Surveying the welfare state: challenges, policy development and causes of resilience

16
the first 1977 cost-containment law, the so-called Concerted Action in Health Care (Konzer-
tierte Aktion im Gesundheitswesen) was established as a corporatist body of interest concer-
tation designed to support the aims of this legislation (Rosewitz/Webber 1990; Dohler
1995: 387f.). This period also saw the first introduction of patients’ co-payments for medi-
cal services.

3.2 The ‘Era Kohl’ (1982-1998): Consolidation, Expansion and ‘Re-
structuring’

The new CDU/CSU-FDP coalition led by chancellor Kohl started its period in office with a
diagnosis of crisis, both in the economy, and in the systems of social security. As a conse-
quence, two steps were seen as necessary: putting on the breaks immediately with regard to
social expenditure and, in the long term, a restructuring of social policy with a stronger fo-
cus on solidity, security and stability as well as on individual abilities and initiative (2005:
99). Schmidt focuses his discussion of the Kohl period on to what extent the coalition
achieved its goals in consolidating social budgets. Here, he distinguishes two periods:
firstly, from 1982 until 1990 the government could book successes, while from 1990 on-
wards, this policy encountered reactional tendencies (2005: 100ff.).

The first period was characterized by a mix of cost-containment and improvement of reve-
nues, backed by Minister of Labour and Social Affairs Norbert Blüm.¹² To start with, the
new government carried on with a restrictive social policy, while stepping up the pace of
consolidation.¹³ In response, the opposition and trade unions were furious about what they
saw as large scale-retrenchments (Sozialabbau), while the government stressed that con-
solidation had been carried out carefully and in a socially balanced manner. With the benefit
of hindsight, the 1980s were termed a period of ‘smooth consolidation’ compared to the
processes in other European countries (Schmidt 2005:11). However, there was a counter-
movement to this trend, which, from 1985 onwards brought about improvements in social
policy, such as in unemployment insurance (longer entitlements for older unemployed) and
an expansion of family policy. Therefore, the first period saw no dismantling of the welfare
state but high doses of cost-containment while the welfare state was left essentially intact.

The second period, in contrast, saw further attempts to consolidate social budgets but these
were overshadowed by forces that had a contrary and thus expansionary effect. They had to
do with the decision to generously fund reunification, and there was an underestimation of
its costs, a rapidly rising unemployment rate and the set-up of a new social programme,

¹² The ratio social expenditure/GDP was reduced accordingly from almost 31 per cent to 27.6 per cent in
1990. Programmes which contributed most to this trend, were old-age and widowers’ pensions, health
care policy and unemployment insurance.

¹³ This translated into several cost-cutting reforms in the years 1983 and 1984, which, among others,
targeted social assistance (decrease of indexation), unemployment insurance and assistance benefits
(level of benefits/tightened eligibility rules) and pensions (faster introduction of health insurance contri-
bution, deferral of automatic adjustments and limitation of disability pensions).

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