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The euro is the currency of the European Monetary Union and after the US dollar the second most important member of the international currency system. Together with the national central banks, the European Central Bank (ECB), headquartered in Frankfurt/Main, is responsible for monetary policy with regard to the euro. The euro is the official currency in 20 of the 27 EU member states. The euro was physically introduced in “Euroland”, including Germany, on January 1, 2002, having served as a currency of deposit since the beginning of 1999.
The Federal Government and cabinet is made up of the Federal Chancellor and the Federal Ministers. While the Chancellor holds the power to issue directives, the ministers have departmental powers, meaning that they independently run their respective ministries in the framework of those directives. Moreover, the cabinet abides by the collegial principle, in disputes the Federal Government decides by majority. The affairs of state are managed by the Chancellor.
Almost all citizens in Germany have health insurance, whether as a compulsory member of the statutory health insurance scheme (90 percent) or a private health insurance scheme (10 percent). The health insurance companies cover the cost of medical treatment, medication, hospitalization and preventive health care. Contributions to the health insurance scheme are made by employees and employers. Non-employed family members of those in a compulsory health insurance scheme do not pay any contributions.
The statutory pension insurance is the most important pillar of old-age provisions. Its financing is split: The monthly contributions paid by employees and employers pay the pensions of those currently in retirement. Through their contributions, those insured acquire some rights when they themselves become pensioners. In turn, coming generations provide for these future rents with their contributions (cross-generational contract). In addition, company and private pensions are the second and third pillars of provisions for old age. Under certain conditions these also enjoy government support.
The Basic Law determines that Germany is a constitutional state: All state authorities are subject to judicial control. Section 1 of the Basic Law is of particular relevance. It stipulates that respect for human dignity is the most important aspect of the constitution: “Human dignity shall be inviolable. To respect and protect it shall be the duty of all state authority.” Among other things, the other basic rights guarantee the freedom to act within the law, equality before the law, freedom of the press and media, freedom of association and protection of the family.
In determining that it is the people who exercise power through special bodies, the Basic Law lays down representative democracy as the form of rulership. Furthermore, it determines that Germany is a constitutional state: All state authorities are subject to judicial control. Another principle of the constitution is that Germany is a federal state, in other words the ruling authorities are divided up into a number of member states and the central state. In conclusion, the Basic Law defines Germany as a welfare state. The welfare state requires the political system to take precautions such that people are guaranteed a decent standard of material well-being in case of unemployment, disability, illness and in old age. One particular feature of the Basic Law is the so-called “eternal character” of these governing constitutional principles. Subsequent alterations to the Basic Law or a completely new constitution cannot encroach on the basic rights, the democratization of sovereignty, the federal state and the welfare state.
In Germany those with no work can claim support. Anyone who is unemployed and over the past two years has paid contributions to the state unemployment insurance system for at least 12 months is entitled to unemployment benefit (60 to 67 percent of their last net income). This unemployment benefit is financed through the contributions of which employers and employees each pay half. The longest period for which unemployment benefit can be drawn is between six and 24 months. After that period those looking for work can apply for basic support (known as “unemployment benefit II”), which is assessed according to the applicant’s needs. In the economic crisis the system of short-time work payment financed from tax revenue proved its worth. It enabled companies to avoid redundancies in a difficult economic situation.