No German children? Then pay up
The Economist, April 5, 2001
IN A startling decision this week, Germany’s Constitutional Court ruled that workers with children should pay a lower premium for the country’s compulsory nursing-insurance scheme than childless ones. The ruling, in a case brought by a father of ten and by family associations, has wide implications for other parts of the country’s welfare system, notably pensions. Nothing has been said about the other solid financial and non-financial benefits already enjoyed by parents.
According to the court’s eight judges, the present pay-as-you-go insurance scheme, set up in 1995 to provide long-term nursing care for the elderly and chronically sick, is unconstitutional, because it has failed to promote the family or to ensure equality before the law, as required by the constitution. Since the main future beneficiaries of the scheme will depend on the premiums paid by coming generations of workers, those people who have not helped to maintain the number of future contributors—ie, the childless—are getting an unfair financial advantage, says the court. So they should pay more.
The present system might have been acceptable in an earlier age when relatively few adults remained childless, said the court, but not at a time when many couples were making a deliberate decision not to have children. Over the past 30 years, the number of babies per woman has fallen by half to 1.3%, one of the lowest rates in the European Union. One woman in three of child-bearing age now remains childless. Experts say that to stabilise the age structure of the population, German women would have to start having 3.8 children apiece, or huge numbers of young immigrants would have to be admitted.
To give the government time to consider the ruling’s significance for other branches of the welfare system, the judges suggest that the present flat-rate levy of 1.7% of gross wages should be maintained for the nursing-insurance scheme until the end of 2004. Thereafter, parents should pay less than single people or childless couples. How much less, the judges have not said; nor—and it’s a fair question—whether parents with only one child should pay more than those with ten.
German parents are already well treated by the state. They get a tax-free benefit of DM270 ($122) per month for each of their first two children, DM300 for the third, and DM350 for each later one, up to the age of 18—indeed, until 27 if the child is still in full-time education. They get other tax breaks too. Parents willing to take time off work to look after their children at home are eligible for additional grants of up to DM900 a month during the child’s first year.
And so on. And on, maybe, if lawyers get their hands on such issues. As in most countries, Germany’s childless—or various other categories who may feel disadvantaged by this or that aspect of the tax-and-spending system—have generally accepted that they must take the rough with the smooth.
But already there are signs that the principle set out by the court is provoking thoughts of “sauce for the goose, sauce for the gander”. As for the happy father of ten, shouldn’t he be charged arrears of contributions if all ten turn out to be unemployable, or emigrate?
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