
Education Policy
8
The Programme for International Student Assessment (PISA) is still an important indicator for the quality of a country’s educational system. Since the first PISA study in 2000, the OECD has often repeated its criticism that access to education in Germany is stratified and educational attainment is dependent on pupils’ social backgrounds. Educational opportunities are particularly constrained for children from low-income families and for immigrants. PISA results from 2012, however, had shown significant improvements, reflecting possibly a catalytic effect of the “PISA shock” in the early 2000s. Germany ranked above the OECD average in mathematics, reading and science, and the importance of students’ socioeconomic background had lessened. While in 2000, the level of social equity in German education was among the lowest of all OECD countries, Germany had risen to around the OECD average in 2012. Until 2018, the overall quality of the primary and higher education system constantly improved. Germany now ranks 4 out of 137 countries.

In contrast to other countries, the proportion of individuals with tertiary education has remained astonishingly low for several decades. The proportion of young people with tertiary education in 2018 still lags behind the OECD average but improvements are obvious. Overall, close to 60% of the population have completed upper secondary education. The risk of being unemployed is five times higher for people without upper secondary education than for people who have completed tertiary education. The teaching workforce is one of the oldest in the OECD, only surpassed by Italy. Teacher salaries are among the highest of OECD countries. Participation in high-quality early-childhood education is high. In 2017, more than one-third (37%) of children under the age of three are enrolled.

In general, Germany’s education system is strong in terms of vocational training, providing skilled workers with good job and income prospects. The rate of post-secondary vocational education and training is about 20%, much higher than the OECD average. The employment rate for vocation graduates aged 25 to 34 years old is almost as high as for those with tertiary education. 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 (rank second among OECD countries). 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.

Citations:
Global Competitive Report (2018):
http://www3.weforum.org/docs/GCR2018/05FullReport/TheGlobalCompetitivenessReport2018.pdf

OECD (2018a): Education at a Glance, Country Note: Germany.
https://read.oecd-ilibrary.org/education/education-at-a-glance-2018/germany_eag-2018-47-en#page8XXXXX

OECD (2018b): Germany, Overview of the Education System.
http://gpseducation.oecd.org/CountryProfile?primaryCountry=DEU&treshold=10&topic=EO

Social Inclusion

#7

To what extent does social policy prevent exclusion and decoupling from society?

10
 9

Policies very effectively enable societal inclusion and ensure equal opportunities.
 8
 7
 6


For the most part, policies enable societal inclusion effectively and ensure equal opportunities.
 5
 4
 3


For the most part, policies fail to prevent societal exclusion effectively and ensure equal opportunities.
 2
 1

Policies exacerbate unequal opportunities and exclusion from society.
Social Inclusion Policy
8
Germany has a mature and highly developed welfare state, which guarantees a subsistence level of income to all citizens. The German social security system is historically based on the insurance model, supplemented by a need-oriented minimum income. Unemployment benefits have required some supplementation over the last decade and have to some extent even been replaced by need-oriented minimum levels of income.

There are a variety of minimum income benefit schemes for unemployed (“Hartz IV”), disabled and elderly people, and asylum-seekers. The ongoing employment boom has considerably reduced the number of households in need of support. In November 2018, for the first time since the introduction of the Hartz system, the number of supported households (“Bedarfsgemeinschaften”) has fallen below three million (2.996 million). This amounts to a reduction of 6.2% over the previous year. This positive development is even more remarkable as, since 2015, 750,000 refugees have become recipients of income support. The number of individual recipients of income support with a German passport has strongly declined from 5.74 million in 2008 to 3.9 million in 2018.

Since January 2015, there exists a national statutory minimum wage designed to stabilize the market income of low-income households. Since January 2018, the statutory minimum wage has been €8.84 and is due to increase in 2019 to €9.19 and in 2020 to €9.35. No massive job losses are noticeable as yet.

Future challenges include an increasing threat of poverty in old age and the integration of a large number of asylum-seekers – with the number of arrivals having peaked in 2015 but decreasing significantly since then. Since 2015, public agencies, supported by civil society organizations, have been largely effective in managing these issues – not only providing essential living conditions to asylum-seekers but also showing some promising indications of successfully integrating asylum-seekers into the education system and the labor market.

Citations:
FAZ (2019): Erstmals weniger als drei Millionen Hartz-IV-Haushalte, Frankfurter Allgemeine Zeitung, 04.01.2019.

Statistisches Bundesamt (2018):
https://de.statista.com/statistik/daten/studie/1396/umfrage/leistungsempfaenger-von-arbeitslosengeld-ii-jahresdurchschnittswerte/

Health

#11

To what extent do health care policies provide high-quality, inclusive and cost-efficient health care?

10
 9

Health care policy achieves the criteria fully.
 8
 7
 6


Health care policy achieves the criteria largely.
 5
 4
 3


Health care policy achieves the criteria partly.
 2
 1

Health care policy does not achieve the criteria at all.
Health Policy
8
The German health care system is of high quality, inclusive and provides health care for almost all citizens. Most employees are insured in the public health insurance systems, whereas civil servants, self-employed persons, persons with high income and some other groups are privately insured. The system is, however, challenged by increasing costs. Recently, the system’s short-term financial stability is better than expected due to buoyant contributions resulting from the employment boom. However, long-term financial stability will be challenged by an aging population. Health care spending as a proportion of GDP in Germany is the fifth highest in the OECD and considerably higher than the OECD average (close to 10% of GDP compared to an OECD average of 6% of GDP). In per capita terms, health care spending in Germany is far above the OECD average.

In its coalition agreement, the grand coalition negotiated a variety of reform measures to increase the quality of health care, redefine some financial details, and reorganize the registration of physicians in private practice, and the distribution of practicing doctors and hospitals. The financing side, in contrast, has received little attention recently. The only substantial change has been the decision that the insurance company-specific additional contribution rate will be financed equally by both employers and employees from January 2019. This additional contribution is the only significant competitive element in the otherwise fully harmonized statutory insurance market. It comes on top of the general contribution rate of 14.6% that has always been shared equally between both sides. Recently, strong employment rates and incomes has allowed most insurance companies to reduce their additional contribution rates. Moreover, the federal subsidy for the national health fund was raised in 2017 by €0.5 billion to a total of €14.5 billion, which was kept constant in 2018.

In October 2018, the cabinet decided to increase the contribution rate for long-term care insurance by 0.5 percentage points. As a result, an additional €5 billion will be available for improvements in long-term care. A proportion of the additional revenue will feed a precautionary fund intended to stabilize future contribution rates. In addition, families that wish to provide care at home will be given greater support.

While the government has been ambitious in fostering a high-quality health system, it is not sufficiently limiting spending pressure. In particular, it has been hesitant to open the system to more competition (e.g., with respect to pharmacies). When the European Court of Justice recently ruled against fixed prices for prescription drugs, the minister of health was quick to announce a ban on mail-order pharmaceuticals.

Citations:
OECD 2018:
http://www.oecd.org/health/health-systems/Health-Spending-Latest-Trends-Brief.pdf

Statistisches Bundesamt 2018: https://de.statista.com/statistik/daten/studie/244326/umfrage/zuschuss-des-bundes-zum-gesundheitsfonds/

Families

#12

To what extent do family support policies enable women to combine parenting with participation in the labor market?

10
 9

Family support policies effectively enable women to combine parenting with employment.
 8
 7
 6


Family support policies provide some support for women who want to combine parenting and employment.
 5
 4
 3


Family support policies provide only few opportunities for women who want to combine parenting and employment.
 2
 1

Family support policies force most women to opt for either parenting or employment.
Family Policy
8
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, has been extended. Paternity leave has been introduced and promoted. Today, a parent’s net income while on leave is on average just 25% less than their net income prior to leave. Additionally, the number of public childcare places has increased. A legal right to childcare beginning at age one came into effect in August 2013. In March 2017, the proportion of children aged under three with access to a childcare institution was 33.1%, a small decrease of 0.4% in comparison to March 2016, although the absolute number increased. In June 2017, the German Bundestag voted to increase the number of daycare places by 110,000 by 2020 with a financial commitment of €1.13 billion.

In summary, these measures, in combination with an increasing shortage of qualified labor, have led to a considerable increase in women’s labor market participation. While in 2005 only 59.6% of 15- to 64-year-old women were employed, this has increased to about 70% by 2017 – 10 percentage points above the OECD average. In the European Union, only Sweden and Latvia have a higher female employment rate. However, 37% of women in Germany are working part-time, which is higher than the OECD average of 25%.

Citations:
Bundesministerium für Familie, Senioren, Frauen und Jugend (2018):
https://www.bmfsfj.de/bmfsfj/themen/familie/kita-und-hort–zahl-der-betreuten-kinder-waechst/126700

Destatis (2018): Arbeitsmarkt auf einen Blick, Deutschland und Europa
https://www.destatis.de/DE/Publikationen/Thematisch/Arbeitsmarkt/Erwerbstaetige/BroeschuereArbeitsmarktBlick0010022189004.pdf?__blob=publicationFile

OECD 2018:
https://www.oecd.org/germany/Gender2017-DEU-de.pdf

Pensions

#22

To what extent does pension policy realize goals of poverty prevention, intergenerational equity and fiscal sustainability?

10
 9

Pension policy achieves the objectives fully.
 8
 7
 6


Pension policy achieves the objectives largely.
 5
 4
 3


Pension policy achieves the objectives partly.
 2
 1

Pension policy does not achieve the objectives at all.
Pension Policy
6
Germany has engaged in a significant number of pension reforms in recent decades. The comprehensive and far-reaching 2004 reform aimed to make the pension system more sustainable through increasing the retirement age and a reduction in future pension increases linked to demographic change. Reforms in recent years have rather gone in the opposite direction. 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 for housewives with children born before 1992 relative to those with children born after 1992. The calculation will now include two additional years of (fictive) contributions. It is expected that about seven million mothers will benefit and is the most expensive measure within the reform package. Pensions for people with disabilities were improved. The cost of these reforms is estimated to be €160 billion by 2030. Finally, the government has decided to further converge the pension formula for the east and the west of Germany with full convergence by 2025.

The largest challenge for the system’s stability is demographic change, with the baby-boomer generation reaching retirement age in the 2020s. This will dramatically increase the ratio of pensioners to the active workforce. This trend would automatically lead to cuts in the level of pensions (relative to the average wage level) and may increase the risk of poverty in old age. To address this challenge, in 2018 the government agreed to establish the so-called double stop-line. This includes the double guarantee that the contribution rate will not increase above 20% and the pension level will not fall below 48% of the average wage. However, these guarantees will only hold to 2025, while the strong increase in the pensioner-to-worker ratio will occur after that. But even this temporary double guarantee requires a drastic increase in federal subsidies for the pension system. These subsidies are already increasing. In 2017, federal subsidies reached a level of €67.8 billion compared to €62.43 billion in 2015

The uncertain medium- and long-term sustainability of the system stand in strong contrast to the comfortable short-run development, which mirrors the employment boom and rising salaries. The contribution rate has fallen from 19.9% in 2011 to 18.6% in 2018. At the same time, pension payments have increased in a dynamic way. In the west of Germany, pension payments increased 4.25% in 2016, 1.9% in 2017 and 3.22% in 2018. In the east of Germany, pension payments increased 5.95% in 2016, 3.59% in 2017 and 3.37% in 2018. To some extent, however, increasing health care contribution rates and long-term care insurance costs have reduced net pension increases.

Citations:
SPIEGEL Online 2018:
http://www.spiegel.de/wirtschaft/soziales/rente-grosse-koalition-einigt-sich-auf-reform-was-bedeutet-das-a-1225438.html

Deutsche Rentenversicherung: Rentenversicherung in Zahlen 2018:
hhtps://www.deutsche-rentenversicherung.de/cae/servlet/contentblob/238692/ publicationFile/61815/01_rv_in_zahlen_2013.pdf

Integration

#12

How effectively do policies support the integration of migrants into society?

10
 9

Cultural, education and social policies effectively support the integration of migrants into society.
 8
 7
 6


Cultural, education and social policies seek to integrate migrants into society, but have failed to do so effectively.
 5
 4
 3


Cultural, education and social policies do not focus on integrating migrants into society.
 2
 1

Cultural, education and social policies segregate migrant communities from the majority society.
Integration Policy
8
According to new data, 23.6% of the people living in Germany have a migrant background. While Germany already had an extremely liberal regime for migrants from other EU member states, labor migration from non-EU countries has also been liberalized. According to the OECD in 2013, these reforms “put Germany among the OECD countries with the fewest restrictions on labor migration for highly skilled occupations.” Nevertheless, there is an ongoing public debate about the need to modernize immigration legislation further.

When the number of refugees claiming asylum in Germany far exceeded prior levels in 2015, the topic of immigration and integration became a priority issue among the public. Asylum applications numbered 127,525 in 2018, 187,226 in 2017, 745,545 in 2016 and 476,649 in 2015. Although a majority of the population initially appeared to welcome the government’s open approach, skepticism increased as the numbers of refugees claiming asylum remained high, and safety and crime concerns grew (in particular following the 2015 New Year’s Eve incidents in Cologne, where numerous migrants were arrested for sexual assault and robbery). Furthermore, xenophobic parties (e.g., the AfD) quickly began to organize an opposition to the arrival of refugees. The AfD gained seats in all state parliaments and became the third strongest party in the Bundestag following the elections in 2017, though none of the traditional democratic parties are willing to cooperate with it. Initially, the government lacked a comprehensive crisis management strategy. However, after disputes between the coalition parties, the government started to develop a more consistent strategy with substantial financial support for states and municipalities, the provision of early integration and language courses, and special support for child refugees traveling without their parents.

The long-term challenge of integration remains a crucial concern, including the successful integration of refugees into both the education system and labor market. Recently, a joint study of the OECD and the European Commission reported that Germany has made clear progress in integrating migrants. According to the report, the country shows a better integration performance than other countries with a comparable immigration history. Labor market integration is particularly successful with an increase in the employment ratio of foreign-born immigrants from 59% in 2006 to 67% in 2017. Remaining deficiencies relate to a relatively high share of young migrants with low qualifications.

Beyond labor market integration, much will ultimately depend on whether broader cultural integration will succeed. So far, German civil society remains in favor of integrating refugees but polarization on this issue has increased. There is a danger of strengthening xenophobia if problems of cultural alienation and safety concerns grow. But, in this regard, recent data points to a relatively positive development. Immigrants report less discrimination in Germany than in other EU member states on average and less than immigrants in Germany reported 10 years ago. Furthermore, the perception of the German population toward migrants today is more positive than it was 10 years ago.

Besides these general developments, there are particular issues with respect to the largest immigrant group, which is from Turkey. The deteriorating democratic performance of Turkey has raised issues of split loyalties. German-Turkish conflicts have overshadowed attempts to further strengthen relations between the German state and official Muslim organizations. In 2016, the German Islam Conference, which assisted in the development of an intercultural dialogue between government officials and Muslim civil society organizations, celebrated its 10-year anniversary. However, its prospects of success are highly contested and its termination has often been considered, including by the responsible minister, Horst Seehofer. The current government plans to restart the conference at the end of November 2018 and concentrate on a new support program “Mosques for Integration” (Moscheen für Integration), supporting training and study courses for Muslim theologians at German universities.

Overall, the way Germany logistically dealt with the inflow of almost a million refugees in a very brief period of time is impressive and there are increasing signs that the integration process has started in a more promising way than was the case with immigration waves in the past. But there is no doubt that integration remains an immense task.

Citations:
BAMF 2018: Aktuelle Zahlen zu Asyl, Oktober 2018:
http://www.bamf.de/DE/Infothek/Statistiken/Asylzahlen/AktuelleZahlen/aktuelle-zahlen-asyl-node.html

bpb (Bundeszentrale für politische Bildung) (2018)
http://www.bpb.de/nachschlagen/zahlen-und-fakten/soziale-situation-in-deutschland/61646/migrationshintergrund-i

Deutsche Islamkonferenz 2018
http://www.deutsche-islam-konferenz.de/DIK/DE/DIK/01_UeberDieDIK/01_Aktuelles/10dik2018-auftaktsitzung-
resuemee/auftakt-resuemee-dik-inhalt.html?nn=3331094

OECD 2019: Deutliche Fortschritte bei der Integration von Zuwanderern, Herausforderungen bleiben aber bestehen, 16.01.2019, http://www.oecd.org/berlin/presse/deutliche-fortschritte-bei-der-integration-von-zuwanderern-herausforderungen-bleiben-aber-bestehen-16012019.htm

Safe Living

#19

How effectively does internal security policy protect citizens against security risks?

10
 9

Internal security policy protects citizens against security risks very effectively.
 8
 7
 6


Internal security policy protects citizens against security risks more or less effectively.
 5
 4
 3


Internal security policy does not effectively protect citizens against security risks.
 2
 1

Internal security policy exacerbates the security risks.
Internal Security Policy
7
In general, residents of Germany are well protected against security risks such as crime or terrorism. Crime rates fluctuate but have not systematically risen over recent years. There was an increase in the recorded total number of crimes from 2013 (5.96 million) to 2016 (6.37 million). But 2017 has seen a decrease to 5.76 million cases which is the lowest number since the early 1990s.

The influx of nearly 900,000 refugees between 2015 and 2018 fostered a heated discussion about a potential rise in crime. However, a special survey of the Federal Criminal Police Office (Bundeskriminalamt) made clear that refugees and asylum-seekers do not display any increased propensity toward criminality compared to German citizens. On the contrary, crime rates of immigrants declined by about 18% compared to 2015. Offenses involving immigrants mostly take place between different groups of immigrants (resulting from ethnic or religious tensions), and often in integration centers and other institutions for incoming migrants.

Notwithstanding, during the 2015 New Year’s Eve celebrations in Cologne and other German cities, hundreds of sexual assaults were reported. Victims and police officers reported that the perpetrators had been men mostly of Arab or North African descent. The attacks triggered a heated debate that often was accompanied by strong prejudices against migrants and foreigners. However, apart from a few spectacular exceptions, the number of suspected immigrants was 167,268 in 2017, a slight decrease compared to 2016.

In addition, several terrorist attacks by Islamist extremists over the course of 2016 to 2018 as well as planned attacks prevented by the police clearly indicate an increase in the risk of terrorist attacks. The most important of these attacks seems to be the attack on 19 December 2016 in which Anis Amri killed 11 people and injured 55 by driving a truck into a Christmas market in Berlin. Islamist extremists are growing in number and attracting support principally among younger German Muslims, but also among some refugees.

Concerning politically motivated offenses and extremist activities (by right-wing, left-wing, and foreign groups and organizations), the number has decreased by about 5% overall. Politically motivated violence sunk to 39,505 incidents. Violent attacks by left-wing groups increased in 2017 to nearly 2,000 incidents, a rise of 15% compared to 2016. This was because of the G-20 meeting in Germany, which was accompanied by violent protests and riots.

After a dramatic increase in the number of xenophobic attacks on accommodations for asylum-seekers at the end of 2015 (1,031 attacks), according to the Federal Criminal Police Office (Bundeskriminalamt), the number of incidents declined between 2016 and 2018.

Citations:
BKA (Bundeskriminalamt) (2018a): Kriminalität im Kontext der Zuwanderung: Bundeslagebild 2017, Berlin
BKA (Bundeskriminalamt) (2018b): Polizeiliche Kriminalstatistik 2017

Global Inequalities

#7

To what extent does the government demonstrate an active and coherent commitment to promoting equal socioeconomic opportunities in developing countries?

10
 9

The government actively and coherently engages in international efforts to promote equal socioeconomic opportunities in developing countries. It frequently demonstrates initiative and responsibility, and acts as an agenda-setter.
 8
 7
 6


The government actively engages in international efforts to promote equal socioeconomic opportunities in developing countries. However, some of its measures or policies lack coherence.
 5
 4
 3


The government shows limited engagement in international efforts to promote equal socioeconomic opportunities in developing countries. Many of its measures or policies lack coherence.
 2
 1

The government does not contribute (and often undermines) efforts to promote equal socioeconomic opportunities in developing countries.
Global Social Policy
8
In absolute terms, Germany ranks third among donor countries with respect to the provision of official development assistance. Relative to its gross national income (GNI), Germany ranks seventh among the SGI countries.

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 European Union’s Common Agricultural Policy 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 open than peers such as France to a liberal approach that would provide greater benefits to developing countries and emerging markets.

In October 2018, the Merkel government started an initiative to strengthen economic developments in Africa. It invited 12 African governments to Berlin and announced an investment fund comprising about €1 billion. The fund is intended to foster economic developments and encourage private investments in the respective countries. It is claimed that the dramatic increase in refugees arriving in Germany since 2015 may have increased the German government’s awareness of the importance of stable social, economic and political conditions in developing countries. This also has a clear budgetary impact: the 2018 draft federal budget proposes to increase the resources of the Federal Ministry for Economic Cooperation and Development by €0.8 billion. In 2019, the ministry’s budget will for the first time total more than €10 billion. The ministry will focus in particular on addressing the drivers of emigration from North Africa, and helping Syria and neighboring countries.

Citations:
BMZ (Bundesministerium für wirtschaftliche Hilfe und Entwicklung) (2018)
https://www.bmz.de/de/presse/aktuelleMeldungen/2018/november/181109_Minister-Mueller-Haushalt-2019-staerkt-Entwicklungspolitik-Koalitionsvertrag-wird-umgesetzt/index.html
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