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



17

long-term care insurance, in 199414. Apart from consolidating social budgets, the Kohl gov-
ernment also intended to carry out qualitative changes in the welfare state or restructuring
(
Umbau). However, such restructuring was to conserve its social insurance character and
leave the right of the social partners to conclude collective agreements (
Tarifautonomie)
untouched.15

How were the major programmes affected by the phases of consolidation and the intentions
of restructuring? It is convenient to distinguish again two periods here, one before and one
following reunification. Starting with labour market policy, the 1980s were synonymous
with ‘selective cuts and targeted improvements’ (Clasen 2005: 64). In 1983 and 1984, this
meant a repetition of the previous pattern of ‘small and dispersed cuts, which mainly disad-
vantaged peripheral workers, while refraining from benefit retrenchment which might affect
core workers’. Between 1984 and 1987, the pattern of ‘selective retrenchment’ turned into
one of ‘selective expansion’ (e.g. easier access to unemployment benefit, extending entitle-
ment periods for some groups from twelve to thirty-two months). Subsequently, there was a
reversal to selective retrenchment when active labour market measures were cut and access
to benefits was restricted for people with less continuous employment histories (Clasen
2005: 65). Bleses and Seeleib-Kaiser similarly note a selective trend towards recommodifi-
cation: younger and middle-aged workers were increasingly forced back into the labour
market because of the curtailments in the unemployment insurance and assistance schemes
(exceptions were made for unemployed workers with children). Older workers, however,
were able to claim benefits for a substantially longer amount of time, which allowed firms
to externalize dismissal costs with a downward effect on the labour supply. At the same
time, active labour market policy covered more individuals without causing higher expendi-
tures, as less funds were allocated to these programmes (Bleses/Seeleib-Kaiser 2004: 56).

In the period following reunification, firstly, selective cuts continued (cuts in labour market
programmes; selective reductions in unemployment insurance (ALG) and unemployment
assistance (ALH) focusing on those without children; scaling back of ALH for claimants
without prior receipt of ALG. Then, signalling a change of development, from 1995 on-
wards, two things happened: on the one hand, retrenchment gained speed (now even core

14 These developments contributed to a steep rise in total payroll contributions (from 35.9 percent in 1989
to 42.2 percent in 1998) which for the most part were caused by the decision to increase social contribu-
tions across all programmes. The social expenditure/GDP ratio again rose to 31.9 percent in 1996 and
was higher than at the beginning of the Kohl era.

15 The goals set included the reduction of unemployment, adapting the welfare state to socio-economic
and demographic change, introduce more flexibility and personal responsibility into the system and redi-
rect social provision to those who needed it most (Schmidt 2005: 104). From a macro-perspective, look-
ing at the German welfare state in its entirety, Schmidt identifies the following successful outcomes of
the restructuring plans (Schmidt 2005:105f.): the rapid transfer of the West German systems of social
security to the new
Lander (which on the other hand also meant immense costs); the decision to establish
a long-term care programme in 1994; the strengthening and extension of family policy despite the diffi-
cult budgetary situation from the mid 1980s; the dampening of expenditure-raising effects of unemploy-
ment and ageing in pensions (reforms in 1992, 1999 and health care: 1993, 1997)



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