Globalization and Welfare series
Edited by Klaus Armingeon and Michelle Beyeler
Chapter 10: Too many rivals? The OECD's influence on German welfare policies
10. Too many rivals? The OECD’s influence on German welfare policies Reimut Zohlnhöfer and Jan Zutavern THE GERMAN WELFARE STATE: INSTITUTIONAL AND POLITICAL CONTEXT The German welfare state is a prime example of the conservative model of social protection. Germany was a pioneer in terms of welfare state development, first introducing social security schemes in the 1880s (health care 1883, old age 1889). These schemes shared important characteristics: they were mandatory and financed primarily by contributions of employers and employees, the benefits were earnings-related, and they were segmented by occupational group, thus both preserving status differentials and excluding the non-working population. Until the 1970s the German welfare state continued to expand the breadth of its programmes (unemployment insurance introduced in 1927), the number of its recipients, and the levels of its benefits. Indeed, notwithstanding a number of fundamental political regime changes, the welfare state’s basic architecture remained unchanged. Even the introduction of long-term care insurance in 1994 conformed to the contributions-financed model of social insurance. Municipality-financed means-tested social assistance supplements the (federal) system of social insurance. Although postWorld War II welfare state expansion took place faster in some countries than in Germany, social expenditure as percentage of GDP has always been clearly above the OECD average. Additionally, the German labour market is highly regulated. During the period of observation Germany was governed by three different coalitions. A coalition comprised of the social democrats (SPD) and the smaller liberal party (FDP) held office from 1969–82, at which point it...
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