14
forms, as the supporters of the Reformstau perspective would argue? The answer is given
in the form of an overview of German social policy development, focusing on the changes
to the three main programmes, old-age pensions, unemployment insurance and health care
Its purpose is to offer a general impression of whether reforms (of the three programmes
and generally) were more incremental or more comprehensive (and possibly structural) in
character rather than tracing whether different types of pressure had resulted in matching
policy amendments (the latter would be beyond the scope of this study and would warrant a
distinct research project). Also, it presents information that cannot be included in the case
studies, as they zoom in on particular reform processes, but it acquaints the reader with the
general picture of German social policy development over time. In terms of its time frame,
the overview covers the main phases of social policy development since the end of the
‘Golden era’ of the welfare state and is structured by the periods of subsequent coalition
governments. For each period, I will describe the general characteristics of each govern-
ment’s approach to social policy before summarizing the main policy changes in each of the
three programmes, including major reform legislation. The main purpose of these summa-
ries is to indicate overall policy trends; they are not intended to cover each reform in detail.
3.1 The Social-Democrat/Liberal Coalition (1969-1982): Expansion
and the Beginning of Consolidation9
From 1969 onwards, the new Social-Democrat/Liberal (SPD-FDP) coalition set the German
welfare state on an expansionary course, which formed part of a common reform plan
backed by both parties.10 A prime example of this expansionary course, which took place
across all programmes expanding the circle of programme beneficiaries and raising the lev-
els of transfers and services, was the pension reform of 1972 (see for the main provisions
Schmidt 2005: 94). That course of widening and deepening the welfare state had to take a
blow with the recession of 1974, when, for the first time, a financial crisis in social policy
budgets became a real possibility. The first reaction of policy-makers was hesitant, and first
cost containment-measures only followed after the change in leadership from Chancellor
Willy Brandt to Helmut Schmidt in 1974. The 1975 budget initiated a different kind of so-
cial policy and first of all introduced cuts in active and passive labour market policy, includ-
ing unemployment benefits. After the federal elections in 1976, this trend of cost contain-
9 The general part of this and following two sections are based on Schmidt 2005, Chapter 1.4.
10 Quantitative measures of welfare state activity confirmed this new strategy: the percentage of the popu-
lation living primarily from social security income rose from 14.4 per cent in 1969 to 18.2 per cent in
1982 (reflecting more pensioners and more people receiving unemployment insurance) and the ratio
social expenditure/GDP climbed from 24.6 per cent in 1969 to a high of 31.4 per cent in 1975 and only
slightly fell to 30.7 per cent in 1982. This expansion was primarily financed from higher contributions,
which also rose from 27.8 per cent at the beginning of the period to an impressive 34 per cent at its end
(Schmidt 2005: 93)