Germany has one of the most comprehensive welfare systems. As in other developed democracies, in Germany too social spending represents the largest individual item of public spending. Around 918 billion euros was committed to public social spending in 2016, equating to a share of 29 percent of gross domestic product (GDP). The tradition of the state welfare system goes back to the age of industrialisation in Germany in the second half of the 19th century and is associated with then Reich Chancellor Otto von Bismarck. It was under Bismarck that firstly mandatory health insurance for workers was introduced in 1883, and with the social legislation that was expanded in the following years the basis was created for an orientation on the welfare state. The principle of the welfare state is embedded in article 20, paragraph 1 and article 28 of the Basic Law of the Federal Republic of Germany. Politicians and social players must continually renegotiate which form it takes in a dynamic process; particularly demographic change necessitates adjustments.
Social network to protect against existential risks
Today a tightly woven web of state health, pension, accident, nursing care, and unemployment insurance protects citizens against the consequences of existential risks and threats. Moreover, the social network encompasses a basic income for pensioners and those permanently unable to work as well as fiscal benefits such as the family allowance system (child benefit, tax advantages). Following a further increase in early 2018, families receive 194 euros monthly for the first and second child, 200 euros for the third, and 225 euros for additional children. The Grand Coalition formed in March 2018 intends to increase child benefit again in 2019, namely by 25 euros. The Coalition Agreement also envisages anchoring children’s rights in the Basic Law.
The pension package that entered into force in 2014 especially improves the situation of elderly people. The reform saw the introduction, among other things, of the full pension from 63 years of age and the so-called mother’s pension, intended to serve as an acknowledgement of mothers’ work raising children. Women who raised children born before 1992 did not have the childcare options available to parents today and as such fewer opportunities in the world of work. The mother’s pension acknowledges women’s work in raising children. Since July 2014 around 9.5 million women (and a small number of men) have received over 300 euros more in pension payments per child per year. Furthermore, since 1 July 2014 people covered by the pension insurance scheme who have paid in for 45 years have been entitled to retire at 63 without their pension being subject to deductions. By the end of February 2018 there had been some 982,000 applications.
Health insurance cover is a legal requirement in Germany. Medical care is guaranteed by a broad spectrum of hospitals, practices, and rehabilitation clinics.