A Strong Family. Report by the Commission for »Family and Demographic Change«

Commissioned by the Robert Bosch Stiftung

Kurt Biedenkopf Hans Bertram Margot Käßmann Paul Kirchhof Elisabeth Niejahr Hans-Werner Sinn Frans Willekens

The Commission Professor Dr. Kurt Biedenkopf, Chairman Former Minister President of Saxony

Professor Dr. Hans Bertram Humboldt University Berlin Chairman of the Expert Committee of the 7th Family Report of the German Federal Government

Dr. Margot Käßmann State Bishop of the Evangelical-Lutheran State Church of Hanover

Professor Dr. Paul Kirchhof Former Federal Constitution Judge, Director of the Institute for Finance and Tax Law, University of Heidelberg

Elisabeth Niejahr Deputy Manager of the Berlin Editorial Office of the weekly newspaper DIE ZEIT

Professor Dr. Hans-Werner Sinn President of the ifo Institute for Economic Research at the University of Munich

Professor Dr. Frans Willekens President of the Netherlands Interdisciplinary Demographic Institute NIDI in The Hague

Contributors Günter Gerstberger Department Manager »Education and Society«, Robert Bosch Stiftung

Dr. Andrej Heinke Secretary of the Commission Project Manager for »Family and Demographic Change«, Robert Bosch Stiftung

Dr. Martin Werding Department Manager »Social Policy and Labour Markets«, ifo Institute for Economic Research at the University Munich

A Strong Family. Report by the Commission for »Family and Demographic Change«

Commissioned by the Robert Bosch Stiftung The Robert Bosch Stiftung (Robert Bosch Foundation) is one of the major German foundations associated with a private company. It holds a 92 per cent stake in the share capital of Robert Bosch GmbH and was founded in 1964 in order to serve the public good, in line with the philan- thropic endeavours of its founder and patron Robert Bosch (1861–1942).

The work of the foundation focuses mainly on the areas of science, health, international understanding, education, society and culture. It runs the Robert Bosch Hospital in Stuttgart, the Dr. Margarete Fischer Bosch Institute for Clinical Pharmacology and the Institute of History of Medicine. 5 4 Preface Ingrid Hamm, Robert Bosch Stiftung

6 Summary

20 Family and Public Spirit – Solidarity and Subsidiarity

32 Life courses and children

58 Family policy as the policy of the future

72 Social Significance and Protection of the Family

82 The Family as a Benefit to Society – The Fiscal Effects of Children

106 Literature 6 Preface

Twenty years ago, nobody took demographers’ warnings seriously. Today, politics, industry and media have picked up on the theme, but so far there are no comprehensive concepts and possible solutions that could stem the unstoppable tide of demographic change. The decline of society and simultaneous aging of the population will have repercussions, whose impact we can hardly imagine, since the demographic developments currently taking place are without precedent in many industrial countries. The effects are particularly dramatic in Germany where the birth rate of 1.31 children per woman is steadily declining. Almost all spheres of life are affected by this: the social security systems, the economy and the working world, the local infrastructure, urban and regional planning, education and social integration. In part, these spheres have also contributed to this change.

Vladimir Spidla, EU Commissioner for Employment, Social Affairs and Equal Opportunities, is therefore calling for a holistic concept to master the challenges ahead of us. Germany’s President Horst Köhler has declared demographic change to be a core political and social task. In actual fact, we need a combination of all available social forces as well as farsighted and coherent policies to be able to master this difficult and multi-layered task. The simple effect of individual measures must be replaced by an overall concept, which finds differential solutions for this complex challenge.

Families grow when people have faith in the future, and families and children feel appreciated and needed by their immediate personal and social surroundings. In Germany, which has a low birth rate, we must succeed in trying to re-establish this faith and sense of appreciation.

In 2004, the Robert Bosch Stiftung initiated the “Family and Demographic Change” initiative. The political visionary Kurt Biedenkopf was appointed as Chairman of the Commission. In the early 80s, he and Meinhard Miegel already pointed to the urgent issue of demographic change. The following members belong to the Com- mission:

:: Professor Dr. Kurt Biedenkopf, Chairman, Former Minister President of Saxony :: Professor Dr. Hans Bertram, Humboldt University of Berlin and Chairman of the Expert Committee of the 7th Family Report of the Federal German Government :: Dr. Margot Käßmann, State Bishop of the Evangelical Lutheran State Church of Hanover :: Professor Dr.Paul Kirchhof, Former Federal Constitution Judge, Director of the Institut für Finanz- und Steuerrecht (Institute for Finance and Tax Law), Univer- sity of Heidelberg 7

:: Elizabeth Niejahr, Deputy Manager of the Berlin Editorial Office of the weekly newspaper DIE ZEIT :: Professor Dr. Hans-Werner Sinn, President of the ifo Institute for Economic Research at the University of Munich :: Professor Dr. Frans Willekens, President of the Netherlands Interdisciplinary Demographic Institute (NIDI) in The Hague

The current report is the result of deliberations by the Commission for “Family and Demographic Change”. The Ifo Institute for Economic Research in Munich hosted the meetings. The Commission is clearly in favour of the holistic approach that is being called for and reflects this through the different personalities of its members and also in its recommendations. Naturally, the experts could not address all issues related to demographic change in depth and therefore focussed mainly on the prin- cipal cornerstones of active family support: life plans, legal position, taxes and pensions, and social networks.

Several expert reports were compiled following consultations by the Commission. The study on »The Fiscal Balance of Children in the German Tax-Transfer System« of the Ifo Institute for Economic Research, in which the discrimination against families becomes obvious, formed an important basis for these reports.

The coalition agreement reached between the coalition partners CDU/CSU/SPD in November 2005 demands that politics creates suitable framework conditions »so that young people can choose whether they want to have children and start a family« and states: »We want families to have more children and society to have more families. We wish to make it clear that Germany does not have a future without children.« We would be pleased if the report of the Commission for »Family and Demographic Change« would make an effective contribution towards this.

The Robert Bosch Stiftung thanks the members of the Commission for their work. I would also like to give special thanks to the Chairman for amalgamating the different positions of the Commission members, which has enabled the Commission to produce remarkable results.

Ingrid Hamm Executive Director of the Robert Bosch Stiftung 8 Summary

Throughout its deliberations, the Commission has focused on two issues, in particular, that are seen to reflect the true magnitude of the phenomena we face today, regarding the declining disposition of young adults to have children and especially to have many children. The following charts illustrate this clearly.

These charts underline the urgent need of taking a new approach in family policy, of developing long-term strategies and changing our political and social behaviour of the past few decades. We need to change our way of thinking in order to succeed in these endeavours. Only a nation that listens to its ancestors and respects the rights of its children has a future. In this sense, children are the future of our country. The most important task of a state that wishes to secure its future is: to ensure that children are born, grow up in the care of their parents and social surroundings, are adequately prepared for adulthood and can thus, in turn, take responsibility for the future. With its work, the Commission aims to reinforce this intention. 9

Age structure in Germany: The pyramid is toppling over and becoming urn-shaped Despite immigration, the age structure in Germany, which still corresponded to the classic pyramid form at the beginning of the 20th century, has continuously been shifting upwards and is expected to turn into the shape of an urn by the middle of the 21st century

1910 Population: 64.9 million 2003 Population: 82.5 million 100 average age: 23.6 years average age: 40.9 years 80 60 40 20 0 1960 Population: 72.4 million 2050 Population: 76.3 million 100 average age: 34.7 years average age: 50.4 years 80 60 40 20 0 800 600 400 200 0 200 400 600 800 600 400 200 0 200 400 600 800 in thousands male female

Forecast for 2050: Version 8 of the 10th Coordinated Population Estimate (Assumption: high life expectancy, medium rate of immigration). Source: Statistisches Bundesamt (Federal Statistics Office); Rostock Centre for the Study of Demographic Change (ZDWA) Declining birth rate in Germany Delays in starting a family in Germany Since 1990, the number of births in Germany has been The percentage of women born in 1970, who do not have declining, albeit with strong fluctuations. Following children, is significantly higher than with previous cohorts. extensive family policy measures in the 1970s, the birth In the 1970 cohort, 44 per cent of all 30-year old West- rate ended up being higher in former East Germany than German women were (still) without children, in the cohort in West Germany. Yet it declined dramatically again after of 1960 it was only 33 per cent. Until now, childlessness the German reunification. Today, the birth rates of former has been much more widespread In Western Germany Easter Germany approximate those of Western Germany. than in Eastern Germany.

Consolidated birth rate Percentage of women that are (still) childless, 100% in Germany 1960-2003 categorised by age 2,5 80%

2,0 60% 1,5

40% 1,0

0,5 20%

0 0% 1960 1965 1970 1975 1980 1985 1990 1995 2000 15 20 25 30 35 West Germany East Germany West Germany East Germany Sustainability level 1950 cohorts 1950 cohorts

The total fertility rate (TFR) indicates how many children 1960 cohorts 1960 cohorts a woman would on average give birth to if the age-specific 1970 cohorts 1950 cohorts birth rates remain constant during the year under review. Source: Microcensus 1998 and 2002 (ZDWA); Source:Statistisches Bundesamt (Federal Statistics German Federal Institute for Population Research Office); ZDWA (BIB);Kreyenfeld (2002) 10 Summary

Children actually desired in Europe 1999 / 2000

1,4 – 1,59 1,6 – 1,79 1,8 – 1,99 2,0 – 2,19 2,2 – 2,39 no data

Source: Eurobarometer 1999 / 2000, 54.2 Copyright: BiB 2004 – Dorbritz / Swiaczny

Childless couples’ reasons for not having children Question: »Irrespective of whether one wishes to have children or not, there may be a variety of reasons that speak against having a child. What might be reasons for not having a child in your present situation?«

Having a child would be a great financial burden. 47 % I still feel I’m too young to have a child 47 My career plans cannot be easily reconciled with having a child 37 I haven’t found the right partner yet 28 I want to have as much freedom of movement as possible, I don’t want 27 to be constrained I have many interests that can’t be easily combined with having a child 27 Children are tiring, I don’t know if I have the strength or the nerves to have one 27 I want to remain as independent as possible 26 I would have less time for my friends if I had child 19 I don’t know whether my partner and I will stay together, whether our 17 relationship is stable enough I/my partner would be worse off professionally if we had a child 16

Basis: Federal Republic of Germany; childless 18 to 44-year olds Source: Allensbach Archive, IfD survey 5177 11

1. Content requirements of the assignment Both theme groups, family and demographic change, address different issues, and although these may coincide in many areas, there are still plenty of common issues left to address. The Commission has mainly concentrated on those aspects associated with the interrelationship between the willingness to start a family and actually having children, family policy and the political and social consequences of the progressive aging of our population.

In its assessment of factors affecting the willingness to start a family and the decision to have children, the Commission has differentiated between economic factors of influence and those that have their origins in our values and belief systems, culture, the general social setting or “social climate” and the role perceptions of society and the parties concerned. Clearly, these areas cannot be neatly separated. Never- theless, it is necessary to identify them as such. Political and social strategies will have to take into account all chief aspects of the effects of these two dimensions, the primarily “economic” and the primarily “non-economic”, on the behaviour of those involved as well as the mutual effect of these two dimensions on each other. In practice, this means that meaningful economic incentives can easily be eclipsed by non- economic influences or that their effects may be positively or negatively influenced by them. One will have to take such interactions between economic and socio-political measures into account in future if one wishes to assess the overall impact of a set of measures more accurately.

1.1 When addressing aspects of family policy, the Commission has focused on issues, such as how to strengthen the family by improving the framework conditions and which preconditions need to be in place in order to stem birth deficits in future. Family policy issues are seen in this context by the Commission and it therefore does not want its treatment of the issue to be understood as a comprehensive review of family policy.

1.2 Of the changes comprised under the collective term “demographic change”, the Commission has been particularly concerned with the decline in birth rate and increased life expectancy. By contrast, issues of immigration and the integration of foreign citizens play a subordinate role when addressing the subject and were not pursued any further. The Commission is of the opinion that existing and future demographic deficits can only be remedied to a limited extent, if at all, by immigration. 12 Summary

2. Family policy 2.1 The state‘s support of families is primarily directed to the legally constituted family. Yet children are increasingly born and raised outside the legally defined family without this being viewed negatively by society. The state’s support of families must take this relativisation of the family institution into consideration and must extend its protection to families who are not included under common law in order to fulfil its constitutional mandate. Wherever there are children, there is a family. Conse- quently, from a family policy point of view, it is ultimately irrelevant whether a family is included under common law or whether we are talking about a single-parent family. In view of the extraordinary burden faced by single parents, these issues deserve to be given special consideration in family policy when trying to improve the compatibility between having a family and pursuing a profession.

If there is no toehold in family law to provide family support for this, then support should be granted to the parent who has custody of the child or children. A partnership without a legal foundation only qualifies for state subsidies to a limited extent. This particularly applies to the needs-based community within the meaning of the Social Security Code (SGB) II. This community need not necessarily be based on family law. Its interpretation is largely at the discretion of the parties concerned.

2.2 Family policy is currently being discussed and evaluated in the light of demographic considerations, in particular. This specifically involves addressing what framework conditions are necessary to encourage 20 to 45-year olds to start a family and have children. In terms of the long-term development of the age structure of our population this question is undoubtedly of great significance. Within the next 20 to 30 years, however, family policy measures are only expected to have a very slight positive influence on the future age structure. This is why we need to start implementing long-term strategies as quickly as possible. The first step is to stabilise the current birth rate and to establish the conditions for increasing it in the long run. However, one should not expect birth rates to rise in the short term.

2.3 The actual justification for our family policies does not arise from demographic necessity, but from principles of justice and the constitutional mandate of Art. 5 GG, which places marriage and the family under the special protection of the state. This protection mandate obliges the state to protect and honour the institution of marriage and family by law by promoting appropriate measures and protecting these institutions against adverse effects and encumbrances. It also obliges the state to provide protection for those families where either the mother or father is a single parent.

The duty to provide protection against adverse effects and encumbrances also coincides with the general principles of justice, which also belong to a state’s obli- gations. The Commission is convinced that these principles have not been sufficiently met in the prevailing family policy and political framework conditions. This is the case for both the economic situation of a family, in the broadest sense of the term, and for its political and social position and role in society as a whole.

2.4 The state’s subsidisation of the family is primarily justified – from the stand- 13

point of justice – through the benefits that the general population gains from a family’s investment in children. Hence, it is a response to the present situation, whereby the state invests only a small proportion of the costs in educating children, but gains considerable benefits through their subsequent life-time achievements. This benefits the population as a whole and hence all those people who have not invested in children. Hence, the statement is apt that the costs of children are privatised, yet their subsequent benefits are socialised.

2.5 In relation to family support, the Commission also recommends improving the tax advantage of families by switching from “marital splitting” to “family splitting”. Yet neither option offers a real alternative. They are based on different considerations. Marriage is also an “acquisition community”, in which the state has a vested interest for the sake of its own future. Independent of their respective material contributions, both partners are entitled to half of the acquired income. The fiscal consequences of this distribution cannot be seen as a subsidisation. Instead, the character of the acquisition community and the parity of the benefits this brings with it are acknowledged: i.e. the income from gainful employment and the value of services rendered gratuitously within the acquisition community.

The Commission is therefore in favour of including children in the acquisition community through a family splitting arrangement. If the matrimony is enlarged by children into a family, then the children should be taken into account in the acquisition community through a family splitting arrangement. The expenses borne by the spouses for raising their children – and thus the investment made in children – should be accounted for through a corresponding distribution of income of the acquisition community. With low tax or income tax-free income, the negative income tax or other forms of transfer income compensate for the tax relief gained through family splitting.

3. The economic framework conditions of family policy 3.1 One of the most important conditions for a just family policy is that there is an appropriate balance between private burden and public gain for each investment made in children.

With the help of the ifo Institute for Economic Research in Munich, the Commission ascertained the following: A child born today that is deemed to be average, in terms of its employment behaviour, income and numerous other factors, produces a note- worthy »positive fiscal externality«, under the framework conditions of the present German tax and social system, which brings the state more benefits than it actually costs it. Over his entire life cycle and taking into account the effects of all descendants that he is expected to have on average, this externality will amount to around 77,000 euros.

3.2 The main reason for this effect, which is favourable for all tax payers and recipients of public services, is the pay-as-you-go financial system of the German social security system, which primarily includes the state pension fund. The statutory health insurance and the general financing of the state budget through taxes and 14 Summary

contributions also come into play. Thus, the German tax and welfare system ensures that there is a continuous redistribution of wealth from young and future generations to middle-aged and older generations. At the same time, it leads to a redistribution within each generation from families with an average or above- average number of children to ones with few or no children.

Although this fiscal effect provides no evidence on whether this redistribution at the family’s expense has an impact on the birth rate, such effects are likely. Howev- er, what is more important is that these effects seriously discriminate against families in economic terms. Even if this discrimination cannot be proven to have any direct or indirect impact on the birth rate of the current family founding generation, justice and political logic dictate that it should be overcome by re-establishing the balance of the family burden.

3.3 The heart of the problem is that the tax and welfare system, and especially the statutory pension scheme, to a large extent socialises possible returns from raising children and does not take into account the assumption of child costs by the individual. This means that the benefits are shared by all members of the parent generation. When making a decision regarding children, parents therefore lose sight of the benefits of raising another child as a provision for old age and choose a smaller number of children. The socialisation of »child benefits« ultimately creates the illusion that, thanks to the social security system, one is financially secure in old age, even without having children of one’s own. Meanwhile, this illusion has become a general vested political right. This not only explains the resistance shown to any change made to the existing system. It also explains the growing sense of ex- ploitation felt by those, who dedicate part of their working lives to raising and educating children, thereby renouncing full-time employment and instead performing unpaid parental work and for this reason are downgraded from the prevailing pension scheme to a retirement annuity, which in the medium to long run will frequently lie below the current social security level. The prospect of being »penal- ised« in this way for a job that is not regarded very highly, although it is indispensable for the future of the country and the survival of its social order, will reinforce the already existing tendency to decide against having children.

3.4 There are a series of measures that can be taken to avoid such externalities.These include lowering the level of pay-as-you-go public provisions for old-age, and especially the pension scheme, expanding family policy benefits granted to a child or its family during childhood or adolescence – even if it isn’t possible to completely offset the negative effects of state intervention through positive intervention. A further measure would be to reorganise the pay-as-you-go social security system, including the pension scheme in particular, so that there is a stronger differentiation of the pension based on the number of children. In addition to a general, pay-as-you-go basic pension, parents would also be entitled to receive an additional pension, financed through taxes or separate contributions. Childless couples would have to accumulate savings for supplementary old age provisions themselves.

The economic framework conditions, infrastructure measures aimed at the care of children are assigned special importance. Yet these measures should not be limited 15

to taking the strain off parents by providing supervision for children. Already in view of the growing proportion of single children among their respective peers and the insufficient socialisation of children within large families, child carers must increasingly also take on child-rearing tasks, which have a much greater significance than they used to.

3.6 In the context of shaping employer-employee relationships, the Commission has also dealt with the issue of protection against unlawful dismissal. With regard to occupational dismissals this particularly concerns the choice of social selection criteria. The Commission recommends that special attention be given to single mothers and fathers in need of protection when examining this issue. Protecting them appears to the Commission to be more important than protecting older employees. It is also unclear what the effects of the currently envisaged possibility of agreeing on a two-year trial period will be. Due to the insecurity associated with such an agreement, this settlement could hamper an early decision in favour of children. The parties to the collective wage agreement can also help to avoid such uncertainties. Not only should they see to it that there are family-friendly working conditions in place. The Commission also expects them to make a decisive contribution towards improving the compatibility of family and work. Thus, they not only fulfil their social duty, in the broader sense, but also the general obligation to exert all possible efforts, as a society, to promote the decision to have children.

4. The non-economic aspects of family policy 4.1 The Commission assumes that there is no direct causal link between improving the material situation of a family and them having children. One glance at the average purchasing power of parents born in the baby boom years of 1955 to 1965 compared against today’s parent generation shows that the actual average purchasing power of a two- to three-person household in 1965 corresponds to a comparative household living on social security today. The actual purchasing power of a four- person household was less in 1965 than that of a comparative household living off social benefits today.

4.2 The financial options for having children have actually significantly improved, not worsened, compared to the baby boom years. What has changed, apart from the mentalities and attitudes to family law institutions, is the extent and attractiveness of alternative options that members of today’s parent generation can and must choose from. As a consequence of higher living standards, the wish to have children now has to compete against a large number of alternative life options. This explains why the desired number of children ascertained in the demoscopic survey was higher than in reality. This also enables conclusions to be drawn on the reasons why more men than women choose not to have children and why men and women with higher salaries have fewer children on average than those with lower salaries.

4.3 Apart from financial reasons and what are perceived to be unjust disadvantages there are also non-economic hindrances to be overcome, which often prevent people from having children. In connection with this, it is important to note that mentalities, ingrained habits, values perceived in one’s own social environment and also worries 16 Summary

and fears can be influenced by political measures. Those who wish to change a particular social consciousness, must change the causes which justify or give rise to it. If a social institution is discriminated against by the law or legislation, then society also begins to discriminate against it: for instance, by refusing to let property to a family with many children or by no longer tolerating them in a piece of rented property.

4.4 During its deliberations, the Commission identified a number of measures, which they are convinced will help to reduce the low acceptance of the „conventional“ family and its value for the community and promote a family-friendly environment. Employers play a decisive role in this respect, so they will have to change their ideas about careers and professional biographies. Raising children is not tantamount to taking leave from one‘s professional life, but simply involves taking time to acquire an additional skill. Parents, who are not able to master the task of raising children by themselves deserve our support. However, in many families there are educational shortcomings. Especially in Germany, there is a verifiable correlation between social background and level of education achieved. This is why the state has to make a concerted effort to improve the level of education by offering sufficient educational facilities. It should also offer parental support, parenting courses, counselling and an introduction to the basic principles of child-rearing.

4.5 The Commission considers it to be particularly important to bear in mind the principle of subsidiarity in this context. Social consciousness cannot be changed by command. Change must evolve from the bottom up. It has its roots where the disadvantages of the existing consciousness become apparent. The wider the gap between cause and effect, the less likely it is that a connection will be made. The state pension system is a good example of this. Therefore, family policy initiatives aimed at reducing families’ non-material disadvantages should primarily take place at the communal level. In the interests of their own future, cities must invest more heavily in families and children and become more attractive for them. Cam- paigns and competitions such as – »The most family-friendly city« – are appropriate means of achieving this. Successful examples – such as living in multi-generational households, family patronage for single parents, nannies, exchange services for childminders, must be publicized and actively promoted. Urban planning offices, architects and builders of residential buildings must establish sympathy for children as a benchmark and as far as possible allow families to participate in decision-making on the municipal infrastructure.

4.6 The same applies for schools and education. The family as the nucleus of a small community, in which the most important aspects of human life unfold, can only fulfil its task if it receives long-term support from nurseries, schools and further education facilities. The duty of a state to grant married couples and families special protection under its legal system is perhaps its most important test.

5. An aging population The concurrence of a persistently low birth rate and the continuous prolongation of life expectancy leads to a social paradox: For the individual this higher life expectancy is a gain. Yet at the level of society, this gain induces serious problems. With the expanding structures of our economic, social and societal order, these problems 17

can no longer be mastered. The root cause of the pressure to reform, which has been growing since the 1970s, lies in this paradox. Its urgency can be attributed to the fact that changes, which started in the 1970s, were largely ignored, tabooed or considered to be easily solvable until the end of the last century. Despite growing evidence to the contrary, one was convinced of the long-term stability of social security systems, and especially of the statutory provisions for old age. A political debate about the consequences of dramatic change to the population’s age structure, which would have been merited, did not take place.

In principle, these changes only gained political recognition at the turn of the mil- lennium. They thus encountered a population, which was just as unprepared for change as for the inevitable consequences thereof. This explains the resistance from the population and different social groups to all political attempts to respond to this seemingly sudden need for action and to establish social structures that are suited to these new, long-term conditions. The time horizon for political action is not only determined by the political actors themselves but, above all, by the changing reality. As former German President Roman Herzog once stated, demographic developments do not wait.

The Commission has studied the consequences of aging on people’s lives in-depth as well as its effect on the working world and on the social systems. Once again, its main focus here has been on the interdependencies between these consequences and the role of the family. Both distinguish themselves, among other things, through the fact that the effects of family policy measures will only come to fruition in the long run, while the aging process will have an impact on all spheres of life and the state and social structures much earlier on. Conversely, these measures, which are meant to address the needs of an aging population, will have an impact on people’s perspective and outlook on life, which will in turn influence their willingness to start a family and have children.

5.1 The Commission finds it imperative to find an intelligent way of reorganising the lives of younger and older people in order to make the gain in life time into a gain for society as a whole – and thus possibly enabling the birth rate in Germany to recover. Its reflections were based on an occupational life cycle model. The model is marked by the reorganisation of work, greater flexibility, life-long learning processes, new ways of combining work and family, new forms of solidarity between the generations and a restructuring of the transition between active working life and retirement. People’s lives should no longer be forced into a rigid division of three parts. Rather, the life course should be shaped in such a way that the different tasks can be combined between the individual phases.

5.2 This requires the willingness to give up rigid and fixed age limits in society, to renounce such limitations in the long run and to establish a set of incentives to ensure that society can make productive use of those among the elderly, who still can and wish to work. Education, work and further advanced training offer a diversity, which opens up a variety of options. What we aim to achieve is flexibility in life planning, which the next generations can also make use of. The basic principle behind this is to provide this flexibility in old age, so that the rigid divisions across 18 Summary

the life course that define our social systems can be overcome.

This could entail a range of provisions, including raising pensions for the remaining years of retirement, reorganising life so that, in the context of an optional model, one can make use of work-free periods earlier on in life, e.g. to dedicate oneself to one’s family or pursue social commitments. The free time taken can and must be worked off later on.

5.3 The state’s monopoly in education and vocational training must be restructured to make life courses more flexible. This is especially the case for all regulations which make it more difficult or even impossible to change jobs. Instead of propagat- ing job profiles, whose schooling requires that one commit oneself to one particular career path, we should emphasize the possibility of taking postgraduate studies and supplementary training options. Elderly people are also in a position to acquire qualifications, which, even in a dramatically changing world, will enable them to play an active role in economic life.

Independent of the need to make people’s life courses more flexible, the education system also needs to be reformed in order to adapt it to the requirements of demographic change. In an aging and shrinking society, one needs to make more inten- sive use of existing human resources. New ways need to be found to maintain the innovative capacity of an aging population. The concept of lifelong learning and the introduction of a quartenary education phase must be part and parcel of the professional and educational system. We must make a concerted effort to improve our education system and to integrate those groups in society who have poor access to education. The period of education must be shortened and the school entry age must be brought forward. The apparent irreconcilability of job and family can be significantly reduced by facilitating access to affordable nurseries, pre-school facilities and all-day schools. A tiered and flexible system of university study and education enables one to plan life in a way that better corresponds to individual life courses. Regional differences need to be taken into account when reorganising the education system. Hence, it is necessary to specifically direct funding to structur- ally weak areas. New educational structures can be tested at the federal state level first. We know from experience that new challenges, which cannot be mastered through past experience, are best resolved through a competition between various solutions.

5.4 Only if life courses, in the sense of one’s occupational life cycle, become more flexible, and there is a clear and generally understandable allocation of costs for the positions they are incurred in, will the additional years of life be interpreted by society in future to be more than just years of consumption and leisure. This greater flexibility not only requires that the state’s de facto monopoly is relativised when it comes to defining professional careers, particularly in the public sector; one will also have to change the training periods and prerequisites for pursuing various careers as well as the regulations for higher educational qualifications and the retirement age. Making the occupational life cycle more flexible also allows one to alleviate the „congestion of life” which occurs between the 25th and 35th year of life. Today‘s organisation of this stage of life with its specific constraints and fixed 19

education periods, defined by the state or society, are not conducive to maintaining a partnership or developing a trustworthy, long-term relationship on whose basis families can be founded. Only by overcoming the “rush hours” of life and making this stage of life more flexible can we encourage younger age groups to make partnerships, marriage and family a firm part of their life plans.

5.5 Flexibilisation strategies of this kind require that the industry, trade and the service sector do not orient their working time models merely to the needs of their companies or administrations. They must also be prepared to provide time for welfare, childcare and the more general care of families as an essential part of the company‘s working time policies. What applies to companies and administrations also applies in equal measure to the parties of the collective wage agreement. They can make a major contribution to making life courses more flexible.

Time and infrastructure policies are further complemented by CV-based transfer options for families. The income-dependent family allowance that has long been paid in Northern Europe and – according to a recently concluded coalition agreement – is also supposed to be introduced in Germany, enables young parents to actually take parental leave in practice. They can then choose to have a child even if their income is relatively low and this would normally significantly reduce their financial possibilities if they didn’t receive family allowance.

5.6 By making parental time and working time over a lifetime more flexible, and by ensuring that both are firmly rooted in a solid infrastructure and have a clearly calculable economic basis, we can succeed in giving men and women more alternatives so that they can organise their lives with children to be more in tune with their own needs. This will also lead to us seeing career and family care, not as contrary alternatives, but as different elements of life that sometimes occur in succession and sometimes run parallel, but even then can be united with one another. 20 21 21 22 Family and Public Spirit – Solidarity and Subsidiarity

What it means to have children and how life dren is incredibly enriching. They imbue life is shaped with several generations living with a deeper meaning, broaden one’s per- together are social aspects that cannot be spective and open up completely new, and captured by fiscal calculations or demo- often unexpected, horizons. Yet children graphic forecasts. Family support may en- also challenge their parents. They ask and courage couples to have children and start a call things into question. By living with chil- family. And the economic benefits families dren, you learn more about yourself. bring to a country should be calculated and stated in a way that grants parents recogni- The benefit of families for civil society: tion for having children. Choosing to have solidarity children presupposes an underlying philos- Families establish a network of relationships ophy of life. The decision to have a family that transcends all generational barriers. testifies to a certain attitude. It is a basic Life is passed on from one generation to the decision in life that is not based so much on next. It is therefore all the more significant economic or intellectual reasoning, but that the number of children per family has motivated by emotions and values. The deci- declined so drastically. Large families are sion to have or not have children is all the social networks that absorb a lot, which the weightier these days, because it is left to the state could never afford to offer. This is individual. The pill and other contraception where true solidarity is experienced, which methods render the assumption that »people cannot be regulated by law. Even today, as always have children« obsolete. And 130,000 Shell’s youth study confirmed, most Ger- The decision to have abortions per year in Germany make it clear mans see the ideal family as consisting of the children is a decision that even if one is pregnant the decision to biological parents and several children. But that affects one‘s whole life. have children is not an easy one. the concept of family is also being redefined to include various patchwork constellations Children are a great The decision to have children is a decision such as single parent families or flat-sharing treasure, they bring true that affects one‘s whole life. No other rela- communities. It is encouraging to see an happiness, which is difficult to describe without tionship is as non-negotiable as this one. increasing openness towards new forms of a sense of pathos. Children take up time, they represent a chal- living. Families establish a lenge, they cost money and they dictate the network of relationships everyday lives of their parents. Children can At the same time, there is the risk that the that transcends all generational barriers. be a burden. And yet, at the same time, chil- traditional family is not valued highly Life is passed on from dren are a great treasure, they bring true enough and that the stability of marriages is one generation to the happiness, which is difficult to describe not sufficiently heeded in a society fixated on next. without a sense of pathos. Living with chil- flexibility. Trust, reliability, solidarity are 23

values that are conveyed in families. Fami- the right partner. It is therefore particularly Trust, reliability, solida- lies who live by these principles may be role important to show (potential) fathers how to rity are values that are conveyed in families. models for others. reconcile family and career, to appreciate the value of children and to inspire their The task of raising children is not valued respect and admiration for the task of rais- The task of raising child- highly enough in Germany. Women, who ing children. ren is not valued highly enough in Germany. choose to quit their jobs in order to raise children, do not receive enough recognition It is crucial, however, to also give qualified for doing this. Even the term »maternity women, in particular, whose share of chil- In Germany, a woman leave« is deceptive. If they return to work, dren is the lowest among women, more op- who is labelled a »mummy« is not held in high esteem. one speaks of »reintegration«, as if they had portunities to combine family and profes- This has to change. been hived off. And one often tends to over- sion. More imaginative working time models look that childcare and child-rearing are not can contribute to this as well as the possibil- the same thing: Even those parents, whose ity of maintaining contact to working life children are sometimes taken care of by during maternity leave. Childminding quali- others, are still responsible for the actual job fications, better child caring services for the of raising their children. under-3 year olds and expanding the range of family support services may contribute Respect and appreciation for the task of towards this. raising children is an essential prerequisite if the decision to have children is not to be State action is required for this. But people’s understood as a professional, economic and perceptions also have to change. social step backwards. But for this to hap- Reducing a mother’s purpose in life to mere- pen, we must first change our ideas about ly having a family appears to be a very Ger- careers and professional biographies. Rais- man phenomenon. Those who force women ing children is not tantamount to taking to make a decision between having children leave from one‘s professional life. It is simply and pursuing a career will find that, in times taking time to acquire an additional skill. of high unemployment and employers’ ex- After all, new skills are acquired in family pectations to be mobile and flexible as well life that are highly regarded in the business as the high regarded value of earning a good world: Strong organisational skills, the abili- income, the decision is more likely to go ty to maintain good social relations and against having children. In Germany, a wom- other »soft« skills are also the prerequisite an who is labelled a »mummy« is not held in for managerial competence. This is particu- high esteem. This has to change. Women larly important with regard to fathers. Vari- should be able to have several life opportu- ous studies have proven that it is not women, nities and live multiple ways of life at the but primarily men, who exclude children same time: but children should always be an from their life plans. In the internationally option in this too, one that can co-occur comparative Population Policy Acceptance alongside all others. Study (PPAS), conducted by the Bundesinsti- tut für Bevölkerungsforschung (Federal Families have a special significance, espe- Institute for Population Research) and the cially with regard to the question of education. Robert Bosch Stiftung, the average number Education is a comprehensive process that of children desired by German men was 1.59. not only involves the conveyance of reading This is by far the lowest figure for any of the and writing, and arithmetic and analytical 13 European countries investigated. For skills, but also being taught emotional, spir- many women, the decision to have children itual and social skills. Thus, the contribution clearly fails due to the difficulty of finding families make to society cannot be valued 24 Family and Public Spirit – Solidarity and Subsidiarity

highly enough. The ability to maintain social based childcare is not always the best solu- relations and values is taught in the family tion. Services also need to be streamlined. context. Here behaviour patterns are tested In some regions, childcare facilities com- that shape one’s whole future life. However, plain that they can only provide childcare in many families today there are educational facilities for working mothers. Consequent- shortcomings. Especially in Germany, there ly, children are neglected and staff mem- is a verifiable correlation between social bers have to seek new employment. Early background and level of education achieved. childhood development must repudiate the This is why the state has to make a concerted allegation that children are shuffled off to effort to improve the level of education by the state in Germany. It is essential to give offering sufficient educational facilities. It mothers a freedom of choice. Yet this free- should also offer parental support, parent- dom cannot exist without sufficient child- ing courses, counselling and an introduction care facilities being in place. to the basic principles of child-rearing. The degree of public interest in television pro- Investments are also needed for the training grammes involving ‘super-nannies’ is not and qualification of staff members in child- coincidental. The basic principles of childcare facilities. However, the same applies for rearing are no longer a matter of course in an the range of training opportunities available individualised and anonymised society. for the growing number of elderly people who wish to and will get involved in this area Particularly families with many children are in future. increasingly being pushed to the fringes of Furthermore, atten- society. For financial reasons, increasing Furthermore, attendance at day-care facili- dance at day-care numbers of children can no longer partici- ties should be free of charge. There is evi- facilities should be free of charge. pate in »normal« life and grow up without dence that children’s future educational any future prospects. Children are quite achievements are already founded in early rightly considered to be most at risk of expe- childhood, before primary school. It there- riencing poverty. The degree of child pover- fore makes little sense that higher education ty in Germany is already more than 30 per in Germany is typically free of charge, while cent. Political concepts must be implement- fees have to be paid for attending a day-care ed to ensure that a generation doesn’t grow centre. In order to include all children and to up without any chance of being integrated enable them to develop their social and into working life or in society as a whole. linguistic skills before enrolling in primary school, a prerequisite for attending school, it Early childhood deve- Early childhood education in nurseries should be obligatory – and free of charge – to lopment must repudiate must be improved, especially as it is not visit a day-care centre one year prior to the allegation that children are shuffled off possible for all parents to ensure that their starting school. At the same time, it would be to the state in Germany. children receive all the attention and en- useful to make the medical check-ups for couragement they need. Families who are children (U1 to U9) mandatory to ensure that financially and culturally better off also any negligence is detected early on. benefit from this. Public investment in this area specifically helps to improve equal The PISA study revealed that those countries opportunities across social classes. This that are particularly successful are also also includes expanding the range of day- those in which the schools, parents and care facilities for children below the age of public institutions work hand in hand. In three. This is necessary to help women to Germany, this is not a matter of course. If a establish a better work-life balance. One pupil is seized by the police on Saturday for must also take into account that home- drug consumption, the school isn’t usually 25

informed. It often takes far too long before interests, people are well aware that it is in parents find out that their child is playing fact in their own interest, since, in old age, truant. If »a child is not to go astray« then they too will depend on receiving support there needs to be a better network, within from other people’s children. It is still un- the dual meaning of the motto »this child clear whether the material conflicts arising It is still unclear whether needs Germany and Germany needs this from these demographic developments the material conflicts arising from these child«. between parents and childless couples, demographic develop- young and old, nationals and immigrants ments between parents The benefit of civil society for families: will escalate or whether consensus-based and childless couples, young and old, nationals solidarity solutions can be found. Family-oriented and immigrants will Friendliness towards children can take policies should focus on establishing allianc- escalate or whether many different forms. It starts in the mind es for families across broad sections of the consensus-based solutions can be found. and heart of the individual and extends population and to acknowledge various beyond the closest family members. Con- contributions. The more diverse the circle of crete and tangible successes can be ob- supporters, the better. served in many areas: for instance, in de- signing and monitoring playgrounds, in The role of the local authorities restaurants, road traffic or the design of The federal government may be responsible buildings. But it is not just up to the state to for creating the institutional framework, make the country more sympathetic towards with its taxes and social policies, which will children. On the contrary, it is precisely here either facilitate or make it more difficult to that the principle of subsidiarity applies. have a family. And parents have a direct Civil society must take the initiative. Subsid- responsibility for their children, which no- iarity should be seen as a political and social body can absolve them of. Yet families‘ daily maxim to take decisions at the lowest possi- lives are also strongly influenced by their ble level, as far as they are in a position to environment – by their neighbourhood, solve the problem themselves. schools or church services, through the infrastructure and the public services avail- Children need to grow up in social relation- able in their suburbs or villages as well as ships, where they can learn the rules of the through the local social climate that pre- game by association and have experiences vails. It is in their local neighbourhoods that It is in their local neigh- with different role models. This is the only young fathers and mothers feel most acutely bourhoods that young fathers and mothers feel way they can develop their own values, after whether they are welcome or not. most acutely whether these have been tried and tested in social they are welcome or relationships with others. Conversely, living Whether pavements are wide enough for not. with children can be an enrichment for prams, whether there are quiet roads with many, not only for the parents. Everyone can low traffic and at what times public facilities contribute to developing a more child- close are aspects that dominate the daily friendly atmosphere: Grandparents or lives of many families. The general lifestyle neighbours, friends or godparents, ac- of the immediate neighbourhood also plays quaintances or sports and private teachers an important role. There is nothing more There is nothing more – all are called upon to make a difference. persuasive for starting a family than happy persuasive for starting a family than happy Even many childless couples are willing to parents within the family, the circle of parents within the contribute to a more child-friendly atmos- friends or in the neighbourhood. Since fewer family, the circle of phere. Many of them can help to draw public children are born and many marriages break friends or in the neighbourhood. attention to this issue and to raise the profile up, it is important that those existing fami- of families. Even if, at first sight, this does not lies that are intact are not only perceived to appear to be in their immediate financial be so in the private sphere but also in public. 26 Family and Public Spirit – Solidarity and Subsidiarity

Cities and communities have reacted very Depending on the local requirements, the re- differently to these demographic challenges. sults have been very diverse. Thus, a »family In some areas, the demographic debate has service for flexible childcare« in Jena has, for hardly had any effect on the local policies in instance, organised additional childcare practice. In many areas, an additional traffic facilities outside the usual day-care opening island still takes priority over equipping new times, and a mini nursery school for children playgrounds or improving the childcare of 7 months and older for those families who facilities in municipal budget decisions. find themselves in an emergency or crisis situation. In Weil am Rhein, companies and Civic commitment municipalities have agreed that parents who Numerous municipalities have gone to great have to commute to Weil can send their chil- lengths to support families – involving sup- dren to the nursery school there and not at port measures that go far beyond the obvi- their place of residence. In Nuremberg, various expansion of day-care facilities. Some ous businesses and public institutions offer towns have introduced child-minding agen- family services at reduced prices. cies, others have established child and family councils in order to allow families to be- However, such initiatives are only one re- come as actively involved as possible in sponse to the financial crisis of the munici- decision-making processes, while others palities, which in turn has affected the range have tried to promote new forms of family of services available for families. life by building multi-generation houses. Smaller towns such as Ellern in Hunsrück or For the childcare situation to improve local- Tiftlingerode near Duderstadt have intro- ly, certain parts of the Hartz IV reforms duced a premium for newborn children: In (which involved amalgamating unemploy- Ellern, a savings account is opened with 250 ment benefits and social welfare benefits) euros in credit for every newborn child. In must be implemented, which envisage grant- Tiftlingerode, the community covered the ing the local administrations an additional cost of nappies for an entire year for its 1.5 billion euros in order to provide for 1000th inhabitant. These initiatives alone childcare facilities. Unfortunately, the Ger- cannot persuade a young couple to start a man government, federal states and commu- family, but they certainly convey a clear nities are still fighting about this sum – which message: we want children! will be generated by unemployment and social benefits. As a result, the number of At the municipal level, friendliness towards childcare services on offer has hardly in- families is not, in the first instance, a matter creased. The problem is further exacerbated of the state. The 190 local alliances for fami- by the fact that the existing childcare places lies across Germany – which are supported are granted on the basis of controversial and coordinated by the local administra- criteria. In Brandenburg, for instance, the tions when necessary – have proven to be children of working parents are given pref- particularly effective. Various social actors erence. Although this might at first appear to have joined hands in these alliances in an make sense, this provision is in fact prob- attempt to improve the living conditions for lematic considering that children from fami- families. Companies, church congregations, lies with a poor educational background – parent representatives, associations, works who are also particularly prone to councils and chambers, clubs, independent unemployment – require special support. welfare organisations, schools, nursery schools Various cities and communities have defined and neighbourhood centres have all contribut- their objective as the desire to be particular- ed to this – and generally with a lot of success. ly »child-friendly« or »family-friendly«. 27

Here, one often overlooks the fact that the pathways, driveways and stairways were consequences of demographic change could built in such a way, so that old people could also be mitigated by making certain areas of move around freely, despite any health con- town more »parent-friendly«. Young adults straints, this would enable many more peo- are probably more likely to start a family if ple to live longer in their familiar local envi- Young adults are pro- this does not entail having to start their lives ronments. bably more likely to start a family if this from scratch. does not entail having to Since most of them don’t live far away from start their lives from In some large cities – such as in the boroughs their children and grandchildren, this would scratch. of Prenzlauer Berg or Friedrichshain in also facilitate the social cohesion and mutual Berlin – one can observe that young families solidarity within families. Often only small Parenthood and metro- will not necessarily move from the inner-city changes are necessary and no great invest- politan lifestyles can be easily united. area to the outer suburbs if the infrastruc- ments are needed – what is important is that ture of this traditionally trendy part of town demographic change is taken into account in is acceptable. Young families shape the urban planning. This would alleviate the mu- street life in such areas. The stairways are nicipal budget considerably in the medium full of prams, in restaurants there are spe- term. The number of old people in need of cial playrooms for children and in open-air care will increase by at least 20 per cent over bars, children play on piles of sand, while the next thirty years. In the years after that their parents drink beer in the evening sun. an even greater increase is expected. Thus, In such parts of town, a certain social milieu experts expect the number of Alzheimer exists that views moving to the suburbs as a patients, for instance, to increase by two loss of quality of life and that can easily unite million by 2050. This may appear a long way parenthood with metropolitan lifestyles. away for many local politicians. However, This may only concern a small target group the rising number of working women of the but could set a sign and encourage others baby boom generation means that the classic who are undecided about starting a family. support structures, where the daughter or Many new forms of life first evolved in such daughter-in-law naturally tends to the old metropolitan settings before becoming father or mother, can no longer be taken for commonplace in other parts of the country. granted. With the rising retirement age and With the rising retire- In certain parts of Berlin and other large increasing pressure on many young pen- ment age and increasing pressure on many young cities, people do away with the social preju- sioners it will be even less likely in future for pensioners it will be dice in a highly visible way and successful spirited sixty-year-olds to take care of their even less likely in future way that family life has to be oppressive and eighty-year-old parents. Many of tomorrow’s for spirited sixty-year- olds to take care of their narrow-minded. sixty-year-olds will have to earn their own eighty-year-old parents. living. Many municipalities face rising costs Many of tomorrow’s Solidarity between the generations for nursing homes, since relatives can often sixty-year-olds will have to earn their own living. »Family friendliness« is not identical with not cover the expenses of full-time profes- »child friendliness« for a further reason: sional care in nursing homes. Family life that merits public support does not only take place where there are young It is therefore all the more urgent to find low- children. Urban planning and neighbour- cost but high-quality ways of living, which hood initiatives can also contribute to adult offer an alternative to nursing homes. One children taking care of their elderly parents option is to have private flat-sharing commu- – and who in turn are ideally there for their nities, also for people in need of care, who own and other people’s grandchildren. Here are then jointly looked after by both rela- urban planning authorities and housing tives and outpatient nursing staff. In Berlin, associations are called upon to take action: If there are already more than one hundred so- 28 Family and Public Spirit – Solidarity and Subsidiarity

called »Demenz-WGs« ( flat-sharing commu- but are no longer common-place in the cities. nities for the senile), the oldest of which have In an aging population, it is becoming in- existed for nearly ten years. They often offer creasingly important to create such facilities. the residents a higher quality of life and living than many residential homes. Munici- Urban planning People are currently palities provide information about such People are currently becoming aware of the becoming aware of the living facilities, advise interested parties and fact that the housing supply and urban fact that the housing supply and urban grant subsidies for modifying such living planning must be tailored to the needs of an planning must be tailo- spaces according to the needs of the senile. aging population. The so-called »barrier- red to the needs of an free living« belongs to the standard require- aging population. Furthermore, many cities promote the for- ments for many residential housing mation of cross-generational living commu- projects. nities. In Stuttgart, a so-called multi-genera- However, the needs of children and families tional house is supposed to bring old and often only play a role with the construction young together through spatial proximity. of new buildings. Yet in cities and federal Four different facilities have purposefully states with stagnating or declining popula- been integrated under one roof: a city day- tions the importance of adjusting the hous- care centre for 120 children, a parent-child ing supply to the needs of the population centre, an outpatient nursing service as well will become increasingly important in fu- as twenty apartments for old people. Behind ture. The experiences of families in the this initiative lies the appropriate belief that, construction of new buildings could be while children and young families may re- usefully applied to this area too. Many ceive support from older relatives, there is apartments could be retrospectively fitted also a growing number of sprightly young with balconies and loggias, for instance. In senior citizens who may be persuaded to apartment buildings, it may be useful to support families too. install storage rooms and spaces for bicy- cles and prams. Improved noise insulation Especially in the cities, Especially in the cities, multi-generational can reduce potential conflicts between multi-generational houses and living spaces are an answer to neighbours and installing communal guest houses and living spaces are an answer to the disappearance of extended families. rooms and flats in larger building complex- the disappearance of They can help make everyday life easier and es can help alleviate tension caused by extended families. increase the quality of living for both chil- illness, confinement after childbirth or dren and old people as well as for single exam periods. In addition, small, inconspic- parents and parents alike. Projects with uous architectonic measures can be taken: modest goals, such as the »Mobile House« in In child-friendly residential housing Cologne, in which old people and families projects, doorbells and intercoms are in- live together in publicly funded homes, have stalled at the height of pre-school children, the best chances of being successful in the front doors can be easily opened and hand- long run. Here, there is a positive attitude rails on the balustrade designed in a child- towards solidarity between neighbours. friendly way. As simple as such measures Older people often offer to baby-sit while may appear – they increase small children’s young parents return the favour by taking scope of movement and thus save parents a down their curtains and carrying heaving lot of unnecessary trouble. shopping bags. Often this living together as a community has less to do with flat-sharing, The challenge in building new flats is to such as in conventional student accommoda- move away from standard apartments for tion, than with providing support structures, the conventional nuclear family and to which are still in place in many rural areas create new rooms with variable and multi- 29

ple possibilities for use, which can accom- and transportation services that are particu- modate families’ different ways of living larly tailored to families’ needs. today. Ideally, architectural design should The fact that there are few services of this Ideally, architectural enable communal ways of living that offer kind in Germany and at the same time a low design should enable communal ways of living both private quarters for retreating, on the birth rate may indicate a correlation be- that offer both private one hand, and common rooms for children tween the two – although it is difficult to tell quarters for retreating, and adults, on the other. whether there are few services, because few on the one hand, and common rooms for children are born and more German mothers children and adults, on When city planners wish to create a child- are in full-time employment than in Scandi- the other. and family-friendly environment, this often navia, for instance, or whether the employ- results in more than the creation of play- ment and birth rate is also a response to the grounds for pre-school children. Experts poor level of services offered. Anyhow, it is subsequently rate the city’s overall facilities clear that there are fewer incentives for as good. Aside from this, public areas in making use of private services in Germany cities have many zones that are dangerous than in France or in the UK, for instance. for children. City planners can counteract these in a number of ways: The use of short- The range of services on offer could be sig- distance public transportation can be made nificantly improved by having a specialist much more child-friendly, the safety of cy- service agency. A service agency can offer cling paths and pedestrian crossings could various services, ranging from shopping to be improved. Backyards could be cleared up babysitting, and is directly responsible for and access to unused property improved, in the trustworthiness of its employees. How- order to create a space for children to move ever, service agencies may also act as an in, which is pedestrian only. This makes it agent for the provision of different services. easier for growing youths to claim a piece of The family service pme is an example of this. their environment for themselves. It offers mediator and counselling services for childcare, trains staff and has set up a Including children, not only their parents, in childcare hotline for emergency cases. Po- planned projects has generally proven to be tential customers are not only families but a great success in urban planning. Although also companies who wish to improve the this is by no means standard practise, this work-life balance of their employees. But measure can help to gain new insights in municipalities could theoretically also become identifying dangers and difficulties and mediators for such services. Local centres increase the chances of leisure facilities could collect offers and take orders from the fulfilling their intended purpose, as well as citizens. Some municipalities have already making it more likely that people will identi- attempted to do this. Yet the costs of family fy with the newly built facilities. support services will have to be reduced if the range of services is to be expanded. Services for families Attempts at doing this can be seen in former Many family-supporting services have a projects – although the term “Dienstmädchen- hybrid status between public and private privileg” (literally meaning “housemaid services for families. Perhaps it is due to this privilege”) has now gained a bad reputation – status, that one seldom talks about them in as well as in the most recent considerations public, although the question of whether and to reduce the cost of such services through how well a family masters everyday life is the reduction of ancillary wage costs or heavily influenced by this. Such services also through so-called combined wages. include semi-private day-care services, as Yet, as we have seen, the increasing number well as many cleaning, handyman, shopping of women in gainful employment does not 30 Family and Public Spirit – Solidarity and Subsidiarity

necessarily result in a rising number of chil- ble proportion of the services provided so dren and opinions differ on the effects of this far, are probably illicit. Hence, changes in Yet it is undeniable that on raising children. Yet it is undeniable that this field will not only take the burden off countries, in which countries, in which there is a high propor- families and possibly raise the birth rate, but there is a high proportion of women in the tion of women in the labour force, also have also help legalise existing employment rela- labour force, also have higher birth rates than in Germany – namely tionships. higher birth rates than in countries with such distinct economic in Germany. systems as Sweden and the United Kingdom. Summary At the same time, both states have a low There is an African proverb that says: »In unemployment rate, which runs contrary to order to raise a child, you need a whole vil- the argument that the strong labour partici- lage«. This is also the case in Germany. The pation of women necessarily reduces the task of improving the living conditions for labour market opportunities for men. children is not only the parents‘ duty, nor is In the U.K. alone, the employment rate of it solely the government’s duty. Nonetheless, single parents has risen from 48 per cent to the government can establish the political currently 55 per cent since the Blair govern- framework conditions in order to promote, ment launched its »New Deal«, without this facilitate and improve the range of childcare having had a negative impact on the gainful services that are offered to the public: employment of other population groups. This means that approximately 300,000 :: Although much lip service is paid to fami- parents have taken up employment. lies, cities and apartments are not always built in a family-friendly way. This applies The general acceptance of such offers will less to new buildings than to the existing probably only change gradually and through housing stock. concrete political measures. According to a study conducted by the German Institute for :: Multi-generation projects can help to im- Economic Research (DIW), over thirty per prove the quality of living of old and young cent of nursery age children are looked after and take the burden off public services. There were never as many by their relatives, mostly their grandparents. There were never as many young, enthusi- young, enthusiastic and However, in the medium term, this model of astic and capable people in retirement age capable people in retirement age who would be childcare is fragile – since the foreseeable who would be willing to help – but we often willing to help – but we extension of grandparents’ employment don’t make use of their willingness to help. often don’t make use of time will make this more difficult and it does Families and especially single parents as their willingness to help. not allow mothers with high professional well as children from underprivileged demands much safety in planning. backgrounds could be helped in this way Especially on the subject of childcare the – through reading initiatives, private tui- attitudes of all participants play a part – the tion groups or, in real problem areas, even attitudes of employed mothers, the prefer- soup kitchens. ences of childminding grandparents, and the social acceptability of children being :: Local governments can often be mobilised taken care of by strangers. In a study on the to become mediators for such services. availability of home-bound services, the They can bring together companies, serv- DIW presumes that German families, in ice providers, social organisations and particular, are comparatively hesitant in al- provide information about lucrative forms lowing »strangers« into their homes to work of cooperation. for them. They also have little experience in registering employees and generally :: The reconcilability of job and family could wish to avoid red tape. Hence, a considera- be significantly improved by introducing 31

tax concessions for family-supporting services. This may improve the birth rate, but it will, in any case, improve the quality of life of many families.

:: Families need to be supported by civil society, on the one hand, and yet they, and particularly extended families, generate material benefits for society that are difficult to measure, on the other hand. It is the government’s duty to repeatedly emphasize this point. Parents are not given sufficient credit for raising children.

The most difficult task will probably to change society‘s basic attitude towards children, in a society that is no longer used to children. Living with children is enriching. To make this clear to people at a time when money and profit considerations pre- dominate represents a particular challenge. The likelihood of a couple deciding to have children will be influenced by economic, fiscal, architectural and other factors. But, ultimately, a family-friendly society requires a specific set of values which are oriented towards the future, relationships, solidarity, love, attachment and commitment.

33 33 34 Life courses and children

The demographic paradox but applies to the whole of Europe. According Today, there are around 82.5 million people to an appraisal by the EU Commission, 65 to 79 living in Germany. Thanks to the continuous year olds, in particular, will be healthier and flow of immigrants, this figure could still be more active than their parents’ generation. close to 80 million in 2030. Most empirical analyses on life goals point to The population will only start to decline hea- the fact that leading a healthy and long life vily after the current forty-year-old baby belongs to people’s highest objectives in life. boom generation die. In 2050, the German For the individual, the aging of the population population will only comprise 70 million is therefore very positive. people, of which 10 million will be new immigrants. Although the decline of the population The same goes for the decline in birth rate, will take place over a long period of time, the which is the main cause of demographic shifts. changes this implies for the age structure of At the beginning of the 20th century, many the population will be considerable. Thus, the women writers who fought for equal rights ratio of over sixty-year-olds to the younger and the active participation of women in pu- generations will nearly double over the next blic and professional life, pointed out that this thirty years. The collapse of the social securi- kind of participation would imply having a ty systems is certain. It has long been pre- smaller number of children. In connection dicted on the basis of sound analyses and with this, we need only remember Alva forecasts, yet politicians have failed to take Myrdal, one of the key founders of the Swe- these warnings seriously. The state‘s share of dish women’s and family policy in the 1940s. public expenditures will increase due to the ever increasing proportion of people who live Even today, there is not doubt that investing or will have to live on state transfer payments, in the education of women and allowing as a number of analyses have stated. While them to actively participate in public and predictions on Germany’s future social and professional tasks is a central prerequisite economic development indicate serious pro- for the emancipation of women, and also for blems, the demographic processes that have the reduction of births in the third world. caused these (negative) developments are In the late 1950s and 60s, an immense effort seen in a very favourable light, by the citizen. was spent in the United States and in Europe to improve the educational opportunities of Thus, while a 60-year old man could expect to the population and to achieve the transition live for another 15 years in 1960, his life ex- from an industrial society to a fully differen- pectancy has risen to nearly 20 more years tiated knowledge-based society. today. This trend is not unique to Germany, In most of these countries, young women 35

took advantage of the new opportunities. as a whole. Perhaps the birth rate in Germa- By reorganising the life There is probably no country today that is ny will then start to approximate that of the courses of young and old people in an intelli- not proud of this development and does not other European countries, such as the UK, gent way can individual do everything to try and promote the deve- France, Denmark or Sweden. The paradox gains in lifespan also be lopment of human capital in its own society. that individual gains in lifespan and the a gain for society as a whole. All European societies have appraised the development of human capital is clearly possibility of safe contraception as an op- linked to rapidly rising social security costs portunity, making it possible to and do not to for society as a whole and a significant red- yield to the dictates of cultural convention uction in the number of births, is a conse- nor leave the decision about having children quence of Germany having failed so far to to chance or established norms, but instead reorganise the life courses of its citizens in to be driven by one’s own preferences and such as way, so that very positive individual those of one’s partner. Strengthening the developments benefit society as a whole. freedom to choose one’s own course in life by investing in one’s own abilities and the abili- The life courses of most people today are ty to influence one’s level of education is an constrained by the relatively rigid time fra- equally important prerequisite for the deve- me defined by the state. Not only does the lopment of knowledge-based societies as is state determine the pension age but also the freedom of choice in terms of marriage, stipulates in detail how long one should train one’s partner and having children. and study and when one should start working. If one follows the analyses on Germany’s future development or even that of the entire It also defines very clearly for what length of This has a negative Western world, then one soon realises that time one may take leave from work. Yet the impact on society as a whole, since a longer the combination of having a healthier and regulation of life courses corresponds to the life expectancy gene- longer life, better education and more free- life course sequencing of the 19th century rates more costs and dom of choice for young adults to shape their when time frames were established for the not enough children are born to bear those lives will generally have a negative impact on duration of public education as well as for costs. society, since longer life spans generate pensions. These time frames have continued more costs, yet not enough children are born to be used in the 21st century, although the to bear the costs later on. requirements for job qualifications and the life expectancy of each individual no longer The opportunities and risks posed by the coincide with these structures. The failure to parallel demographic processes of rising life adapt this model to current circumstances expectancy and the low reproduction rate of or the refusal to produce a new occupational the next generation, should be analysed and life cycle model can be seen as the main their consequences evaluated separately reason why individual gains in lifespan and from one another. Only after doing this, can the variety of options open to the next gene- Dividing life into three one ask which links can be established, in a ration cannot be benefited from by society as parts with a relatively strict age limits and the knowledge society that depends on the deve- a whole. tendency to terminate lopment of human capital, between both the occupational phase these processes at a social and at an indivi- Dividing life into three parts with a relatively earlier on, inevitably leads to the resources of dual level. This is the only way to develop strict age limits and the tendency to termi- the older generation not new perspectives. nate the occupational phase earlier on, ine- being used and the vitably leads to the resources of the older pressure on the younger generation to achieve By reorganising the life courses of young and generation not being used and the pressure more in a shorter period old people in an intelligent way can individu- on the younger generation to achieve more of time increasing al gains in lifespan also be a gain for society in a shorter period of time increasing drama- dramatically. 36 Life courses and children

Between 2010 and 2030, tically. A life cycle-adjusted model for educa- to 70 year olds will rise by 37 per cent and the percentage of 65 to tion, family, work, voluntary work and flexi- the percentage of 80 year olds by 57 per cent 70 year olds will rise by 37 per cent and the ble age limits can help to permanently in all European countries. percentage of 80 year resolve the paradox described above. This olds by 57 per cent in all would generally result in the development of Höpflinger, a Swiss researcher on the effects European countries. favourable effects of aging in society and of aging, saw the central problem to be that also have a positive effect on the decision of people went into retirement increasingly young adults to shape their lives in various early and fewer were willing to work past the ways, choose different types of partnership age of 65.Thus, the labour force participati- and, of course, also to have children. on rate in Switzerland for elderly men aged 55 to 64 was 86 per cent in 1991, which is 7 Making life courses more flexible per cent higher than in 2003. Among the If we maintain today’s practise of annuitisati- over 65 year olds, 20 per cent of men and 11 on, the ratio of potential beneficiaries to con- per cent of women were still working in 1991, tributors would increase from 42 per cent to while in 2003, only 14 per cent men and 6 per 78 per cent in 2030. The consequence would cent women were still employed. The labour be that the pension scheme contributions force participation rate for the 55 to 64 year would be at 28 per cent, nursing insurance at olds in Germany is only 43 per cent, which is 3.5 per cent, health insurance at 17.5 per cent far behind Switzerland and cannot by any and unemployment insurance at 6.9 per cent. means compete with Sweden with over 65 This would claim 30 per cent of the GDP. per cent, Denmark with over 55 per cent or the United Kingdom with 50 per cent. One The public share for The public share for 2030 is estimated to be can therefore speak of an increasing level of 2030 is estimated to be around 65 per cent of the gross domestic underemployment among the over 55 year around 65 per cent of the gross domestic product. This will create considerable politi- olds in Germany. Most people in this group product. This will create cal challenge and unpredictable budgetary are not only extremely capable and healthier considerable political risks. than older generations, but also have strate- challenge and unpredictable budgetary risks. gies to compensate for shortfalls in perfor- Our relationship with the elderly is an im- mance as they grow older. portant part of this development. Between 2010 and 2030, the percentage of 65

1 | Anticipated distribution of the Gross Domestic Product (GDP) in 2030

1999 2030

Contribution rates Pension scheme 19,5 % 28,0 % Nursing care insurance 1,7 % 3,5 % Unemployment insurance 6,9 % 6,9 % Health insurance 13,6 % 17,5 % Total 41,7 % 55,9 % in % of the GDP 22,6 % 30,3 % State expenditures on personnel 10,5 % 16,5 % Primary surplus 1,0 % 2,4 % Other public expenditures 15,9 % 15,9 % Public share 50,0 % 65,1 %

Source: Sinn, Thum (1999), Börsch-Supan (1997), Färber (1995), Dt. Bundesbank (1997), SVR (1998) empirica 37

The Europe-wide trend of sending older If one follows the German Bundesbank’s employees into early retirement is a dead statistics for 2004, one can see why problems end. Neither has this helped prevent youth associated with an aging population cannot unemployment, nor is it an appropriate easily be solved in the short term by raising response to the combined phenomena of a the birth rate. In 1970, the average retire- higher life expectancy and better health. On ment age for men was 65.2 years; in 2003 it average, over 65 year olds spend roughly was at 63.1 years. The life expectancy of 65 three quarters of their lifetime without or year olds today is 4 years more than in 1970 with very few physical restraints. and the trend is on the rise.

When the dynamic pension scheme was 2 | Life expectancy and retirement age introduced in 1957 / 1958, there were a total Changes compared with 1970 of 5 million people living in Germany who were aged 65 and over. At the time, there Men were 72 million people living in both parts of 16,2 +4 Germany. In 2000, there were 83 million people living in Germany, of which 13 to 14 +2 million were older than 65 years. At the time, the population’s share of over 65-year-olds 12,0 0 was roughly 7 per cent; today it is approximately 17 per cent. If one were to re-esta- If one were to re-esta- 65,2 blish the age ratio of 1957 / 60 by promoting blish the age ratio of -2 1957 / 60 by promoting population growth through immigration, population growth 63,1 Germany would have 160 million inhabitants through immigration, -4 Germany would have Women today. 19,9 160 million inhabitants today. +4 The tendency to go into early retirement can be seen as a systematic means of prematurely +2 bringing human resources to a standstill in a society, in which people are already complai- 15,0 0 ning about the fact that the next generation is not producing enough children to adequately 63,3 63,3 -2 finance the additional life years gained by the older generation. Politicians and academics must deal more intensively with the question -4 1970 75 80 85 90 95 00 2003 if the social and economic participation of Life expectancy of 65-year-olds elderly people in public life is to have positive Retirement age * social and economic consequences for society as a whole. A longer life span after the age Figures in years * for the first pension payment, figures for West Germany, of 65 also means a greater diversity of life- German Bundesbank 2004. style options following retirement. Yet the main challenge for future develop- Source: Verband Deutscher Rentenversicherungsträger (Association of German Pension Insurance Funds), ments is not only to develop strategies for Federal Ministry of Health and Social Security integrating over 55-year-olds more effectively into the labour market. The aging of our society will also bring with it a complete set of challenges for the young elderly. As the illustration »Development of parents sup- 38 Life courses and children

The relative ratio bet- port ratios« shows, the relative ratio between as those of their parents’ generation. Hence, ween 80-year-olds and 80-year-olds and those between 50 and 64 the basic objective is to establish more flexi- those between 50 and 64 years, i.e. their children’s years, i.e. their children’s generation, was 6 bility also for the older generations. A good generation, was 6 per per cent in Germany in 1950; in 1990 it was example of this is the university sector. Un- cent in Germany in 1950; 20 per cent and in 2025 it will be 34 per cent. like in the United States, Germany has a fixed in 1990 it was 20 per cent and in 2025 it will retirement age. In the state of Berlin, the be 34 per cent. This is not merely a German trend but a Eu- pensions must be provided by the respective ropean one. As yet, society still has no soluti- institution where the functionaries were on for how to best manage the imbalance of employed. The rigid retirement age can lead ratios between the generations of elderly to a situation where, with the extension of people and support services. In order to find the retirement age, each retired professor productive solutions, there must be a basic will cost a university 170 per cent of his pre- discussion about whether it makes sense at vious salary, since the university has to pay all to set fixed and rigid age limits in society both the salary of a new professor as well as or whether it would not be more useful to do his pension. With regard to the current ad- away with such limits and to create a system vancement of a relatively healthy group of el- of incentives, which ensures that society can derly, it would make more sense to change make use of the human potential of those the part-time pre-retirement schedule for still able and wishing to work. elderly employees prior to retirement and to offer new incentives that make it more at- The next generation can The next generation can no longer expect ca- tractive for older employees to continue wor- no longer expect career reer patterns to be as linear and predictable king. patterns to be as linear and predictable as those of their parents’ This could include a multitude of regulati- generation. 3 | Population in Germany ons, ranging from a higher pension for the categorised by age groups remaining years to a reorganisation of life from 1960 to 2040 in millions and as a percentage courses, in which an option model could ena- of the groups aged 15 to 64 years ble one to take time off in earlier years instead of at the end of life, for instance to 90 pursue family activities, training or further 83,1 82,7 82,1 82,0 80 79,8 education and social commitment. Those 78,4 76,2 who did not pursue such activities previous- 70 70,9 mio. ly would be able to or would have to catch up 19 19 14 18 23 on them later on. 60 19 19 18 24 18 24 21 22 50 23 Being in a knowledge-based society, we can 22 22 24 21 assume that the proportion of employees 40 17 23 23 21 19 working with information will increase and 20 24 21 30 22 21 that they will generally have to rely on their 18 19 23 25 18 cognitive competences, whereas craftsman- 20 18 16 16 17 15 ship skills will become less important. New 15 16 10 types of vocational training would enable people to exercise various highly qualified 0 1960 1980 1996 2000 2010 2020 2030 2040 professions over the course of their lives. up to 14 years/over 64 35–44 years Today, teachers in many schools, especially 55–64 years 25–34 years in the cities, face challenges that can cause 45–54 years 15–24 years significant stress and make it nearly impos- Source: Rössel, Schaefer, Wahse 1999, p.25 ff. sible to reach normal retirement age. Why 39

4 | Development of parent support ratios in selected European countries in 1950, 1990 and 2025

Parent support ratios* 1950 1990 2025 Denmark 8 24 32 Germany (East & West) 6 20 34 France 10 26 32 United Kingdom 9 24 30 Italy 8 18 32 Austria 7 23 30 Poland 6 13 27 Sweden 9 29 38 Switzerland 7 23 36 Hungary 5 15 33

* Parent support ratios: the number of 80-year olds and over per 100 persons aged 50– 64 years.

Source: François Höpflinger, Aspekte demographischer Alterung – Messung und gesellschaftliche Folgen (Aspects of demographic aging – measurements and social consequences) www.mypage.bluewin.ch/hoepf/fhtop/fhalter1E.html

can such professions not be organised in 5 | Forecast for the number of persons of such a way that one is offered the possibility working age 2005 to 2050 of doing a 2 to 3-year Master’s degree after 10, 15 or 20 years in order to learn something new and perhaps even change career? 60 Number of persons in millions This may sound utopian, but it is standard 55 practice rather than an exception for the

officers of the German Federal Armed 50 Forces. The same is true of many other professions, such as educators, nurses or carers 45 for the elderly, for which the state has a monopoly on vocational training. This could be 40 restructured in such a way that someone with 5 to 10 years of professional experience 35

as an educator is given the opportunity to 30 qualify for a new job through an advanced 2005 -10 -15 -20 -25 -30 -35 -40 -45 -50 training course. These days, such models are Jahr utopian, not because they cannot be fi- 20–60 20–65 20–70

nanced, but because politicians do not see Source: Statistisches Bundesamt (Federal Statistics investing into new vocational training facili- Office); 10th coordinated pre-estimate for the population ties as lucrative, due to a reduced working estimate, medium variant; calculation Bertram, H. life as a result of early retirement. This makes it clear that, by regulating the life span, the state has considerable influence to make productive use of the additional working years in social and economic terms. 40 Life courses and children

Setting false priorities Setting false priorities means that neither greater life expectancy will lead to an incre- means that neither the the municipalities, federal states nor the asing proportion of elderly people requiring municipalities, federal states nor the German German government ever attempted to as- social support and professional care. The government ever at- sess the social and economic costs of their additional years make it easier than previ- tempted to assess the laws and regulations for the future. The ously to understand the limits of people’s social and economic costs of their laws and tendency of setting the wrong priorities performance. Today, most of the support regulations for the when dealing with a longer life expectancy, provided comes from relatives, and almost future. as can be observed in most European coun- entirely from daughters, mothers and grand- tries, is also attributable to the fact that in mothers. This was Otto von Bismarck’s visi- Germany neither the municipalities, federal on when he introduced the provision for states nor the German government have ever dependants. He justified the provision for attempted to assess the social and economic widows, by explaining that this would enable costs of their laws and regulations for the the daughter-in-law to look after the survi- future. Hence, the founding fathers of the ving father-in-law. However, in a society in dynamic pension neglected to calculate which only part of the population still lives which costs would arise if the then already in a family or kinship relations, such old-fa- apparent increase in life expectancy after shioned schemas are hardly suitable for the World War II would become the basis of their future. calculation. Instead, they simply relied on the fact that population growth would ab- Making life courses and career paths more sorb all the costs. The long-term conse- flexible, however, also opens up the possibi- quences of this measure were neither calcu- lity that people who do not live in kinship or lated when early retirement was introduced family relations can perform such tasks in the 1970s, although the subject was instead. If one knows that one’s own occupa- addressed by some experts, such as Kurt tional life cycle will reach far into old age, Biedenkopf und Meinhard Miegel. Even the then this not only subjectively legitimises cost estimates of the most recent calculati- training periods for learning to care and ons assume a medium variant of age deve- actively nurse others, but also allows one to lopment in society, although past experience take advantage of such services oneself later has shown that the gain in life years has been on. Such models are by no means new and continuously underestimated. In attempts to played an important role in previous centu- follow the USA, there have repeatedly been ries, since one‘s life course was so uncertain. suggestions in Germany to establish a »gene- Since one can not rely on being taken care of ration balance«, as was suggested by Bernd by one’s own children, such a combination of Raffelhüschen in 1996, for instance. One can younger people, not requiring care, taking only hopet hat regional and federal legisla- care of older people in need of care, offered a tors will finally decide to use such instru- solution to this problem. It is further known ments, since people are more likely to work now that older men also participate in the longer if incentives for flexible forms of early care of others, allowing care models, where retirement are in place. It will also make it care provision is not merely seen as a re- much easier to recognise that a growing sponsibility of women in society. number of children cannot absorb the rising costs of old-age pension schemes. Only if life courses, in the sense of an occu- By making life plans and career paths more pational life cycle, become more flexible and flexible, constructive and long-term solu- there is a clear and generally understanda- tions can be found for a social problem, ble allocation of costs for the positions they which, in spite of being a topic of debate, has are incurred in, will the additional years of largely been ignored by society as a whole. A life not merely be interpreted by society in 41

future as years of consumption and leisure. nal life perceives this attitude as part of their Instead, one should see the active participa- own life plan and as a vested interest, which tion of the elderly in working life and in the state and society must guarantee. Under voluntary work in other areas of life as a new the current circumstances and social expec- way of actively shaping life. An over 70-year- tations, a clear message is conveyed to the old can be more than just an interior mini- younger generation to focus as much as ster. He can also be a policeman, professor, possible on acquiring a lucrative position teacher, skilled worker or could continue with the associated prestige, as this cannot working as a member of any other professi- otherwise be achieved in a long-term life on. This does not necessarily mean that he plan. Meanwhile, the concentration of life The concentration of life would have to resume the same activities he courses between the 20th and 50th life year courses between the 20th and 50th life year did 30 or 40 years ago. This could also invol- has become a social fact, which has evolved has become a social ve new skills, which he has gained later on in over decades and is difficult to eliminate. fact, which has evolved life. This will depend on establishing new This is accompanied by the dire conse- over decades and is difficult to eliminate. life courses. In all these areas, the state has, quences that it is becoming increasingly de facto, a monopoly. From the length of difficult to achieve a full occupational life school education and further education, the cycle and that the next generation has less requirements for exercising many professi- and less time for other areas of life outside ons to the regulation of academic qualifica- their jobs. The framework conditions that Those who have not tions as well as the retirement age – all this these policies have created and are respon- reached the highest point in their careers by lies in the hands of the state. sible for also mean that someone who has not the age of 35 or 40 have reached the highest point in his career by the no chance to make it in Alleviating the congestion of life age of 35 or 40 has no chance of making it in our society. We may be well aware of the fact that, by our society. When making life plans, young decreasing the occupational lifespan since adults therefore have no other choice but to the 1970s, we have not really benefited from try as hard as possible to established them- having healthier elderly and a longer life selves in their careers as fast and as early as expectancy. Even less consideration has possible, since they have to assume that any been given to the impact a reduced occupati- investment in their own potential human onal lifespan has had for the life plans of capital will become redundant when they young adults. If only 46 per cent of men and reach mid-50 at the latest, and they are »dis- nearly 30 per cent of women aged 55 to 64 carded« for business management reasons. years are employed in Germany, compared to 62 per cent of women and 68 per cent of How little our politicians think about these men in Sweden, and if industrial corpora- correlations, can be seen from the recently tions already start to move their 53-year- introduced regulation to limit the time it takes olds into a part-time pre-retirement working to become a junior professor. In order to be- schedule, only to allow the economy as a come a professor in Germany today, one must whole to bear the financial brunt of these complete the first university degree in no erroneous business decisions, then this can longer than twelve years, without there being have disastrous consequences for the life any objective grounds for this limitation. and career plans of the younger generation, who has to witness the effects of these decisi- If it were for this regulation, a number of ons on their parents. Nobel prize winners would never have be- At the same time, the younger generation come “professor” in Germany today, since plan their professional and corporate ca- they did not originally plan to become pro- reers in line with these expectations. The fessors, but developed into the job after generation that is in the middle of professio- exploring various other job options. 42 Life courses and children

Over the last few de- Over the last few decades, we have made the This has nothing to do with the course con- cades, we have made process of successfully starting a career tent, but above all with concerns that a te- the process of successfully starting a career increasingly difficult for the next generation acher qualification based solely on a BA increasingly difficult for and have introduced many social regulati- could lead to an academically underquali- the next generation and ons that considerably delay the process of fied teaching profession. Since both the have introduced many social regulations that getting established in one‘s career. federal government and individual states considerably delay the One of the chief aspects of becoming an adult have taken the OECD’s view that 40 per cent process of getting in Germany involves attaining economic of the population must hold an academic established in one‘s career. independence. Yet an academic will only degree in the long run, the trend outlined reach economic independence between the here indicates that an increasing number of ages of 26 and 28 at the earliest: 12 to 13 young adults will only attain economic years of school, one year of military or civili- independence later on in life. Since the an service, four to five years of study and two current pension age is 63 years for men, this years of internship, as required for public means that it will only be possible to work posts, amount to a total of 20 to 21 years. for an average of 35 years. The trend descri- Consequently, young adults are only able to bed here not only applies to academics but lead independent lives outside their parents’ to all professions since the qualification homes shortly before they reach 30. And requirements in all professions will not only whether the restructuring of the university lead to longer education or vocational trai- systems to include Bachelor and Master ning periods but also implies that economic degree courses will accelerate this is questi- independence will be postponed to the onable. In future, teachers will need both second half of the 30s. qualifications to teach at a school.

6 | Career change 2003, categorised by age Dependent workers (without students) in May 2003, as categorised by age and changes in employment and employer in the previous year, as a percentage of all employees of the respective age groups, Germany

30 1

8 1 25 10

20 21 1

15 9 16 1 10 6 1 1 5 8 4 0,4 0,4 1 5 3 0,3 5 3 0,3 2 4 4 2 1 3 3 0 2 2 2 15–20 20–25 25–30 30–35 35–40 40–45 45–50 50–55 55–60 60–65 65 + Age Change of employment and employer only change of employer only change of employment

Source: Results of the microcensus; Federal Statistics Office 2004-15-0321 43

Completing further education and entering 1.65 in 1965. In the above chart, two pro- into professional life today, however, does cesses can be clearly distinguished. In 1935, not ensure a safe job and future career pro- 100 women gave birth to 216 children, of spects. For many academics, this first of all which 70 were from families with four or means being employed on a temporary basis, more children and 60 from families with often as an unpaid trainee (»the traineeship three children. In 1945, 100 women gave generation«). According to the Federal Stati- birth to 179 children, of which 37 came from stics Office, approximately 27 per cent of the families with four children or more and 42 young adults in the group of 20 to 25-year- from families with three children. The de- olds changed employer and employment or cline in birth rate among these two age only the employer in 2003, compared with groups can largely be attributed to the intro- 4.3 per cent among the 55 to 60-year-olds. duction of contraceptives in the 1960s,which an increasing number of women took advan- Furthermore, a quarter of the employees tage of to adjust the number of children born are on temporary contracts among the to the number they desired. Contraceptives young adults, compared with 4 per cent were the only means of having the number of among the 55 to 60-year-olds. One may children desired at the time, of two children think that this is normal and typical for per woman. The continuous decline in birth young adults and that all generations expe- rate after that is attributable to the childless- rienced the same situation, but this is not ness of the subsequent age groups. While in the case. Especially for the generation that 1945, 13 per cent were childless, the propor- completed school and further education tion had doubled to 26 per cent in 1960. after World War II, one could be sure to be offered a permanent contract after gradua- Even though this development cannot be tion, in both East and West Germany. In entirely explained by the fact that the young both parts of Germany, there was a great de- generation today finds it increasingly diffi- mand for labour, which offered the genera- cult to stand on their own two feet early on in tion born between 1930 and 1940 more life, the trend shows that in the late 1950s secure life prospects than today’s generati- and early half of the 1960s, known as the on of youths has. Entering into professional »golden age of the family«, young adults life today is just as insecure for the young enjoyed a much higher level of economic generation of today as it was for their great security and attained economic inde- grandparents and grandparents in the first pendence earlier on. This not only enabled third of the 20th century. It is therefore not them to start a family much earlier on but surprising that today’s childlessness very also meant that they had more children and much resembles that of the generation li- there was less childlessness. ving in the first third of the 20th century. At the time, the family model of labour force When comparing this development to the participation, in which a man‘s salary was fertility of the generations born between regarded as a ‘family salary’ and was ex- 1935 and 1960, it soon becomes clear that, pected to suffice for a whole family, was parallel to the increasing uncertainty and well-established among politicians as well as Parallel to the increa- difficulty of finding a secure job, the birth trade unions and employers. This family sing uncertainty and difficulty of finding a rates of the individual age groups have model still forms the basis of large parts of secure job, the birth declined sharply. the social security system today, in which rates of the individual the social safeguards for women and child- age groups have also declined sharply. While women still gave birth to 2.1 children ren are defined by the income of the husband in 1935, the birth rate was 1.98 in 1940 and with regard to both the pension scheme and 44 Life courses and children

7 | Temporary employees in May 2003 categorised by age, as a percentage of all employees of the respective age groups in Germany, All employees except for trainees, and military and civilian service conscripts

35 30

24 20

9 8 6 5 5 4 4 4 0 15–20 20–25 25–30 30–35 35–40 40–45 45–50 50–55 55–60 60–65 65+ Age

Source: Results of the microcensus; Federal Statistics Office 2004-15-0311

8 | Comparing the frequency of career change between the generations over time Age of economic independence for men by East-West comparison Economic independence 1931–48 1936–53 1941–58 1946–63 1951–68 1956–73 1961–78 1966–83 1971–88 1976–93

0,8

0,6

0,4

0,2

-0,2

-0,4

-0,6

-0,8

-1 1913–17 1918–22 1923–27 1928–32 1933–37 1938–42 1943–47 1948–52 1953–57 1958–62 Birth cohorts West East mean = 2,53

Source: Henneberger, S.; Kreher, S.: Evaluation of the results of the life courses, DJI family survey and singularisation study 45

9 | Comparing the frequency of career change between men and women over time Age of economic independence for men and women by comparison Economic independence 1931–48 1936–53 1941–58 1946–63 1951–68 1956–73 1961–78 1966–83 1971–88 1976–93

0,8

0,6

0,4

0,2

-0,2

-0,4

-0,6

-0,8

-1 1913–17 1918–22 1923–27 1928–32 1933–37 1938–42 1943–47 1948–52 1953–57 1958–62 Birth cohorts Men Women mean = 2,49

Source: Henneberger, S.; Kreher, S.: Evaluation of the results of the life courses, DJI family survey and singularisation study

10 | Fertility of the birth cohorts 1935 to1960

Birth cohorts 1935 1940 1945 1950 1955 1960 Percentage of women with x children per 100 women Percentage of childless women 9 11 13 15 22 26 Percentage of women with one child 26 26 30 30 25 22 Percentage of women with two children 30 34 35 34 33 32 Percentage of women with three children 20 19 14 13 13 12 Percentage of women with four or more children 15 10 8 7 6 8 Total 100 100 100 100 100 100 Number of children 1 child 26 26 30 30 25 22 2 children 60 68 70 68 66 65 3 children 60 57 42 39 39 37 4 or more children 70 47 37 35 37 41 Total 216 198 179 172 167 165

Source: Bertram, H. 46 Life courses and children

the health care system. According to empirical studies of the 1960s, this model was also Figure 11 illustrates how in the oldest gene- widely accepted in society, not only be men, ration investigated, 80 per cent of East Ger- housewives and mothers, but also, in equal man women and 74 per cent of West German measure, by employed women and mothers. women started working with one child, Today, only 14 per cent of the female popu- whereas today the figure is 35 per cent in lation accept this model, while the over- East Germany and 42 per cent in West Ger- whelming majority of women would prefer a many. Of the youngest cohorts analysed, model, in which man and woman were both approximately 14 per cent of the women in seen as the economic basis of the family. Yet West Germany and 13 per cent in East Ger- the woman’s life role could be adapted, many, decide to have a child immediately depending on whether she chose to have after completing further education, without children or not. Such an »adaptive life role« going on to actively pursue a career. This means that the profession and economic makes it clear that the majority of women, at The majority of women, independence of a woman, on the one hand, least the cohorts in East and West Germany at least the cohorts in and her wish to have children, on the other, questioned in this survey, do not live their East and West Germany questioned in this would not contradict each other. Instead, lives according to the traditional housewife survey, do not live their there is the possibility of combining one model. lives according to the with the other when interpreting this as traditional housewife model. one’s chief role in life. The structure of the If one compares the degree of childlessness young adult phase described here and the among 40 to 44-year old women in the for- mechanism intended for integrating young mer Federal Republic of Germany in 1971 to adults into professional life do not, howe- that in 1995 and 2003, it becomes apparent ver, allow for such adaptive models. In our that there was already an above-average modern knowledge-based society, young degree of childlessness among the better men and women are expected to make full qualified women in 1971. Evidently, better use of their potential and also to make the qualified women already made use of their skills they have acquired available to others acquired skills then to develop a different in their occupational lives. Under such life model from less-qualified young women. circumstances, it is easy to understand why, during young adulthood, both men and women see education, starting a career and economic independence as their primary objectives in life. Consequently, there have been dramatic changes with regard to the decision to have children. It is widely known that the average age for giving birth to the first child has significantly increased to 29 years. This lies above the average age of 27–28 years, which prevailed at the beginning of the 20th century. Since women‘s qualification profiles having improved, women are now more likely to start a career directly after graduation and before having children, which was not typical for their parents’ and grandparents‘ generation at the beginning of the 20th century. 47

11 | Percentage of women, who started their careers with a child categorised by cohorts (figures in per cent)

Started career Started career With a child, with a child without a child but no career Women in East Germany 1913–1917 82,83 15,15 2,02 1933–1937 86,39 9,30 4,31 1953–1957 84,91 11,41 3,68 1958–1962 81,97 12,99 5,04 1968–1972 60,18 32,52 1,30 1973–1977 34,82 52,36 12,83

Women in West Germany 1913–1917 74,01 14,12 11,86 1933–1937 81,46 11,65 6,89 1953–1957 78,21 17,91 3,88 1958–1962 64,89 30,00 5,11 1968–1972 67,35 27,55 5,10 1973–1977 42,53 43,68 13,79 Source: Hennig, 2005, p.55

12 | Childlessness among the 40 to 44-year-olds in East and West Germany Women and men, 1971 to 2003

1971 1995 2003 1971 1995 2003 Women Women Women Men Men Men Former West Germany No school leaving certificate 22,7 21,3 19,3 25,9 34,0 28,4 Comprehensive school leaving certificate 15,0 22,8 23,7 14,9 30,2 32,8 Mittlere Reife (equivalent of O-levels) 22,4 25,7 23,7 15,6 31,9 33,6 Hochschulreife (equivalent of A-levels) 20,4 26,8 30,4 18,5 38,8 37,6 Technical College/University 40,4 31,3 32,7 16,1 34,3 35,6

Former East German states and East Berlin No school-leaving certificate – – – – Comprehensive school leaving certificate 19,6 26,7 33,3 40,4 Mittlere Reife (equivalent of O-levels) 13,3 18,0 21,2 28,1 Hochschulreife (equivalent of A-levels) – 13,3 20,5 26,7 Technical College/University 10,6 12,5 18,8 24,7

Source: Bertram, H. 48 Life courses and children

What is perhaps surprising is that the pro- birth rates than Germany. According to the portion of childless women who have a uni- data and analyses provided by the UNO, the versity degree is seven per cent below the age for giving birth to the first child in other figure of 1971. The childlessness of female European countries, such as Finland, academics did not stand out then, since with France, Sweden or Denmark, has risen to a only 5-6 per cent male academics and 2-3 similar extent as in Germany. However, in per cent female academics, the numbers northern Europe this has also led to the fact didn‘t carry much weight. Today, by con- that subsequent cohorts even decide to have trast, where the number of academics has children after the age of 35. Despite the very risen to 30 per cent, the subject is much more high employment rates and the many activi- significant. ties associated with this, which mothers perform outside the home, many North Eu- The development with men is particularly ropean women still choose to have children The childlessness of 40 interesting. The childlessness of 40 to 44-ye- between age 30 and 40, and not just one but to 44-year-old men in ar-old men has not only surpassed that of several. In some North European countries all educational groups has not only surpassed their female cohorts, but has more than that reveal a high level of childlessness, the that of their female doubled since 1971. While male academics decision of some women to have many child- cohorts, but has more openly relied on the support of their wives to ren largely compensates for the childless- than doubled since 1971, especially among advance in their careers in the 60s and 70s, ness of others. the academics. this attitude is not very common among the younger generation of academics today. We The first noticeable difference between Ger- do not have such long time series for Eastern many and these North European countries in Germany as we have for Western Germany, which there is a high labour participation yet it is worthwhile mentioning that there is a among the elderly are the life plans of adults negative correlation between childlessness aged between 30 and 40 years. Not only do and educational achievements with both more people choose to have children during men and women in East Germany. However, this period of life but many choose to have the childlessness of men greatly supercedes more than two children. Obviously children that of women in all educational groups in fit into life, at a time which is also of decisive the new German states. The development importance for one’s professional advance- outlined here corresponds well with the ment. Here, there is a clear distinction to attitudes of the young population. Hence, 61 Germany. Yet this distinction is not as proper cent of the 23 to 26-year-old childless nounced among the younger age groups, academics stated that it would be very diffi- since the period for giving birth to the first cult to combine their career plans with ha- child has shifted across Europe to the se- ving a child and as much as 29 per cent of cond half of the 30s. childless interviewees with a low to medium level of education stated the same, as a sur- In Germany, there are ongoing discussions vey conducted by the Allensbach Institute on how to improve the life-work balance, so for Demoscopy in 2005 revealed. The verifia- that more young men and women choose to ble conflict that exists between the higher have children. According to the results of a education requirements of the next generati- survey conducted by the Allensbach Insti- on, the changed attitudes towards partner- tute for Demoscopy, 85 per cent of the 18 to ship roles within the family and the very 44-year olds questioned considered having uncertain career prospects of the younger children to be an unrealistic option. The generations can also be observed in other main reason given was that, even with im- European countries. This begs the question proved day-care facilities, one first had to why other European countries have higher complete education and make a good and 49

13 | Denmark, Germany, Finland, safe start to one’s career as well as acquiring The Netherlands: Fertility Trends some work experience before choosing to have children. Denmark 200 180 160 If any conclusion can be drawn from the 140 European trend of increasingly delaying 120 parenthood and from the widespread view 100 80 in Europe that education and profession are 60 the foundations for starting a family, then 40 we must ask ourselves why Germans are not 20 able to delay childbearing until the fourth 0 Germany decade of life. It is particularly important to It is particularly impor- 200 tant to ask whether and 180 ask whether and to what extent the German to what extent the 160 organisation of young adults’ life courses German organisation of 140 contributes towards, not only delaying their young adults’ life 120 economic and professional independence, courses contributes 100 towards, not only 80 but also prolonging their social and emotio- delaying their economic 60 nal dependence on their parents beyond and professional inde- 40 that of other European countries. Relative pendence, but also 20 prolonging their social 0 to other European countries, it is apparent and emotional de- Finland 200 that German men leave the parental home pendence on their 180 much later than, say, young Danes, Fins or parents beyond that of other European coun- 160 Dutch. At the age of 25, only half of all young 140 tries. 120 German men have left their parental home, 100 whereas in Denmark or Finland 50 per cent 80 have already left their parental home by the 60 40 age of 21 or 22. In this regard, young Ger- 20 man men are only surpassed by the Spa- 0 nish, Italians and Greeks, 50 per cent of Netherlands 200 whom leave their parental home between 180 the ages of 28 to 30 years. On average, wo- 160 140 men in Germany leave their parental home 120 much earlier: Approximately half of all 100 22-year-old women no longer live with their 80 60 parents, which does not deviate much from 40 other countries, such as France, the Nether- 20 lands, Denmark or Finland. When young 0 men leave their parental home in Germany, 15–19 20–24 25–29 30–34 35–39 40–44 45–49 they do not necessarily move in with a part- 1970 2001 ner. Only 30 per cent of the 23 to 27-year- Source: United Nations Population Division, olds who leave their parental home move in World Fertility Report 2003 with their partners, compared to 50 per cent in Finland and 40 per cent in England and the Netherlands.

A study was also conducted to see whether young women, who live together with a partner, have children. Again, in Germany, 50 Life courses and children

this is more seldom the case than in France, be too late to start a family. Since the per- Finland, Denmark or Sweden. In Germany, centage of young adults who still live with 11 per cent of young women aged between their parents has increased since 1972, we 20 and 30 years, who live together with can assume that the probability of this their partners, have children. In France, it younger generation of adults successfully is 30 per cent who have children, in Finland reconciling career and family is rather low. it is 38 per cent, in Denmark 47 per cent and Even though the living arrangement of in Sweden 56 per cent. While treating these »living apart together« exists with this age few figures with caution, one can neverthe- group, its prevalence is so low, at 10 to 12 less infer that in Germany young men, in per cent, that living together with one’s particular, who for whatever reason are parents has no effect on the partnership more likely to leave their parental home behaviour of young adults. The favourable later than in other European countries, are effects of the GDR’s pro-birth policies after Whatever reasons they initially also more likely to live alone. The 1972 support this argument. One of the key may have, young Ger- microcensus of 2003 confirms that 30 per policies, which promoted the founding of man men, in particular, leave their parental cent of the men in this age group live alone. families, even during vocational training, home rather late in life, Hence, young women are less likely to live was to offer young people their own apart- compared to other with a 20 to 30-year-old man and even less ment, allowing them to live separately from European countries, and then prefer living alone likely to have child with him than their their parents, as well as secure future job initially. peers in North or Western Europe. In con- prospects. trast, this is much more common in France and in Northern Europe. International This implies that for an increasing proporti- comparisons should be made cautiously, on of young adults today, and for young men since little is conveyed about the motifs of in particular, the possibility of living inde- those taking part in these surveys and the pendently, having a partnership and star- combination of circumstances described ting a family is no longer possible, as it was above does not exist in all European coun- for most of the 21 to 24-year-olds in the tries. Nevertheless, a possible explanation 1960s, who married relatively young and for these particular circumstances can be had a correspondingly large number of found in the extended period of study in children. Economic independence is often Germany and the associated prolonged only reached very late in Germany. economic dependence on the parents. This is reinforced by the fact that in Germany From other countries, such as France, we parents are obliged by law to provide for know that the decision of young adults to their children until they are economically have children and to live independently is independent. According to the German encouraged by them receiving benefits from maintenance law, the family, and in this the family benefits office. This means that case the parents, are obliged to secure the parents are no longer burdened with the economic existence of their children even if costs. The French system is not dissimilar to they are already in possession of all other the GDR’s concept. Other countries, such as civic rights. Finland, make such benefits dependent on certain contingencies, such as living inde- Many authors of international research pendently and being available and willing literature assume that living with one’s to work. All these countries focus on pro- parents for so long delays the development moting the independence of the next gene- of an independent partnership and the ration, whilst in Germany, as in the coun- creation of one’s own family. A delay in tries of southern Europe, the young adults’ finding a partner can also mean that it may economic dependence on their parents was 51

extended. When comparing these coun- that this may be due to the difficult econo- tries’ birth rates with Germany, we should mic situation of individual eastern German however note that the average birth rate of states, as even western German states with southern Europeans is less than one child high unemployment, such as North Rhine- per woman. Westphalia, do not differ in their life forms from economically prosperous states such However, in the German system there is one as Bavaria. other way to have a child and become independent of one‘s parents: through social benefits. If a young woman chooses to have a child and not to live together with her partner, who would otherwise be responsible for her, she is entitled to receive social benefits. Thus, the current German system enables a woman to have children, without being economically independent. The most important prerequisites are that one is not married, does not live together with one’s partner and is not available for work. In this case, the state supports the young family for the child’s first two years with around 1,200 to 1,300 euros per month net income. By comparison, half of the young women aged 30 years currently earn 1,200 euros net income per month. Being a single parent is often the result of a string of personal circumstances, for which there was perhaps no other solution. These people therefore require public support. Considering the changes in living conditions that have taken place in former East Germany since 1991, it may however be possible that, unlike in the GDR, these incentives do not coincide with the values and outlook on life of young Ger- mans before 1990.

According to Figure 14, the proportion of single parents living in Brandenburg, Me- cklenburg-Vorpommern, Saxony and Saxo- ny-Anhalt has increased from 20 to 30 per cent over a period of ten years, from 1991 to 2002, or even to 35 per cent in Branden- burg. The most significant increase can be seen in Berlin: While in 1991, 30 per cent of the families with children living in East Berlin were single parent households, this has now risen to 50 per cent during the last 10 years. We cannot rule out the possibility 52 Life courses and children

14 | Single mothers with children in the old and new German states Percentage of single parents compared to families with children, without age limits, 1991 and 2002, in per cent

0 Berlin Hesse Saxony Bavaria Bremen Saarland Germany Germany Hamburg Thüringen East BerlinEast West Berlin West Brandenburg Lower Saxony Lower Saxony-Anhalt Schleswig-Holstein Meckl.-Vorpommern Baden-Württemberg Rhineland-Palatinate North Rhine-Westphalia

1974 1991 2002

Source: DJI Regional database; base data: Federal Statistics Office, microcensus

A comparison of married and unmarried Only 4.8 per cent of all East Germans want proportions of the population in the new to live alone with children and only 6.3 per German states shows that, in the group of cent wish to live in separate households. over thirty-year-olds discussed here, rough- The rest would prefer to get married (76 per ly 60 per cent of 32 to 34-year-old men, for cent) or live in extra-marital cohabitation instance in Saxony, were single in 2004, (10 per cent). 77 per cent believe that child- compared against 17 to 18 per cent in 1991. ren need a home with a mother and father in These shifts have not been quite as drastic it to grow up happily. According to the in- for women, but even here more than 40 per formation of the Federal Institute for Popu- cent of group aged 30 to 34 years are single, lation Research (BiB), marriage and family compared with less than 15 per cent in 1991. are still incredibly popular in the new Ger- man states. Thus, the shifting tendencies Obviously, it was more attractive for young and radical changes described above must adults to enter into a partnership and mar- have other causes. riage and jointly care for children in the GDR than it is in current Germany, where It is worth noting that until they reach their marriage and family are under the special mid-30s, the majority of young men tend to protection of the state. One can dismiss the live alone, without a partner, family or idea that the increase in the number of sin- children. This tendency is not quite as gle parents and life-long bachelors and pronounced with women, but nevertheless spinsters is a reflection of changed values. noticeable. With regard to Germany as a 53

whole, it should be noted that, in 2003, 30 look on life of 18 to 44-year-olds shows an per cent of the 30-year-old men were mar- attitude, which explains why the populati- ried and 47 per cent of the 30-year-old on finds it so hard to live in a partnership or women. These results do not coincide with family. the value perceptions of young men and The findings of the Allensbach Institute of women measured in various surveys. Demoscopy confirm that the most important aspect in the decision to have children The public debate specifically focuses on the is that both partners share the wish to have issue of childlessness and the small number children. It is also equally important that of children conceived per woman and con- both partners perceive the partnership to templates whether this development of ha- be stable. The third most important aspect, ving fewer and fewer children and the grow- after the desire to have children and a sta- ing number of childless couples is to be seen ble partnership, is that the partner has a as a consequence of the disproportionate secure job and, alongside this, a secure and rise in opportunity costs for children. But in adequate salary. Most of the 18 to 44-year- fact, this very brief analysis of the demogra- old women (77 per cent) consider the ideal phic changes over the past 30 years brings to age to have a child between 20 and 26 ye- light two other factors. The organisation of ars. Furthermore, most of the women que- The organisation of life life courses for the 20 to 30-year-olds has un- stioned assume that the reproduction pha- courses for the 20 to 30-year-olds has under- dergone such radical change that the com- se should be over by the age of 33. This data gone such radical pletion of education and starting a career also corresponds with other findings by change that the comple- has gained pivotal importance for young Köcher and Eppler: Young women below tion of education and starting a career has men and women during this period of life; so the age of 24 consider the ideal number of gained pivotal impor- much so that the decision to have children or children to be 2.14, of which 2.1 are actual- tance for young men a family has become unlikely. This is becau- ly conceived. The 29-year-olds or over view and women during this period of life; so much se the period of study has been prolonged the ideal number of children to be 1.87, of so that the decision to and, along with it, the economic dependence which 1.74 are conceived. This evident have children or a family of these young people on their parents. At effect of age is also reflected in the desire of has become unlikely. the same time, it has become increasingly childless women to have children. difficult for young adults to gain a foothold in their careers. Today, young men and women Of the 16 to 26-year-old childless women, are expected to come up with successful 62 per cent definitely want a child, while strategies for overcoming these obstacles in only 14 per cent of the 35 to 44-year-olds There is no time left for education and career development. There is still wish to have children. Similar age ef- a partnership and children in this complex no time left for a partnership and children in fects can be seen with the men. structure of young this complex structure of young adults’ life adults’ life courses. courses. The organisation of this period of The age effects substantiated by the Allens- life obviously leaves no room or time for bach study can also be drawn from compa- maintaining a partnership and developing rative international studies. Young trusting and long-term relationships, nor for women‘s wish to have children in Germany founding a family. is not as strong as in other European countries. Yet the comparative group of men in Partnership and parenthood Germany is even less inclined to have child- The desire of 35-year- The correlation shown here between a ren. The desire of 35-year-old German men old German men to have children is currently far certain reluctance to enter into a steady to have children is currently far below the below the 2.1 children partnership, to marry and have a family 2.1 children per woman needed to ensure per woman needed to can be substantiated in detail, both empiri- stable population growth. ensure stable population growth. cally and through survey results. The out- 54 Life courses and children

The comment is repeatedly heard with such also applies to other variables, such as the findings that they are only based on surveys highest occupational qualification, one‘s and have only measured attitudes, whereas position at work or a comparison of East and the real empirical data is completely diffe- West Germany, although there are also some rent. Fortunately, family research offers the interesting deviations here. possibility of comparing these measurements of attitude with the respective popula- For instance, at 27 per cent, the percentage tion statistics and verifying whether those of childless, married women employed in attitudes correspond with the statistics. The senior positions in the service sector is much American Bureau of Census, which has a higher than in other occupational groups. long tradition of undertaking such compari- And this is also an indication that the preva- sons, analysed childlessness in the USA in lence of childless and partnerless women 1998, which, at 20 per cent of all women, is may be particularly pronounced in certain also relatively high. In doing so, it identified professions. This can also be verified against the following aspect as the most important the data obtained from the microcensus. variable for determining family status: Mar- Figure 15 illustrates the correlation between ried women generally had children in the being partnerless, childless and occupatio- What stands out is that USA, unmarried generally did not. Based on nal position. What stands out is that an abo- an above-average the German microcensus, this result was ve-average proportion of women who work proportion of women who work in the media relatively easy to reproduce, although the in the media or who are company managers or who are company microcensus only records the children per are partnerless and also childless. By con- managers are partner- household and not the number of biological trast, women who are employed in more less and also childless. children, as in the USA. The findings corre- traditional jobs such as in agriculture or who spond with those of the US Bureau of Census: perform junior office jobs, such as admini- 75 per cent of all women aged 40 to 44 years, strative assistant, have more children, more who had never married, were childless, often, than other occupational groups. It is whereas 82 per cent of all women of the same also interesting to note that women who are age, who had married also had children. employed in more traditional women’s pro- Hence, if Renate Köcher from the Allensbach fessions, such as primary school teacher, Institute of Demoscopy emphasizes the carer for the elderly or educator, also choose importance of partnership in the to have children, even without a partner. interviewee’s decision to have children in This is not the case with certain service-sec- these studies, then one need only compare tor jobs in the wholesale or retail industry, in this with their marital statuses to realise that the banking business or for entrepreneurs or these are not merely attitudes, but reflects businesswomen. real behaviour patterns. This is confirmed by the data collected in the microcensus: These structural data confirm the findings roughly 75 to 80 per cent of all children on attitudes by Renate Köcher. Women who below the age of 18 grow up with their two need to study for a long period of time and (biological) parents. The powerful effect of then require even longer to get established partnership and marriage on people’s atti- in their careers, as is the case with corporate tude and actual behaviour towards children managers or doctors, often have to renounce does not change even if all other variables their life plan of having a partner or child- come into play: 80 per cent of all women, who ren. Regrettably, there are no empirical are university graduates and never married analyses in Germany on the motifs for such are childless, whereas only 19 per cent of all life-changing decisions. Yet, the results of an women with university degrees, who are American study on women with “high poten- married, have no children. This correlation tial” with an annual salary of at least 100,000 55

dollars, shows that being childless and part- are frequently subordinated to other life nerless is not the result of a conscious decisi- options. As a consequence, more than 50 per on in life, but rather a process with many cent of the women in this situation in the stages and motifs. Successfully pursuing a United States are without a partner and career not only demands that one is well-ed- children. ucated but also willing to invest more time and energy into this area at the expense of A similar trend can be observed with men. It one‘s private relationships and circle of was once said that a man would advance in support. Building a stable relationship is his career if he had a supportive wife behind generally not easy under such circum- him. Nowadays, these occupational groups stances, especially with a partner who has are experiencing a similar trend as women. similar ambitions. If one’s investment pays Most men working in the IT sector are part- off with a commensurate advancement in nerless and childless and those among the one‘s career, then the demands placed on the younger cohorts who wish to climb the ca- partner could rise too. Hence, being partner- reer ladder find themselves, to a large ex- less may be a possible consequence of pursu- tent, in the same situation as young women. Making a career appears ing a career. Ultimately, without a partner Making a career appears to be more of a to be more of a deterrent than previously for the decision to have children becomes re- deterrent than previously for forming stable forming stable partner- dundant. Hence, partnership and children partnerships. ships.

15 | Women born 1955–65 in Germany without children, without partners and their professional positions

40% Women without partners Head of Division/ Managerial Social educator assistant 35 % Physiotherapist Publisher Entrepreneur Manageress 30 % Nursing assistant Doctor Carer for the elderly 25 % Assistant Primary school teacher Legal /Notarial secretary Post holder Restaurant specialist 20 % Educator Beautician Wholesale/retail merchant Administrative assistant Bank woman 15 % Florist Retail merchant Cashier lady Saleswoman 10 % Hairdresser Agriculturist

2 5% R = 0,4505

0% 0% 10 % 20 % 30 % 40 % 50 % 60 % Women without children Source: Microcensus 2000, calculation by Bertram, H. 56 Life courses and children

Summary and women into occupational life, with sta- In our initial argument, we described the ble partnerships and the decision to have demographic paradox between an aging children. In spite of the contingencies in life, population and the development of human the willingness to have children, a partner- capital in modern societies. For the individu- ship and to engage socially with one‘s parent al, the longer life expectancy is a gift, espe- generation will increase too. Without a new cially because of the increased likelihood of vision for life, the disposition of the younger enjoying good health in the later stages of life. generation to have children, a family or a Rising levels of education open up a variety of partnership will decline. options for young adults that are perceived as an added bonus by those concerned. Howe- Late parenthood, in other words giving birth ver, these individual gains evidently appear after the age of 30, leads to the desire to have to have created serious social problems, since children declining and families getting smal- the cost of financing an ever larger group of ler. At 35, the chances of successful insemi- over 65-year-olds is becoming increasingly nation are only half as good as below the age difficult and the requirement for young adults of 30, and from 38 onwards they are only a to achieve higher qualifications comes at the quarter as good. Although artificial insemi- cost of a decline in reproduction levels. This nation may be an option, it does not offer a development is historically unique and can solution due to the limited chances of suc- not be resolved by drawing on past percep- cess. Moreover, with late births there is the tions. The point is not to explain to the older increased risk of a child being born with generations that an increasing number of various disabilities. As women grow older, elderly people in society will now have smal- the desire to have children declines for a ler pensions than in the past, but instead to number of reasons. This has partly to do clarify that the idea of the third stage of life with one’s own self-perception and ability to being one of retirement is no longer mea- integrate one’s role as a mother into one’s ningful in view of the growing number of life; but it does, of course, also with other people with a life expectancy of 100 years of factors, such as insecurity or lack of confi- more. This stage in life must be given a new dence in having a stable partnership, doubts meaning. The productive age, and especially about maintaining an appropriate lifestyle, the period up to the eightieth year, is a social the increasing awareness of one‘s professio- resource, which needs to be meaningfully nal success and self-realisation. All this does shaped and made use of socially. Yet, so far, not fit together with founding a family and we hardly have any concept of how to make maintaining a household. better use of human productivity in this phase. With these new ideas, we leave the Apart from biological and medical reasons, 19th and early 20th century behind us and changes in preferences in the transition from replace the past concept of life being a lad- young adulthood to middle-age play a pi- der with the idea of life phases, which can be votal role in the decision to have a partner- combined in a variety of ways. ship, children or lead a family life. Since these preferences do not remain constant We also need a new concept of age, because but change during the process of transition this is the only way the next generation can from young to middle adulthood, the option shape and experience a new concept of life, of having a partnership and children de- in which it is possible to combine the highest clines as life progresses. It is also important qualification requirements, along with the to realise that as one grows older and has difficult process of integrating young men different experiences with various partners, 57

that the stability of the partnership, the long as we are not willing to accept that high- consensus between the partners to agree on er investments into one’s personal qualifica- common goals and values, the perceived tions only enables one to have a partnership quality of the partnership may be interpre- and family if the full extent of available life- ted differently and perhaps more critically span can be meaningfully used by the indivi- in some respects than in previous phases of dual, the above-mentioned processes will life. The concentration of key objectives in continue. Hence, the key to resolving this life within a very short period of time inevi- demographic paradox is to reorganise the tably leads to young adults feeling overbur- life courses in all spheres of life. dened during this period and abandoning certain options. Furthermore, in everyday life, they also perceive how others, who have chosen a life with children, face the very same problems described above, which they find impossible to master.

The demographic paradox is by no means inevitable, but rather the consequence of a misguided set of life courses in German society. Life courses are not only the result of individual actions, but also always the consequence of state-induced norms which, due to their time constraints, have a significant impact on people‘s life courses. Furthermo- re, they are also dependent on the state-induced norms, for instance when labour market regulations determine the ease of gaining access to employment or organise state support in such a way that it makes some life forms more attractive than others.

Hence, based on this argument, we can ded- uce that this demographic paradox can be resolved if the state-induced norms are re-examined as regards to whether and to what extent they are the cause of the developments described above and to what extent life courses can be reorganised by introducing a different set of regulations or perhaps even abandoning the regulation altogether. One of the central failures of the One of the central social policy pursued by all major parties so failures of the social policy pursued by all far has probably been to view the variables major parties so far has of the demographic paradox as unrelated probably been to view issues and, at the same time, to primarily the variables of the demographic paradox reduce these issues to the financing of pensi- as unrelated issues ons and the necessity of replacing the missing human capital in the working world. As 58 59 59 60 Family policy as the policy of the future

Investment in human capital require professional assistance. When the Although family policy and improving fami- public budget needs to be tightened or new ly benefits is normally greeted with much social projects require financing, allowances sympathy by the general public, family poli- that benefit families are almost always cut to cy is classed as less important in public dis- »counterfinance« this. Hence, the family and course than economic policy, domestic poli- child allowance was cut to »counterfinance« cy or defence policy. The private nature of the recently introduced incentive wages in the family and family relations means that it the public service sector. These amounted to is often regarded from a private perspective as much as four billion euros.. and therefore seen as less socially relevant than other issues. However, this also has to In the debate on promoting research and do with the fact that ever fewer people are granting additional funding in this area, it affected by the issue in Germany. was naturally assumed that one could sa- crifice the home owner allowance for this Economic difficulties in society and high purpose. The homeowners’ child support unemployment are issues that everyone can (Baukindergeld) alone, which exclusively relate to, whereas investing into children is benefits families, amounted to three billion seen as a private undertaking, which only euros. Large families benefited most from starts to become relevant when it comes to this as, in spite of their relatively low per- safeguarding one‘s own pension. This view capita income, nearly 80 per cent of the of seeing children as »private commodities« families with three or more children live in is also shared by some economic theorists, their own homes. Yet this was not even who treat children in the same way as a car discussed. Thus, the seven billion euros or house, for instance. siphoned off from families was not an issue. Instead, families and children are often A similar stance can be observed when it considered to be a private matter in many comes to childrearing or a child‘s develop- public and some academic debates, in ment. Here, there is a lack of trust in parents‘ which parents are often depicted as over- Among the 40 to 44-ye- capabilities of raising children and insuffici- burdened and families as antiquated life ar-old men in Germany ent understanding of the family tax-relief forms. If, among the 40 to 44-year-old men today, 40 per cent of the economists, doctors package (known as Familienleistungsaus- living in Germany today, 40 per cent of the and social workers and gleich in German). It is often argued that economists, doctors and social workers as many as 67 per cent parents may have children but that they are and as much as 67 per cent of the journa- of the journalists are childless. overburdened with their upbringing and lists are childless, then it is no wonder that development and therefore desperately the topic of family and children only rouses 61

interest when it comes to securing suffici- man capital nor caring for one another are ent profit from future contributors to the unlimited resources. They are just as scarce pension fund. and valuable as clean air and water.

In the light of this difficult starting situation, In our society, it is difficult to push through it will be a major challenge to turn the family family policy as a policy to secure the future, and family policy into the central topic of because the government has so far failed to political discourse and debate and to make it give adequate consideration to the responsi- clear that family policy is always the policy of bilities of the federal states and municipali- the future. This was already attempted in the ties. The states and, above all, the municipa- Fifth Family Report of 2004, which provided lities have not seen it as their duty so far to an in-depth analysis of the importance of engage much in this field. Cities and munici- family for the development of human capital palities mostly see this population group as a in modern societies. To understand family cost factor with regard to the public educa- policy as the policy for securing the future tion infrastructure or blame the urban also overcomes the danger of polarising those sprawl on their housing needs. However, if who choose to have children against those family policy is only introduced at a federal who do not. The issue of securing the future level then attempts to safeguard human does not divide those who decide to have capital and ensure the welfare of others will children from those who are childless, but not be very successful in the long run. This is offers the possibility of jointly developing a also due to the fact that the living conditions future vision for modern European societies. of families in Germany are so varied that a Family policy is always uniform policy across the nation will not be a policy to secure the future. However, family policy is not just a policy for able to balance out these differences in a safeguarding the human capital of modern commensurate manner. societies. It is also a means of securing the social capital of modern societies. The care The demographic development in Germany The demographic of others, which in most western societies is is as diverse as that of the entire European development in Germa- ny is as diverse as that not handled through the market but offered Union. While the birth rates in the new Ger- of the entire European in the form of personal solidarity, is essenti- man states much more strongly resemble Union. ally based on the mutual care of family mem- those of the neighbouring Eastern European bers for each other. In view of the longer life countries, those in the west of Germany expectancy, this form of personal solidarity correspond much more closely to birth rates will become even more important in future in the Netherlands, which are 1.6 and 1.7, than it already is today. In this sense, family respectively. Furthermore, the demographic policy creates the framework conditions that developments are likely to differ so widely enable individuals to include children in between the individual states in future that their life courses and also to take care of no federal policy introduced by the govern- others during the course of their lives. ment will be able to equalise these differences. Such a family policy is always a long-term policy, since it assumes that the next genera- While in Bavaria and Lower Saxony, the tion will have the same choice of options in portions of the total population accounted its life courses as the parent generation and for by the family-relevant age groups of 30 to will be able to choose freely not only to have 45-year-olds are estimated to drop to 80-85 children but also to take care of others. This per cent between 2002 and 2030, they are policy is also a long-term policy, because it likely to decline to 40 per cent in Saxony-An- holds the insight that neither society‘s hu- halt and 50 per cent in Brandenburg. In each 62 Family policy as the policy of the future

of the latter two states, there will then only policy can only be successful if all public be one person aged 20 to 59 for every person bodies and social groups jointly tackle the aged 60 and over. Thus the population in task of safeguarding our future human capi- Bavaria and Lower Saxony will grow slightly, tal and welfare system at their respective while Saxony-Anhalt and Brandenburg will levels. have to stomach significant population losses of 15 to 20 per cent, while simultane- Time for children, infrastructure and financi- ously dealing with a very unfavourable age al services A family policy that ratio. Such massive demographic distortions A family policy that understands itself to be understands itself to be that are partially the result of mobility – bet- a policy for safeguarding the future of socie- a policy for safeguarding the future of ween 1989 and 1993 alone, one million peo- ty should primarily be characterised by society should primarily ple relocated from the eastern to the western reliability. The decision to enter into a part- be characterised by states – inevitably require very different nership and the decision to have a joint futu- reliability. responses in terms of organising welfare for re with children are key turning points in the others in such distinct demographic set- lives of those concerned, even if the partner- tings. The issue of supporting families and li- ship should subsequently be dissolved. A ving life with small children will take on very family policy that wishes to help shape the different dimensions and will require very framework conditions and options for such different responses in these regions. decisions can only influence couples’ decisions if life partners do not feel those frame- Only if family policy, as a future policy for work conditions change every time there is safeguarding society’s human capital and an election. While certain fundamental the welfare of others, is understood to be principles of family policy remain constant more than just a governmental matter by the in other European countries, such as France, states and municipalities can it be successful Denmark or Sweden, after a change of go- in establishing framework conditions that vernment, this is hardly the case in Germa- favour the decision to have children and ny. Thus, in France, for instance, family protect our welfare system. This does not policy has always been marked by the finan- mean that the federal government has a cial support of large families and women’s subordinate role to play in this field. Family integration in the occupational world

1 | Development of family-relevant age groups in selected federal states between 2002 and 2030

2002 = 100 100

40 2002 2008 2014 2020 2026 2032 2038 2044 2050 Bavaria Lower Saxony Saxony-Anhalt Brandenburg

Source: Federal Statistics Office, 10th Coordinated Population Estimate (Variant 5); Calculation by Bertram H. 63

through the provision of an extensive infra- upon their husbands and knowing that they structure for children. These priority areas would be able to return to their jobs later on. have remained the same irrespective of which For a short period of time, the demographic party was in government. The North Europe- effects of this policy were clearly visible. an countries have always tried to combine time policy, the expansion of the infrastruc- In 1990, the former German family minister ture and public and corporate transfer pay- Rita Süssmuth introduced a Child and Youth ments in such a way that higher labour parti- Welfare Act, which was an attempt to at least cipation of women can be reconciled with establish a new basis for action with regard to having time for children. the role of mothers and parents. The law Continuity and the combination of different formulated a legal entitlement to a place at policy strategies concerning time, infrastruc- nursery school from the third year onwards, ture and money can be seen as the reason which was enforced in early 1990. Maternal why, compared with Germany, so many more leave, the child-raising allowance, guaran- young people in Northern Europe choose to teed employment, pension claims based on have children and frequently opt for a large the period of parental leave rather than on number of children. Unlike France, these the working hours and the legal entitlement countries had a lower birth rate than Germa- to a place at nursery school were relatively ny in the 1960s. Despite an unfavourable new concepts. This concept enabled one to starting situation, they nevertheless mana- continue using the human capital generated ged to reorganise mothers’ occupations, time by young women through gainful employ- for children and the economic situation of ment, while at the same time ensuring that families in such a way that the birth rates of childcare – including the decision to have these countries are now higher than in Ger- children – would at least notionally be percei- many and childhood poverty, at 3 to 4 per ved on a par with gainful employment for the cent, is far below the German level, which is period childrearing allowance was granted. between 11 and 12 per cent. Based on the discretionary intervention and A brief glance back at the history of German steering powers of the government at the time, family policy shows that a series of measures the GDR developed a family policy concept by that were taken in other countries, were also introducing time policies (parental leave/ implemented in Germany according to the guaranteed employment), financial support criteria and principles of German family (childrearing allowance) and infrastructure policy. Yet, unlike in Northern Europe or policies (entitlement to a place at nursery France, no consistency or reliability could school), which were geared to other European be detected in German family policy. In countries and were intended to help young 1985/86, the former family minister Heiner adults build an occupational life cycle. Geißler reacted to this demographic challenge with a family policy consisting of time and By introducing the baby year with 90 per state transfer policies. The maternity leave cent continued wage payments for the first act of the time guaranteed employment, year and by expanding the infrastructure granted child-raising allowances and credi- for day-care centres for the second year, ted childrearing time to pensions. It repre- effective policy strategies were pursued, sented the first attempt to enable young, which furthered family development. Alt- appropriately qualified women with a clear hough the effects were more pronounced in career path to spend time at home taking the GDR, the family policies implemented in care of their first child without having to both German states had very positive ef- worry about being financially dependent fects, albeit for a limited time. In the case of 64 Family policy as the policy of the future

the GDR, the ending of these policies was The time, infrastructure and financial trans- associated with the German reunification. fer policies of the 1980s were only taken up Other European countries even managed to recently to now be integrated into a systema- stabilise their birth rates by systematically tic life course policy concept. Through the and persistently pursuing this policy ap- new legislation for part-time work and the proach. Germany did not proceed with its reorganisation of parental leave, the time initial attempts to establish a systematic parents can take for their children within the policy for supporting young families. scope of their occupational life cycle is no Hence, the entitlement to a place at nursery longer limited to three years but can flexibly school was reduced to three hours and be taken at any time until the child is eight. generally without lunch in western Germa- Furthermore, the legal entitlement for part- ny. In some West German states this was time work, which is negotiated and mutually even divided into mornings and afternoons. agreed by employers and employees in about There is no supporting infrastructure in 95 per cent of the cases, offers parents more place for establishing a work-life balance, flexible opportunities to take care of their even for part-time work. Without the children. This is important as, in childhood existence of private support networks, it is development, it is not only the first three nearly impossible for parents of children years that are critical and in which their younger than 10 years of age to achieve a children require the special care and sup- work-life balance. port of their parents. There can be phases of transition in the life of a child, which require While much time, energy and, most of all, strong parental presence, as the new legisla- money was spent on adjusting East German tion in Germany is now seeking to promote. pension claims to the West German pension system in reunified Germany, family policy However, such strategies for promoting was substantially watered down. With its greater flexibility presuppose that the indus- baby year policy, the GDR secured 90 per try, trade and service sectors not only take cent continued wage payments, even if the into account the corporate requirements for mother was a single parent, while the West flexible working hours in their respective German model focused merely on the acqui- working time models, but also include the sition community of a young mother and time for childcare as an essential part of husband or boyfriend. Without knowing their company’s working time policy. Inci- what ultimately motivated the majority of dentally, this similarly applies to the trade young men and women in former Eastern unions which, in this respect, can learn from Germany to initially decide against having other countries such as the Netherlands or children after 1990 – which resulted in the Denmark about how to interpret such time steepest decline in birth rates in history – the policies as part of their collective bargaining The West German question that arises is whether this reluc- agreements for working time policies. Howe- marriage and family tance was not perhaps influenced by the fact ver, these processes cannot be introduced model was not accepted by the young people in that young East Germans did not accept the into the corporate world via laws alone. Only East Germany. West German marriage and family model. through alliances with various actors at the corporate level, and with trade unions and It is astonishing that reliability and continui- municipalities can such flexibilisation pro- ty are key elements which naturally form cesses be implemented in the interests of part of all aspects of pension policy but not freeing up more time for childcare. of family policy. Here, the municipalities are particularly called upon, as such flexibilisation processes 65

require an infrastructure for children, which vernment has thus at least provided the offers parents reliable support so they can incentive not to live together with a partner reconcile different time requirements. Such and not to be available to the job market. processes are an excellent way for municipa- This policy has also substantially contribut- lities to demonstrate civic commitment. And ed to the fact that a disproportionately high if large cities, such as Stuttgart, proclaim percentage of children never stops living off that they want to become Germany’s family social welfare. and child-friendliest city, then this demonstrates that the majority of communities and The illustration »Parental allowance as a municipalities have understood that a flexi- wage-dependent transfer payment« demons- ble time policy in the interests of children, trates how, contrary to the North European mothers and fathers is only possible if the welfare states, the German welfare state appropriate infrastructure is in place within clearly supports single parenthood and the the communities. voluntary decision not to work. By contrast, the North European states orient themselves Time and infrastructure policies must be towards an occupational life cycle model and enhanced to include life course-related provide clear incentives for taking up work transfer payments for families. An income- again. This policy has several consequences. dependent parental allowance, which has Irrespective of whether parents choose to long been paid in the North of Europe and have one, two or three children, they can rely will now also be introduced in France and on the fact that during a period in which they the U.K., is intended to give young parents feel they need to invest a lot of time in child- the possibility of taking advantage of paren- ren, they will not be forced to ride on an tal leave and to voluntarily agree upon their economic rollercoaster. Even if parents division of labour between themselves. It willingly accept these wage losses with their offers them decisive support at a time when first child due to their wish to have a child, their wages are still relatively low and they the decision to have a second or even a third are aware that their existing economic re- child will become increasingly difficult, sources will most certainly deplete rapidly. since the parents not only have to consider Today, the average net income of a young their wish to have a child but also the living woman of 30 years is roughly 1200 euros, situation and perspectives of the children while that of a young man is around 1700 they already have. euros. The decision to have a child and to dedicate oneself to the child during its first While the North European states have mana- year of life entails a loss of income of appro- ged to establish a certain life-work balance ximately 700 to 800 euros. It is therefore not through their wage-dependent parental surprising that young families with children allowance, thus essentially putting parental Young families with belong to the social groups with the lowest leave and nursing time on a par with occupa- children belong to the social groups with the per capita income. tional time, France chose the family-split- lowest per capita ting option as a solution, along with more income. Today, the only way to prevent such a loss of child benefits from the third child onwards income in Germany is to try as much as pos- and tried to achieve an economic balance sible to remain unavailable to the job market through tax relief. Yet if one takes the lack of and not to live together with a life partner. children prevalent in each country as an Then one is entitled to state benefits which indicator of the economic success of the replace the wage or wage compensation. For different policies, then the North European a 30-year-old woman with a child, this policies are more successful, at least from an amounts to 1200 euros per month. The go- economic perspective, since France has a 66 Family policy as the policy of the future

similarly high proportion of lack of children very rarely return to work. Perhaps the dis- as Germany, where the parents receive less continuous North European models with than 50 per cent of the average French wage. shorter intervals also further the perception that one’s profession and the work one does The North European model has also had one for one’s family are not regarded as conflic- other decisive effect. Although North Euro- ting options, but as different elements of life, peans have three or four children just as which sometimes occur in succession, and often as Frenchwomen, they often have sometimes concurrently, but that are essen- their children relatively late in life, even tially reconcilable. after the age of 35, which represents more of a health risk. What the individual effects of family policy By contrast, in France, as in Germany, the measures are on demographic development intensity of life and the decision to have is a contended issue in literature. Yet at least children is concentrated between the ages in those countries in which women have a of 28 to 35 years. It is possible that a more high labour force participation rate, such as flexible parental leave scheme, along with a the North European countries, and that have reliable infrastructure and a clearly cal- developed life span and life cycle models culable economic basis coupled to the which allow the high labour force participa- mother‘s occupation has resulted in the tion rate to be combined with a relatively labour force participation rate of women extensive and flexible period of time for aged 50 to 65 years being much higher in children, also appear to have more children, Northern Europe than it is in Germany. Ac- specifically also in the form of extended German women who cording to the available data on Germany, families. On a side note, this evidently also withdraw from working women who withdraw from working life for a leads to a much greater desire to have child- life for a prolonged period of time to have prolonged period of time to have children ren in these countries than in Germany. children very rarely return to work.

2 | Parental allowance as a wage-dependent transfer payment

Euro Birth End of parental time in Finland End of maternity Start of unpaid third year Start of allowance for domestic leave in Finland in Germany child-care 1.400

1.200

1.000

800

600

400

200

0 N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D 2004 2005 2006 2007 German model (duration 39.2 months) Finish model applied to Germany (duration 36 months) Swedish model applied to Germany (duration 480 days) Social services pursuant to the new 5GB XII law plus child-rearing allowance in Germany

Source: Bertram, H. 67

Occupational life cycle: The Dutch model scheme. In periods of unpaid absence, the In September 2003, the Dutch government administrator of the life-cycle savings ac- proposed a wide range of old-age and social count transfers the corresponding sums to security reforms in order to reshape the the employer who, without any tax or social welfare state in an era of increasing indivi- security deductions, transfers the entire net dualisation and an aging population. The sum to the employee. Each individual emplo- plan was to introduce an occupational life- yee is entitled to save up for additional pa- cycle model. The employers’ associations rental or nursing leave. For all other occasi- and trade unions at first opposed the ons, the employer’s consent must be sought. government’s proposals. Only after tough negotiations were the social partners able to Each year, a maximum sum of 12 per cent of agree on a reform package, which as enacted the gross salary may be paid onto the savings on 1st January 2006. account. In addition, overtime and additional vacation (beyond the period prescribed by The agreement enables all Dutch employees law) can be converted into savings and paid – with the exception of the self-employed – to onto the account. With the employer’s prior find a better balance between their life span consent, the accumulated vacation time can and their earnings at every stage of life. This also be converted into savings. Furthermore, reduces the risk of an involuntary withdra- the employer may pay a discretionary sum wal from the labour force, especially by onto the life-cycle savings account. Those employed mothers, and also unnecessary who have saved for early retirement can also periods of absence from work due to illness transfer those funds onto their savings ac- or the incapacity to work. At the same time, count. The total savings balance may not stress caused by children, education and exceed 210 per cent of the last-earned gross work, all laying claim to a limited time bud- annual salary. The concept can be combined get during these periods of »congestion in with a parental leave scheme. Parents who life«, is reduced. wish to request paid or unpaid parental leave and have a life-cycle savings account will In an individual agreement, employees can receive a parental leave discount or tax allo- invest funds from their gross salary into a wance (ouderschapsverlofkorting) amoun- life-cycle savings scheme. The money from ting to half their statutory gross minimum this savings account can later be used to wage per day of leave. cover a number of unpaid absences from work, for instance, in order to take care of The Dutch government sees the concept of a one‘s children, sick parents, for education life-cycle savings scheme as an essential purposes, for sabbatical leave or early part of the collective wage negotiations. The retirement. A fixed interest rate of four per social partners may enhance the concept cent is assigned and the savings account is even further within the scope of the law. The either managed by an insurance company, collective wage agreements may also stipu- a bank, a pension scheme or investment late that any additional vacation is converted fund. They are responsible for administe- into savings and transferred onto the life-cy- ring the life savings account. cle savings account.

Taxation is suspended until the moment the The life-cycle savings scheme introduced savings are withdrawn (“omkeerregel”). in the Netherlands on 1st January 2006 is a Then the saver receives a tax deduction of up first step on the way to developing an occu- to 183 euros for every year they have trans- pational life cycle regulation. This is a new ferred part of their salary to the savings political approach that is geared to an age 68 Family policy as the policy of the future

in which people pursue a multitude of acti- Political and social implications vities, voluntarily or non-voluntarily, duri- Wage-dependent parental allowance mo- ng the course of their lives and combine dels, as they are commonly found in Nort- various phases of life. It is a first step. And hern Europe today, could be conceptually yet an overall political concept will be and financially integrated without difficulty needed to integrate and combine various into the existing structure of current laws, as social and labour market concepts in rela- a form of wage compensation. Thus, as in tion to the occupation life cycle. This would Bavaria and Mecklenburg-Vorpommern, make it necessary to take into account Baden-Württemberg, for instance, pays various phases in working life as well as around 250 euros for the third year of paren- educational and nursing periods. tal leave, an amount commensurate to what Finish parents are entitled to receive if they Training qualifications decide to stay at home and not return to or degrees that deter- work. The Finish government justifies this mine one’s initial career position can be ac- payment with the argument that costs have quired in all phases of been saved in childcare, which would other- life. wise have been necessary. The Finish government pays 67 per cent of the last net salary for ten months and then demands that a decision is made on whether to return to work or continue parental leave for a further 36 months and be paid 256 euros per month. Other North European countries have varia- tions of these models. Yet behind all these models is the notion that, outside the occupational world, parents’ commitment to their children is just as important as their professional work and that this should therefore in principle be treated like an advanced training course or any other measure which could contribute to enhancing a person’s education capital.

Independent of how different parental allowance models are appraised, they demonstrate at least one way in which various phases in life, be they working phases or nursing phases, can be combined with one another. If one could ensure that such interruptions would not become a major obstacle to one’s career, perhaps not only young women but more young men could be encouraged to have a family. The idea of introducing leave in order to pursue social activities was already addressed by various political parties and state governments, yet without it ever having been put into political practice. Not only are such state-organised models actual- 69

ly lived in Northern Europe, but also in the government and the federal states, who have United States. They are a not uncommon a de facto monopoly on the definition of example of women’s employment patterns. state-recognised vocational training and higher education qualifications whether we In relation to Germany this would mean that will approximate the European standards or the German education system, which so far stick to a course, which only still prevails in has presumed that what opportunities an this form in Southern Europe. A revised individual has in his life are defined in a education system, which enabled one to single phase of his life, will need to be com- obtain an initial degree with the prospect of pletely redesigned. A sequential life cycle obtaining further qualifications later on, model postulates that degrees or training would permit a state-backed change in acti- qualifications that determine one‘s initial vities. Some of these activities could be of a career position can be acquired in all phases professional kind, others could involve so- of life. Such models that are a common part cial welfare work and yet again others could of the Anglo-Saxon and French education involve engaging in important projects in systems can evidently not be implemented in the community. Germany. The corporatist interests of individual occupational groups, such as those of It will probably only be possible to organise secondary school teachers, inhibit a primary the life course as a series of different sequen- school teacher from taking a quick advanced ces if the government and the public institu- training course to become a secondary tions are generally prepared to drop their school teacher. The corporatist interests of 19th century view of the life course being the health care professions inhibit an educa- divided up into three parts. We also know tor from taking a short advanced training now that it is very difficult to maintain these course after parental leave to become a carer sequences in many professions, and espe- for the elderly. There are countless other cially in highly qualified professions. If a examples. member of a research group chooses to have a child and then stays at home for two years, As long as the view prevails in the German he will generally lose out both socially and education system that a 19-year-old A-level professionally. Therefore such sequential graduate must know whether he wants to models need to be complemented by parallel become a scientist, teacher or something models that open up the possibility of linking completely different, or that a 17-year-old up different areas of life. Interestingly en- medium-level secondary school (Realschule) ough, Heiner Geißler had already intended to graduate must know whether or not he wants do this with his previous model of parental to be an educator for the rest of his life, the leave, in which he thought it possible to inclu- less likely it will be that a young woman or de a part-time option for a 19-hour week. man will initially strive to obtain a certain Meanwhile, this option has increased to 30 degree, knowing they will only perform that hours, which, however, does not resolve the job for a certain period of time, before subse- problem of parallelism. The key issue with quently studying something else. In the these models is not only the state-regulated English-speaking world, most business time quotas but also the need for more flexi- schools demand that applicants, who are bility so that different areas of everyday life applying for a postgraduate MBA, already can be better coordinated with one another. have at least five years of professional expe- Faced with a severe shortage of teachers in rience in a qualified position. the 1960s, the former North Rhine-West- phalian Minister of Education Mikat had the In any case, it is in the hands of the German courage to offer mothers with children and 70 Family policy as the policy of the future

Regions have long only the German equivalent of A-levels a where there are areas with 40 to 60 people emerged in Northern two-year training course to become a pri- per square kilometre that are no longer and Eastern Germany with no more than 40 to mary and comprehensive school teacher. capable of maintaining a differentiated in- 60 people per square Most of the now already retired teachers did frastructure that is geared to the needs of kilometre that are no not differ in any way, in terms of their ca- individual subgroups of children. Offering longer capable of maintaining a differenti- reer path, qualifications and performance services with a multifunctional infrastruc- ated infrastructure that rating, from those teachers who chose their ture along with employees who can and do is geared to individual careers at the age of 25. Since the govern- meet very different demands within this subgroups of children. ment has a monopoly in this area and the range of services is perhaps one of the few federal states are also able to shape advan- opportunities we have of at least slowing ced training courses and training qualifica- down the current trend. tions themselves, the East German states, who suffer from an immense drain of young Here, a new debate is needed on the organi- women in particular, should at least con- sation of working hours, full-time and part- template restructuring their education and time positions and new forms of integrating vocational training systems. This should full-time and part-time work. This is all the enable young women, who initially embark more pertinent as in Germany the desire to on a career as an educator and then decide cut back on working hours is much more pro- after five or ten years to obtain a new quali- nounced than in the Netherlands, for in- fication that is in line with their previous stance, where the introduction of more flexi- training and experience, to go on to do a BA ble working hours has essentially led, among education course. They can then build a both men and women, to a redistribution of new career as a primary school teacher or working hours between different groups of qualify for other professions by taking people. In attempts to improve the infra- additional modules. However, this requires structure of childcare, the federal govern- that the education and teaching professi- ment is currently focusing very heavily on ons, on the one side, and the health care expanding institutional care, which will professions, on the other, are redefined and effectively cost the municipalities a lot of integrated more closely. If the Eastern Ger- money. It would be helpful to orientate one- man states continue to pursue the West self more strongly towards the experience of German course in terms of their qualifica- the French, who have met demands in regi- The government must tion systems, then, even though they may ons with sparse population by offering a be prepared to abandon offer first-class education in the long run, variety of childcare services that are often the 19th century model of a 3-part life course. they can expect to see the flow of young also organised privately. This does not mean migrants to Western Germany to continue. that the state abrogates its responsibility for assuring quality. Instead, it defines the qua- The concept outlined here also applies to lification profiles of child carers and the developing infrastructure for children and standards of childcare, so that quality con- families, who live in regions with sparse trols can be performed independently. The- population, above all in the East German se qualification profiles are linked to educa- states, which due to having a completely tional and vocational training requirements different demographic structure can no and are not – as in Germany – necessarily longer follow the West German models. With associated with the building or furnishing a few exceptions in Saarland and Rheinland- requirements of childcare facilities. Pfalz, West Germany generally has an average population density of 300 people per Yet making working hours more flexible to square kilometre. This contrasts strongly free up time for the provision of care presup- against Northern and Eastern Germany poses that the different needs of parents and 71

other persons at work, who require time for care, are appropriately taken into account. Although there are women’s representatives in many large corporations, in the public administration and in other quasi-publicly organised institutions, one should perhaps consider whether it would not be better to focus more heavily than previously on introducing concepts for parents‘ representatives, as were, for instance, developed by the Massachusetts Institute of Technology (MIT) in Cambridge near Boston. They not only address conflicting time requirements but also other issues, including joint career development for spouses – and not only the issue of the gender mainstreaming.They are responsible for developing practicable solutions so that, in the long run, work and family can be better reconciled than previously at this concrete interface.

One of the central challenges for future research policies will be to adequately integrate young scientists in the universities and research institutes and to develop career models for those young scientists who choose to enter into a partnership and have children. Our present career system in the field of science presupposes that, in order to become a professor at the end of twelve years of scientific career, young scientists must have an unlimited amount of time at their disposal for research as well as teaching. This is not specifically a German problem, but a general problem for young academics. In contrast to today‘s 50 to 60-year-old scientists, the up-and-coming generation of scientists must deliver an outstanding performance, while at the same time being exposed to much tougher competition than today’s already established scientists. An important issue is how to reorganise the scientific career path in such as a way so that young men and women need not lead near- celibate lives in order to provide top perfor- mances. 72 73 73 74 Social Significance and Protection of the Family

Germany is one of the Germany is one of the wealthiest countries in ver, this often leads to the normative error of wealthiest countries in the world, yet it is also among the ones with declaring the trend to be a shift in values. the world, yet it is also among the ones with the least children. Our endeavours to ac- This misguided development is equated with the least children. quire wealth are therefore misguided. The a corresponding change in values, and thus advancement of society and the state, with does away with the benchmark for right and regard to the achievement of high technolo- wrong and renders redundant the need for a gical standards and economic and cultural critical appraisal of our current situation, its progress, depends on whether young people causes and those responsible for it. are able to take up and further develop these achievements; and also whether they find Equating this misguided development with a living conditions prevailing that further the shift in values is just as foolish as claiming development of family culture. that due to the number of road casualties in Germany everyday the protection of life, as a The current situation of having economic fundamental value of our constitution, has wealth but a paucity of children makes it been forsaken. If values are infringed upon, imperative for the state and society to apply we must make a concerted effort to guard the law and their wealth to establish frame- those values, not to call them into question. work conditions for families that will further The shift in values is not determined alone the wish to have children and facilitate the by people’s actual behaviour, but generally raising of children in practise. The state and occurs as a result of a constitutional change society only has a secure future if they give which presupposes that there is a growing their youth intellectual and material free- need to reassert one’s current values, their dom and teach them how to go about with democratic legitimacy and changeability that freedom. within the context of universal human rights. Misguided social development instead of a shift in values Furthermore, the argument that Germans no Instead, however, a reverse trend of amnesia longer cherish the value of marriage and about the future and self-abandonment family has no foundation. Empirical surveys appears to be taking shape. If we observe the and personal experiences reveal that young rising trend of fewer births, the reduced people particularly wish for a child and capabilities of our children, fewer marriages older people desire grandchildren. and a growing number of divorces, this alar- ming development should induce us to take immediate countermeasures. Instead, howe- 75

Constitutional mandate to protect marriage the»only foundation for forming an intact and family family« and »the prerequisite for a child’s The liberal, free and constitutional state lays best possible physical, intellectual and spiri- its future in the hands of the family. The tual development«. decision to have and to raise children is parents’ responsibility. Parental upbringing Hence, the constitution construes the legal ensures that children develop sufficient institution of marriage to be a community self-confidence, reasoning powers and disci- formed by man and wife to prepare their pline in order to live in a free, democratic children for potential parenthood and thus order and also bring with them enough civic to secure their own future. pride and public spirit, so that they can support the democratic state as a citizen. The Marriage and family as a freedom option free democratic constitution is based on the and a constitutional expectation assumption that parents will give their The constitutional freedom of marriage and children a clear vision and a firm set of va- family contains an implicit offer, which the lues and meaning in life through interperso- entitled party may accept or reject, but nal relations and an appreciation for nature, which the free, democratic state hopes and by introducing them to art, science and reli- expects the party to accept. This constitutio- gion and by conveying to them a basic under- nal requirement is based on the solid foun- standing of economic and technical princip- dation of people’s intention to form a family les. Relying on a youth that is free and wisely community for life. This intention is to be uses that freedom, the constitutional state strengthened, promoted and protected therefore banks on people’s willingness to through the protective mandate of the Basic marry, desire children and raise them within Law. However, this mandate is occasionally the safe haven of a loving and caring family. not fulfilled and even violated. The Basic Law grants young people the freedom to The constitution places the living communi- have a family (Art. 6 of German Basic Law) ty of a married couple and the family under and at the same time to exercise a profession the »special protection of the state order« (Art. 12 of German Basic Law). Yet in actual (Art. 6 Para. 1 of German Basic Law). This fact, a differentiation is often made on the protective mandate obliges the state to pro- basis of tradition and not induced through vide for the institution of marriage and fami- the constitutional law, which forces young ly in its legal system, to acknowledge this people, and particularly young women, to body of persons as the nucleus of any politi- face the crude opposite alternative of having cal community and to protect and promote to decide between their careers or having a marriage and the family through appropri- child. This de facto alternativity threatens ate measures as well as shielding them from the openness and freedom of the family. adverse effects and encumbrances. By the state’s definition, marriage is the voluntary The family-hostile structure of the current The family-hostile union for life between man and woman that occupational and economic order has its structure of the current occupational and econo- is recognised by the state for the purpose of root cause in the separation of the workplace mic order has its root forming a comprehensive living community. and the family home as well as in the legal cause in the separation It establishes the equality of both partners downgrading of family-related activities to of the workplace and the family home as well as in before the law, mutual privacy that is free an economically insignificant accomplish- the legal downgrading of from the state’s influence and a personal ment. While parents who previously worked family-related activities bond for life. Marriage is a living community in the agricultural or commercial business to an economically insignificant accomplish- between man and woman, which, as the simultaneously dedicated themselves to ment. Federal Constitutional Court states, is working and raising children, which enabled 76 Social Significance and Protection of the Family

the child-rearing mothers to enjoy the possi- married couple with children will need to bilities at work of encounter, acknowledg- renounce the employment of one of the pa- ment and earning a salary, the economic rents, along with their income and pension value of child-rearing today is only acknow- claim, in order to fulfil their child-rearing ledged with educators in schools, nurseries duties, while at the same time bearing the or therapeutic institutions. Child-rearing expenses for raising the children. By con- remains an activity performed at home, in trast, a couple without children will have two the privacy of family life, and therefore ap- sources of income, two pension claims and pears from the start to be an accomplish- the associated accumulation in case of survi- ment not worthy of being remunerated, but ving dependents. The state organises social merely one of consumption; not a source of welfare benefits to provide security for eve- income, wealth and security, but a task ryone in old age and crisis, also for childless which takes up a lot of time and effort. employees, yet it compels children to make their own parents, who raised them and bore Neglect of the accomplishment of raising the costs of raising them, to go away empty- children in the inter-generational contract handed. By separating occupational work from family work, child-rearing now merely retains For this reason, the Federal Constitutional economic value in the case of illness, unem- Court stated in its verdict concerning the ployment, old age and emergencies; that is »rubble women« that the legislative decision the only time parents have a maintenance »that child-rearing is a private matter, while claim against their children and experience old-age insurance is a social duty« put fami- a sense of social security. Yet the economic lies at a disadvantage without there being value of child-rearing has also been collecti- »any adequate reason for this with regard to vised in the inter-generational contract of the state‘s duty to support them, pursuant to the public social security system, separated Art. 6 Para.1 of German Basic Law«. The from the family’s task of child-rearing and legislator has the duty »to at least ensure that even denigrated as a contribution in the each reform step introduced actually helps inter-generational contract. This makes the to reduce the family’s disadvantage«. Giving social welfare achievements of the public child-rearing and employment equal consi- social security system, which also offers deration would be a starting point for sha- childless people economic security in times ping the social security system in a family- of crisis, into a constitutional scandal: The friendly way: Although, in contrast to the only carriers of this inter-generational con- monetary contributions made by employees, tract, parents and above all mothers, have no the contribution child-rearing makes to share or very little in this »contract«. The maintaining the social security system constitutional mandate for family protection and gender equality demands structural cannot materialise directly in the form of changes in this respect. pension payouts to the older generation, the equal material value of child-rearing and If family law does not continue to acknow- monetary contributions lies in the same ledge the maintenance claim of parents amount of work, the same non-consumption against their children, although social welfa- and the same dependency on security and re law still obliges children to preferentially covering one’s needs. Child-rearing and finance the employed and not the child-rear- monetary contributions are therefore of ers, then the constitutional idea of a family- equal value as a foundation for the social based maintenance community will revert to security system and must result in the same the opposite: In normal, everyday life, a benefits. This view of an inter-generational 77

contract shuns the current loss of reality, purpose of paying taxes. The fiscal legislator The fiscal legislator which presumes that there will be subse- may therefore not tax any part of the may therefore not tax any part of the parent‘s quent generation, yet without seeing it as a parent‘s income which belongs to the child- income which belongs necessary prerequisite for granting social ren. These grounds for exemption have been to the children. insurance benefits. recognised, yet the amount exempted is by no means enough. The current children’s Fiscal framework conditions allowance, which amounts to 3,648 euros Moreover, the acquisition community of per child per year, is insufficient to cover the marriage and the maintenance community child‘s material needs, to give him access to of the family must be given adequate consi- foreign languages and modern methods of deration under tax law. In terms of income communication, to cover his leisure activi- tax law, the government takes its share of the ties in clubs and to finance his journeys. Here income the individual has earned. However, too, the legislator must revise the focal if the members of an acquisition community points of the reforms introduced so far and such as an OHG, KG or a GmbH acquire com- compensate for deficits that are at the bined income, then the participants may family’s expense. This is all the more impor- split this income for the purpose of individu- tant in view of the fact that the introduction al taxation and thus reduce the level of pro- of and rise in eco-tax has considerably incre- gressive taxation and apply individual-ba- ased the actual tax burden on families com- sed tax deductions. This rule, which applies pared to other groups of individuals. to all forms of acquisition community, should particularly apply to the one institu- Further family support by the law tion, which the state owes its future survival Even if the government has established the to, marriage. If income tax law enables this legal framework for the freedom to marry form of tax distribution in marriage split- and have children and blocked detrimental ting, then this regulation is to be considered effects on the family, it will only satisfy its as a necessary part of the taxation system, protective mandate, according to Art. 6 of not as a subsidy. Marriage splitting should German Basic Law, if it strengthens and therefore be maintained for the purposes of supports the family. One of the traditional equal taxation. Childless spouses are also understandings of the state’s general doc- acquisition communities and should be trines is that the individual’s ability to rea- taxed as such. Legislative plans to withhold son thrives under the influence of certain marriage splitting from childless marriages »moral institutions«, the principle one being would influence young adults’ private decisi- the family (Hegel). The state’s cohesion is on to have children, harm marriages who destroyed if the family’s protective function wish to have children but cannot, and finally becomes dispensable: Without a family there Without a family there deny those parents the splitting benefits, can be no proper upbringing, without up- can be no proper upbringing, without whose adult children have already left the bringing no personality and without perso- upbringing no persona- home and who are therefore classed as nality no freedom (Montequieu). German lity and without perso- »childless« by the tax system. To deny the Basic Law also assumes that the child first nality no freedom. splitting benefits to parents and grandpa- grows up detached from the state, in a family rents would be outright cynical. environment under the supervision of his parents, who will care for him for life and Parents must offer their maintenance-en- take their share of responsibility for ensu- titled children a reasonable subsistence, ring he grows up into a responsible citizen, which they customarily finance out of their makes full use of the liberties he is granted own salaries. They therefore do not dispose and, as part of the national population, be- of this part of their income – neither for the come a guarantor for the continued survival 78 Social Significance and Protection of the Family

of the constitutional order. This is why the and siblingless child often also loses out on constitution places the family under the those some of those opportunities too. special protection of the state order. Supporting families to relieve state institu- The state’s share of responsibility lies speci- tions A variety of families fically in the legal status it assigns to parents A variety of families means a variety of ap- means a variety of in its vocational and economic order. Accor- proaches to freedom. It is therefore essential approaches to freedom ding to the Federal Constitutional Court, the for the free democratic structure of the state entitlement of each mother to receive pro- whether children are raised in their families tection and care by the community (Art. 6 or in state or state-like institutions. Children Para. 4 of German Basic Law) obliges the only become acquainted with many areas of legislator to »establish the foundation for freedom – religion, art, science, sport, tech- family activities and employment to be re- nology – through their parents. In addition, conciled and to ensure that professional the family’s role of child-rearing is also an disadvantages are not incurred through the indispensable prerequisite of our economic pursuit of child-rearing duties«. »This inclu- system. The costs for a communal crèche des both legal and actual measures that place and especially for an assisted home for facilitate the parallel pursuit of child-rea- youths sometimes amount to several thou- ring and occupational activities by both sand euros per month. If all parents were to parents as well as the return to work and place their child in state-funded care facili- professional advancement following paren- ties, our customary social welfare system tal leave«. The legislator is obliged to »intro- would collapse. Against this backdrop, we duce regulations that give families with should perhaps consider giving families children special consideration« not only in similar economic opportunities as childless the field of employment law, but also in other couples, so they are no longer at an economic fields of private law. This applies in particu- disadvantage due to the need to meet what is lar to tenancy law, loan contract law and the perceived as an indispensable constitutional granting of a place at university. expectation. Higher child benefits could enable parents and families to find a better The family, the daily interaction between balance between family and work life and to parents and children, is the initial prerequi- perform family work and receive recogniti- site for parents and children developing on for it in a society in which honour and personalities. Of course, there are good income go hand in hand. They would enable reasons for not having a child and frequently married couples switching from occupatio- people do not even have the chance of having nal work to child-rearing activities to obtain Yet those who only a child. Yet those who only decide against a broad range of vocational qualifications, decide against having having children because of their jobs, should thanks to their additional child-rearing children because of their jobs, should seriously contemplate whether their lives skills, which would facilitate a return to seriously contemplate may not end up being less fulfilling in the work and professional advancement for both whether their lives may long run. Gender equality is not achieved or parents after parental leave. Furthermore, it not end up being less fulfilling in the long run. promoted by concealing or ignoring the would help to make homes more child- existence of children in economic life or in friendly and leisure facilities better suited to legal system. Furthermore, a child’s possibi- family’s needs. The family’s and state’s sha- lities in life are considerably reduced if its red responsibility for the child is not only early life structures are shaped by single contained in its parental upbringing and parent households. Equal opportunities school education, but particularly in the cannot be achieved if they exclude or go legal and financial responsibility of the state against children. And often the fatherless and society for their joint future. The consti- 79

tutional law provides the impetus. The legis- Father and mother living together in extra- lator, as the initial interpreter of Art. 6 of marital parenthood often perform very Basic Law, is the initiator of this develop- similar child-rearing and subsistence tasks ment. as marriage-based families. It would therefore be advisable to include the extra-mari- Supporting the family means supporting the tal family in the family support scheme. community of parents and children, since However, such support would generally they alone will secure the future of the state, presuppose that the state can reliably deter- economy and society. A family generally mine whether the extra-marital partners are consists of a legally established living com- co-habiting, which would mean dispatching munity of man and wife, in which the child- a state commissioner to enquire into the ren are raised by both the father and mother, private lives of extra-marital partners to see which considerably improves the child’s how they are living. This form of inspection chances of development. However, the is not compatible with the constitutional constitutional protection of the family also protection of privacy and, considering the applies to the legal relations between pa- impermanence of relationships and reserva- rents and children if the parents are not tions about their temporary nature and married. Similarly, the living and child-rea- irrevocability, this would not be implemen- ring community of a single mother with her table in practise either. This is why, in deter- child is protected as a family under constitu- mining the existence of marriage, the legal tional law. The same applies for single fa- system bases its interpretation on the formal thers. These legal relations also claim the declaration made by the spouses at the re- state’s family support and financial recogni- gistry office. Those who formally enter into tion for child-rearing. common law marriage are married; those who do not seek the legal recognition of The need for state funding to alleviate the their co-habitation are not married. Conse- particular difficulties of single parents, who quently, legal provisions such as the marria- cannot share family and occupational work ge splitting tax provisions apply exclusively between two parents, is justified. Neverthe- to those who have formalised their marriage less, this must not lead to the current social and do not treat extra-marital cohabitants in welfare system providing incentives for the same way. By contrast, parenthood is refusing to marry and thus to weaken based on actual facts and is independent of society’s social structures and the equal any formal legal act, so that family and child opportunities of children. benefits are linked to a singular and irrevo- cable, permanent family relationship. The The same applies for extra-marital living state benefits are generally granted to the communities with children. The current social parent who has the custody for the child. welfare system offers a thirty year old woman with child, who lives without a partner and is Marriage and family are indispensable for a not available for work, state benefits of roughly free economic system €1,200 per month, which a married mother is Constitutionally safeguarded freedom is not entitled to claim. Social welfare law there- generally understood to mean freedom or in- fore provides incentives for avoiding marriage dependence from the state. However, since and thus dispenses with the institutional basis mankind requires support and care at birth for a living and child-rearing community. This and later during illness, poverty, disappoint- form of state intervention against marriage is ment, isolation until he is old and fragile, he not compatible with the constitutional obliga- needs attention, education, support and a tion to protect marriage and the family. means of subsistence. The institution of 80 Social Significance and Protection of the Family

marriage and family provides a community strengthen families’ child-rearing mandate. which takes mutual responsibility and provi- Each generation can only develop the culture des life support. It strengthens our sense of whose roots were planted by previous gene- Each generation can cohesion and solidarity based on our natural rations. It does not wish to re-invent the only develop the culture need for social interaction, promotes the wheel every time but to build on existing whose roots were planted by previous exchange of ideas, provides mutual encoura- knowledge passed on by the previous gene- generations. gement and life support, which the individu- ration. Hence, the cultural foundations of the al receives and which is of fundamental state and legal system must continuously be importance for the individual’s ability to live renewed from generation to generation too. freely and for the structure of community The family supports this by providing a li- life. ving community in which parental traditions meet with the youths’ drive for renewal, Freedom from the state is therefore based on established values encounter the carefree the tight bond between those entitled to be desire to be free, and in which cultural and free. Responsible parents’ sense of duty communal ties are conveyed to the next ge- spares the state the need to guide the child neration. through life. Family-based subsistence does away with social welfare. Private care of the After all, the core problem of Germany’s elderly replaces the need for nursing homes economic policies, i.e. insufficient economic and hospitals. Personal dialogue makes psy- growth, is also due to our lack of children. chological and therapeutic support redun- Due to negative population growth, compa- dant. In times of lack of orientation and po- nies expect the markets to shrink in future tential crime, the marital and family-based and are therefore reluctant to invest, which living community helps to restore peace and furthers economic stagnation, which in turn a sense of balance and thus prevents police leads to mass unemployment and living and court interventions. A fragile old person standards declining. Even the value of mo- will not find the support he needs in his money, the »inter-generational contract« and all ney or shares but through the assistance of a structural policies depend on future genera- spouse or child. Without marriages or fami- tions maintaining the current performance lies the state could not maintain its freedom level in Germany with sufficient numbers and the social welfare state would be com- and qualifications. The lesson of the present pletely overburdened. is not to simply come to terms with the lack of children and to refuse to deviate from the Marriage and family are thus the precondi- pursuit of economic wealth, but to restore tion for freedom. Since the state can only the balance between employment and fami- grant liberties and create favourable frame- ly. Growth, above all, means growth in the work conditions for accepting these liberties, number of children. The family is our missi- but people’s willingness to accept these de- on and the litmus test of future policies. The family is our pends on the cultural liberties and on their mission and the litmus own upbringing, the state must make a con- test of future policies. certed effort at present to firmly support and 81 82 83 84 The Family as a Benefit to Society – The Fiscal Effects of Children

Fiscal balance and decline in birth rate been provided below. Preceding this is a The German State The German State claims it invests a lot in brief discussion of the importance of these spends a lot on child- children, especially in terms of its social findings which – based on the size of the ren, but in the end it retrieves much more services and education, where it contributes survey – are at least reasonably reliable. back from them. to the child’s upbringing. However, through taxes and social security contributions, it During the first few years of their lives, ultimately regains more from them during children, who naturally having no disposa- the course of their lives. When taking a clo- ble income of their own, almost automatical- ser look, the entire state budget, including ly receive a type of credit in the form of pu- the social insurances, resembles a gigantic blic expenditure in return for the public contribution system, which is primarily benefits they will claim. The lenders are for financed by the taxes and contributions of the most part members of the parent genera- people of working age while delivering con- tion, whose tax payments are used for this tinuous benefits to people of all age groups. purpose by the public tax system. To the What the lifelong net effect of this system extent to which children themselves become will be on the individual is unclear and in the economically active during the course of end it depends on the circumstances of each their lives and earn their own income, from individual. which they must pay taxes and social contributions, they will pay back this credit and If one follows the development of an average enter into a creditor position vis-à-vis the child today throughout its entire life span state and members of other generations. As and draws up a balance sheet to record each they grow older and the amount of taxes and revenue and expense of the state resulting contributions they need to pay typically from the child’s existence, then according to diminishes and the public benefits they the most recent calculations of the ifo Insti- claim dramatically increases, this position is tute for Economic Research, contributions reversed. If the accumulated balance of cash paid to the state are in clear excess of the equivalents expected on average for all the continuous allowances paid by the state. In taxes paid by the child and all public benefits The surplus gained from current cash equivalents, this incongruity he claims is zero at the end of his life, then contributions paid by amounts to 76,900 euros – a clear economic the state is considered to be in a fiscally parents to the state amounts to 76,900 euros. advantage for childless parties, i.e. other tax neutral position vis-à-vis the child and indi- payers and recipients of state benefits, which rectly in relation to his parents’ decision to parents support by giving birth and raising a conceive him in the first place. If it is negati- child of average needs. A summary of the ve, the state subsidises the birth, if it is posi- basis of calculation and the results have tive, it taxes it. 85

In actual fact, the balance is positive amoun- to spend more on each child rather than ting to the above-mentioned 76,900 euros: have more children; Hence, the state levies a net tax on the birth :: secondly, life concepts, particularly of Hence, the state levies a of a child. The fiscal system thus effectively women, have changed; they now prefer to net tax on the birth of a child. The fiscal system causes a redistribution from young and engage increasingly in their careers and thus effectively causes a future generations to middle and old genera- therefore seek higher qualifications from redistribution from tions. Within each generation, this simulta- the outset, which raises the cost of having young and future generations to middle and neously leads to a redistribution of financial children since this entails interrupting old generations. Within resources from families with an average or one‘s source of income; each generation, this above-average number of children to those :: thirdly, state intervention to artificially simultaneously leads to a redistribution of with few or no children. continue raising the cost of children and financial resources from reducing parents’ revenues by the state families with an average This redistribution is certainly contentious collecting these revenues and redistribu- or above-average number of children to from the point of view of justice, but it is ting them, instead of allowing them to flow those with few or no perhaps more important to observe the lack from adult children back to their parents. children. of incentive it transmits. Just as one can expect state allowances for children to lead Parents‘ decisions about the number of to more children being born, it is to be fe- children they will have are distorted only by ared that this negative redistribution of the third explanation model. From an econo- wealth will result in fewer children being mic perspective, this leads to a counter-pro- born than if the state behaved neutrally. ductive reduction in the number of births to The fact that Germany has the lowest below what it would have been if citizens had number of births relative to its population decided independently, without the inter- among the OECD countries can also be un- vention of the state, be it intentional or unin- derstood in the light of this. tentional.

Parents’ decision to have children comprises In the pertinent research literature, discus- many elements, which cannot, or at least not sions on the effects of the state’s fiscal system entirely, be modelled economically. Yet at on the birth rate can be summed up by the the same time there is a core set of economic term»fiscal externalities« of children. A questions, which the economy can help to fiscal externality is the non-negative net flow answer. This includes the allocation of pa- of payments measured in cash equivalents, rents’ limited time for either employment or which the birth of an additional child gene- family, the use of limited income to cover rates and which flows into the long-term various expenses and the choice of various future. The debate on the fiscal externality strategies for securing living standards in of children has so far focused mainly on the old age. Since the ground-breaking work of effects of pay-as-you-go public pension Nobel Prize winner Gary S. Becker, an inde- schemes. Systems of this kind have made the pendent research branch for the »economic purpose of raising children as a security for theory of the family« has been set up to old age nearly completely redundant at a address these issues. According to this theo- personal level. Yet to continue functioning ry, there are three main explanations for the such schemes remain dependent on a suffici- general decline in birth rate, which has been ently large, well-educated generation of observed in many industrialised countries future contributors. The birth-reducing over the past century: effect of negative incentives that the positive fiscal externality of children produces – :: firstly, with rising prosperity and improved alongside the effects of the other explana- living standards, potential parents prefer tions described above – has meanwhile also 86 The Family as a Benefit to Society – The Fiscal Effects of Children

been substantiated by numerous empirical probability of that life expectancy declining studies. towards the end of the period under review.

The much more comprehensive calculations The long time horizon for these calculations conducted by the ifo Institute prove that the implies that the majority of individual effects German statutory pension scheme is in fact observed are based on projections, i.e. on the largest single contribution made by an hypothetical simulation calculated assu- average child towards a positive fiscal balan- ming an extension of the current law. All ce. Similar effects for analogous reasons are statutory changes to this legal status, whose produced in the field of the statutory health effect will only be seen later on, have also insurance schemes and the social long-term been taken into account. When performing care insurance fund. Although the overall advance estimates on the long-term develop- effect of this is softened through tax-fi- ment of public finances, and especially the nanced benefits, special family policy in- contribution rates and performance stan- struments and state education financing, it is dards of social insurances, as well as the by no means evened out. The calculations matching demographic-economic back- have taken account of the fact that the Ger- ground scenario, the calculations refer to an man tax and social system is not sustainable up-to-date study conducted by the ifo Insti- in its current form in the long term and will tute on behalf of the Federal Ministry of lead to rising tax burdens, despite dwindling Finance. The Ministry used this study as a performance standards, and a burgeoning basis for its »sustainability report« published If no further changes are state debt. If no further changes are made to in June 2005. The version applied here com- made to the law that go the law that go beyond the reforms already bines various variants of the advance esti- beyond the reforms already introduced then introduced then the fiscal burden for future mates, which, all in all, lead to a plausible the fiscal burden for generations of children will continue to »basic scenario« that is neither particularly future generations of grow. The repercussions this would have on optimistic nor all too pessimistic. Further- children will continue to grow. The repercussions the birth rate would be even more severe. more, in order to arrive at the calculations this would have on the made here, it was necessary to extrapolate birth rate would be even The extent and structure of the fiscal exter- the projections originally made until 2050 more severe. nality of children caused by the German tax for a further 50 years. and social system, according to the prevailing law, will be broken down in more detail The key elements for establishing the life below. The intention is to find concrete star- cycle of the ‘average’ child under discussion ting points for correcting the problems en- are (cf. Figures 8 to 15 in the Annex to this suing from it. However, the decisive conclu- chapter): sion is that, through its contribution to the declining birth rates observed in Germany, :: age and gender-specific probability of this system will destabilise itself in the long survival of a child born in the year 2000 run. (according to the 2000/02 life table of the Federal Statistics Office); Methods and assumptions :: age and gender-specific share of children The calculations of the ifo Institute for a and youths for visiting publicly financed child’s fiscal balance within the underlying childcare and educational facilities, diffe- conditions of the current German tax and rentiated according to the different levels social system are related to the stylised life of the education system (based on data cycle of an, in all respects, »average« child, from BMBF 2002); born in the year 2000 with a maximum life :: age and gender-specific employment rates, expectancy of 100 years and an increasing taking into consideration the distribution 87

of the working population in various forms are accordingly subject to different tax regu- of employment and unemployment (based lations and social laws and have unequal on a combination of estimates made by the access to diverse state benefits. Institut für Arbeitsmarkt- und Berufsfor- schung (Institute for Labour Market and All calculation results were initially ex- Employment Research) and calculations pressed in the form of cost levels for the year made by the ifo Institute, based on the data 2000, bearing in mind the expected real from a microcensus and from the national growth of monetary aggregates. Subsequent- accounts; cf. Fuchs and Thon 1998; 1999; ly, they were subsumed as cash equivalents Fuchs and Söhnlein 2003; Werding and for the year 2000. A fixed real interest rate of Hofmann 2005, Section 2.2); 3.5 per cent p.a. was applied for the entire :: average salary progression for employees, projection period as a bank rate for conver- civil servants, the self-employed and low- ting running values. wage employees who are subject to social insurance during their entire active emplo- The fiscal balance of a child born today would yment phase (according to an estimate be incomplete if it did not also include the based on the data provided by a socio-eco- present value of the fiscal effects of the grand- nomic panel, enhanced by data from surve- children and great-grandchildren, etc. that ys conducted by BIBB/IAB 1998/99 and by can be expected for the original child. If he Fertig et al. 2004; cf. Werding and Hof- had not been born, none of his descendants mann 2005, Section 2.3). would exist either. Provided the basic legal conditions remain the same, the effects of the Furthermore, old-age income trends (from first child will therefore continuously repeat funded and unfunded statutory pension themselves over a virtual, infinite time hori- schemes and private savings for old age) and zon, albeit with a time lag and with a steadily life-long consumption expenditures were declining cash value. In an up-to-date esti- deduced from the income earned during the mate, the Federal Statistics Office estimates employment phase. This provided a realistic that in the long term the birth rate will be at basis for estimating the income and con- 1.5 births per woman (in the sense of comple- sumption tax payments over the entire life te cohort fertility; the current comparative span of the child under discussion. The value is 1.6). If one sums up the fiscal effects of household’s level of education, trends in all descendants over 100 generations under marital status and the average number of this assumption, then this would increase the grandchildren expected to be born were also fiscal balance and each of the effects con- taken into account. tained therein by 79.5 per cent of the cash value, merely for the values apportionable to Where necessary, all this empirically based the life cycle of the original child. data was extrapolated over the entire projection period. Changes in the future education The results and employment behaviour, which are alrea- The calculations for the fiscal balance of an dy foreseeable today, were included. Through average child aim to determine the so-called the combination of all individual assumptions »marginal« fiscal effects of the examined it was possible to take into account child in all areas of the state budget. This throughout the calculations that some child- refers to the additional public revenues and ren never reach an employable age, others do expenditures that are directly associated not pursue gainful employment when they with the birth of a subsequent child. If the are employable, while others take up various child in question was not born, then this forms of employment at different stages and would create an uncovered financing requi- 88 The Family as a Benefit to Society – The Fiscal Effects of Children

rement, on the one hand, but on the other person’s earnings, will fall to around 36 per would also free up funds for a variety of cent until 2065. From the point of view of the other uses, to the advantage and/or disad- individually insured person the volume of all vantage of all other tax payers and beneficia- these payments is still considerable. ries of state benefits. Under this conceptual guideline, the fiscal effects will be investigated below on a step-by-step basis, which will The foreseeable increase in contribution follow from the contributions and benefits of rates and decline in pensions means that the the statutory social security insurances (for calculated earnings from the contribution the percentage of employees who are subject payments of a child born in 2000 will decline to social security compared to the rest of the considerably in value compared with those The cash value of population of the same age and gender), for an old-age pensioner today. In other expected pension from the realm of income and consumption words, the cash value of expected pension benefits, which with pay-as-you-go pension tax (giving different weight to various forms benefits, which with pay-as-you-go pension schemes is inevitably of employment, family status, etc.), and final- schemes is inevitably smaller than the cash smaller than the cash ly from granting of diverse tax-financed value of previously paid contributions, will value of previously paid contributions, will be state benefits to all kinds of recipients. The be even smaller in future. Against this back- even smaller in future. individual results obtained from this are drop, it is not surprising that the (positive) subsequently summed up and selected com- »fiscal externality« – i.e. of the surplus of plementary variants are then studied, which financial contributions vis-à-vis the benefits deviate from the assumptions of what is claimed – is higher with the statutory pensi- considered to be, in all respects, an »ave- on scheme than with any other aspect of rage« child. German fiscal policy analysed here.

Contributions and benefits of the statutory As an example of the logic behind the calcu- social insurances lations for other fiscal instruments, Figure 1 Among all forms of social insurance, the demonstrates the time lapse of pension con- statutory pension scheme (GRV) displays the tributions and benefits from the point of clearest time structure of all contribution view of the examined child born in 2000. As payments and benefits. Throughout their of 2015, there is a small probability that the entire working life, employees subject to adult child will take on a relatively low-paid social security pay income-related pension job and be liable for social security contribu- contributions. Subsequently, if they stop tions. Subsequently, the age-specific propor- working early due to an incapacity to work, tion of employees that are subject to social retire early or at the regular retirement age, security will rise and so will their average they will receive a pension oriented towards salaries within the context of the average their previous salary. wage profile.

The contribution rate of the statutory pensi- The probability of claiming pensions in on scheme (GRV) currently lies at 19.5 per advance on account of a reduced capacity for cent of the gross pay subject to contribution work will become noticeable from 2045 and will – despite all recent reforms and onwards. Between 2060 and 2065, the ‘child’ despite an equally massive rise in federal will enter into retirement. The length of subsidies – increase to 25 per cent until 2050, retirement, including any survivorship according to the projections of the ifo Insti- annuity for the spouse, will be determined tute. Then it will remain at that level. The by the child who will have a maximum pro- (gross standard) pension, which is still cur- bability of surviving until the year 2100. rently at 48 per cent of the average insured These developments can best be seen in the 89

actual progression of contributions and The co-insurance of children is therefore benefits (in prices for the year 2000), as they often seen as an important form of family are displayed in Figure 1. When converting policy redistribution from childless people this into cash equivalents (for the year 2000), liable to pay contributions to those with which is actually the most important aspect, children. Nevertheless, the actual progressi- the strong impact of discounting future on of contributions and benefits strongly payments becomes recognisable. resembles that of the statutory pension scheme. On average, the benefits for children Over the course of the examined child’s life are usually very limited and are usually span, a balance of contributions he has paid »amortized« quickly with one‘s own contri- and the benefits he has received is accumula- butions on starting employment, subject to ted in the statutory pension scheme, amoun- contributions. Towards the end of the em- ting to 77,600 euros. If one takes into ac- ployment phase and after entering into reti- count similar, time-shifted and therefore rement, there is usually a sharp increase in even more strongly discounted effects of all the number of benefits claimed, while the his grandchildren, etc. this amount incre- contribution payments of pensioners are ases to 139,300 euros. And this is only the reduced. Ultimately, the statutory health effect of the statutory pension scheme on the insurance is primarily a pay-as-you-go child’s fiscal balance. scheme for covering rising health costs in old age. It has a very similar payment struc- Unlike the pension scheme, the statutory ture as the statutory pension scheme. In the health insurance (GKV) offers its members underlying projections for the development and their insured dependents lifelong bene- of age- and gender-specific pro-capita ex- fits. Yet the obligation to contribute does not penses of the statutory health insurance, two end when entering into retirement either. further trends have been taken into account,

1 | Statutory pension scheme in the life cycle of a child (*2000)

Contributions

10.000

5.000

10.000

Benefits 15.000 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 Contributions Benefits (in prices of 2000 respectively) Running accounts in 2000 cash equivalents

All figures in euros (cash equivalents, related to the year 2000). Source: ifo calculations 90 The Family as a Benefit to Society – The Fiscal Effects of Children

apart from the growing proportion of elderly, scheme. which will determine the development of The basis for projecting the future deve- health insurance expenditures over the next lopment of nursing expenses are age and few decades. For one thing, with rising life gender-specific prevalence rates for out- expectancy we can expect to see a delay in patient and in-patient care combined with the age-related rise of costs. Yet, based on the respective nursing rates. Here again, all past experience, we can also expect ge- the contradictory effects of a declining neral medical-technical progress to be a age-specific nursing risk combined with a strong cost driver. Rising health costs there- rising life expectancy and the medical- fore currently represent the biggest challen- technical progress to be expected here, has ge for the future funding of the German been taken into account. In total, the calcula- social security system. It is specifically tions for the social long-term care insurance being alleged that, without additional re- can have a positive fiscal effect for the child forms, the contribution rate of the statutory being examined, including the effects of his Without additional pension scheme of currently just over 14 per descendents to the amount of 20,600 euros. reforms, the contributi- cent will increase to nearly 24 per cent on rate of the statutory pension scheme will rise until 2050, and will subsequently even The services and benefits of the unemploy- from currently more exceed the pension contribution rate. ment insurance fall within the same life than 14 percent to phase. If there was a sharp distinction bet- nearly 24 per cent until 2050. Overall, the calculations of the statutory ween this and the other budgets, then they health insurance also reveal a remarkably should almost surely equal each other out positive fiscal effect for the child being over the course of an average insured examined. Over the course of his life span, person’s life. However, the calculations have he will contribute 38,900 euros, and taking initially focused primarily on the easily into consideration all effects of the grand- imputable individual wage compensation children, ultimately pay 69,800 euros. benefits of the insurance, i.e. especially on the payment of unemployment benefits. With its typical time frame of contribu- Other expenses can only be distinguished tions and benefits, the long-term care insu- from general labour market policy measures rance, which was only launched in 1995, with difficulty. They are also de facto co-fi- strongly resembles the statutory health nanced by the Federal Employment Office insurance scheme, except that the probabi- through large federal subsidies. They are lity of requiring care when one is young is only taken into account at a later stage and much less likely than the probability of calculations for the unemployment insu- incurring general health costs. Furthermo- rance therefore yield a positive fiscal effect re, the probability of requiring care incre- for the examined child and his descendants ases as one grows older. The long-term amounting to a total of 10,800 euros. care insurance is therefore much better equipped in practice as a pay-as-you-go Figure 2 provides a summary of all results provision against drastically rising costs in for the statutory social insurances in the old age. form of cash equivalents based on the year 2000, which arise over the life span of an in However, the volume of funds required for all respects average child. In total this pro- this is, which is expressed in the lower duces an accumulated balance of contribu- average per capita expenses and corre- tions and benefits of around 134,000 euros. spondingly lower contribution rates, clear- If one includes the effects of the average ly lower than with those of the statutory number of grandchildren that an average pension scheme and health insurance child is expected to have, then this results 91

in a positive fiscal effect for the examined income to the household, the calculations child of around 240,500 euros in total. include a total of 21 constellations of single Hence, the statutory Hence, the statutory social insurances of households and couple households in vario- social insurances of pension, health, long- pension, health, long-term care and unem- us combinations of employed and unemplo- term care and unemploy- ployment insurance encumber the new- yed partners. Only at the end, are these ment insurance encum- born child with a total of 240,500 euros. It is results weighted against the relative fre- ber the newborn child with a total of 240,500 as if at birth the mother receives a bill of quency of these cases. euros. It is as if at birth debt for the child to that amount, which the mother receives a needs to paid off and interest paid on it over For each of these household constellations, bill of debt for the child to that amount, which the course of the child’s life and that of its the course of the respective claims to retire- needs to paid off and descendents. ment income over time, from statutory fun- interest paid on it over ded and unfunded pensions and from (sup- the course of the child’s life and that of its Taxes plementary) private savings, are deduced for descendents. Calculations of the fiscal effects of income each earned income. For simplification pur- and consumption taxes must include both poses, the calculations have refrained from employees subject to social security contri- including other capital come (and inheri- butions and people in other forms of employ- tance funds). Following the deduction of the ment. The individual’s household situation declared savings, the resulting household and especially the income and consumption net income (after deducting social security of the partner play an important role with contributions and income tax) provides an this form of taxation. In order to take this estimate of the life cycle profiles of individu- household situation into account and not al consumer expenditures. The consumer eliminate the effects of progressive income expenditure for the examined child already tax by prematurely assigning an average accrued during his first life phase is included

2 | Statutory social security schemes in the life cycle of a child (*2000)

Contributions

6.000

4.000

2.000

Benefits 4.000 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 Social security contributions Statutory health insurance Long-term care insurance Unemployment insurance Statutory pension scheme

All figures in euros (cash equivalents for the year 2000). Source: ifo calculations 92 The Family as a Benefit to Society – The Fiscal Effects of Children

in a separate estimate based on relevant data Tax-financed benefits from the last »income and consumption The ex definitione positive fiscal effects of sample« of the Federal Statistics Office. an average child within the context of the tax system and in view of his total fiscal ba- In order to simulate income tax payments, lance are offset by a number of counter-en- the income tax rate for the year 2005 is ex- tries, which result from so far undocumen- trapolated in such a way that the effects of ted tax-financed state benefits. Public a »cold progression« – i.e. the rise in tax expenditures on education and on family liabilities with a progressive rate trend as a policy benefits, in particular, apply quite result of future real increases in income – early on in the child‘s life span. The cash are completely neutralised. In accordance value of these benefits therefore has a with the applicable law in future, the reti- noticeable effect on his fiscal balance, even rement income is subjected to a so-called if they initially appear to be quite modest »deferred« taxation. On the basis of these in terms of their running (real) value. calculations, the examined child will need to make income tax payments amounting In order to estimate the state expenditures to 56,800 euros during the course of his on childcare and education, the average lifetime. Taking into account all the tax contribution rates for all relevant age groups payments of his descendants, this will and education paths (differentiated accor- amount to a positive fiscal effect from in- ding to pre-school childcare facilities, gene- come taxation of a total of 102,000 euros. ral-education and vocational schools as well as universities) were combined with the per Die Berechnungen zu den Verbrauchsteu- capita expenses differentiated accordingly. ern Consumption tax calculations not only All public expenditures for building and relate to the general sales tax, but also running publicly funded education facilities, other, specific consumption taxes (petrole- grants for private facilities and expenditures um tax, tobacco tax, insurance tax, motor for supporting students with their general vehicle tax, alcohol tax and other »smaller« living costs (e.g. repayable state grant such consumption taxes). The calculations have as the German BAföG) as well as for scholar- not taken into account possible income- ships. This produces a counter value and life phase-based changes in consump- through public spending on education of tion pattern (as well as other forms of 75,700 euros per examined child. If this cash V.A.T.-exempt consumption). Instead, value of similar expenses is extended to all based on the figures from the national grandchildren, this amounts to a fiscal effect account, a uniform »consumption tax rate« of 136,000 euros, which are subtracted from is applied throughout which comprises the child‘s fiscal balance. 17.2 per cent of the consumption expenses, consisting of around 10.8 percentage Also specifically included in the calculations points that are apportionable to the actual under family policy benefits, within the VAT charged for private consumption and narrow sense of the term, are the child-rea- another 6.5 per cent for all other consump- ring allowance, child benefits and the parti- tion taxes. Hence, according to these cal- ally credited effects of income tax-based culations, the consumption taxes paid by child tax credits, within the scope of the the examined child over the course of his applicable law, as well as the effects of une- lifetime, will amount to roughly 69,900 qual contributions in the social care insu- euros, and to a total of 125,500 euros if we rance between parents and childless coup- take into account the effect of all grand- les, which came into force in 2005, and the children. crediting of parental leave in the statutory 93

pension scheme. As in the case of the styli- derlying life cycle concept and cannot be sed life cycle of the examined child, several easily handled at the individual level. These years from the life cycle of average-aged benefits are difficult to apportion, because parents with an average income are taken they sometimes involve so-called »public into account in the calculations, using the goods«, for which it is not easy to observe same methodology. It is furthermore assu- and assess the expenses allotted to individu- med that the respective mother will require al users. And sometimes the data available a period of limited employment in order to on the structure of public expenses at all care for the child. This represents the most levels of the German federal fiscal system is frequently observed pattern (cf. Figure 13 in simply not differentiated enough. The attri- the Annex to this chapter), with the corre- bution of costs is also a sensitive issue, be- sponding consequences for the parents’ cause there are often both double counts and household income and their social insurance gaps in the recording of state benefits, which contributions and claims. Based on this, the can distort the results in either direction. overall fiscal effect of family policy benefits This is further complicated by the fact that, is calculated to be –36,100 euros in the even with a complete record of the benefits, course of the examined child‘s life span and the inadequate timing of the alleged claim –64,900 euros when taking into account can significantly influence the results of the similar benefits claimed by his descendants. calculation on a child’s total fiscal balance.

In addition, one should bear in mind that the Therefore, for the purpose of simplification, state also contributes to the so-called »op- »other« state benefits are accounted for from portunity costs« of the child’s upbringing the examined child’s first year of life onwards through a considerable amount of missing by estimating the per capita shares of the taxes and social insurance contributions – entire domestic expenses of all regional aut- i. e. the missing revenues from child-related horities (federal government, federal states employment constraints. In terms of their and communities) in the areas of »general cash value, these costs are considerable, administration«, »defence«, »homeland secu- even though, within the scope of a practica- rity«, »economic affairs«, »environmental ble system of levies, the state’s contribution protection« and »sport and leisure«. Under the appears to arise automatically and can hard- simplified yet not unrealistic assumption of an ly be interpreted as a targeted family policy optimal, cost-minimising allocation of re- measure. Detailed calculations to assess the sponsibilities within the federal German total opportunity costs of the child being financial system, these per capita values can examined have shown that the state’s contri- at the same time be taken as an estimate for bution amounts to 66,700 euros (40.4 per the »marginal« costs of additional beneficiari- cent of the total gross opportunity costs of es. The recorded expenses are adjusted for 164,900 euros). If one factors in the similar the shares that are not financed through pri- effects of all grandchildren, then the fiscal vate households, but through corporate tax balance of the original child will be debited revenues and, as can be supposed, that com- by -119,800 euros. panies also benefit from.

In addition to the individual and easily ap- All in all, the counter value of »other« state portionable state benefits mentioned so far, benefits directed to the examined child which the child claims in the course of his amounts to –58,200 euros. Taking into ac- life, there are also a large number of »other« count the benefits to all descendants, this tax-financed state benefits, which cannot be would amount to a total fiscal effect of imputed so easily in the context of the un- –104,400 euros. Yet, due to the selected me- 94 The Family as a Benefit to Society – The Fiscal Effects of Children

thod of imputation, one cannot exclude the cycle. In total, this amounts to an accumula- fact that this value may considerably exagge- ted balance of around –91,100 euros. Taking rate the public benefits claimed by children. into account the additional effects of the An (absolute) smaller figure is probably original child’s descendants, this results in a correct. To avoid exaggerating the alleged negative fiscal effect for the examined child net taxation shown for newborn children, of –163,600 euros. This amount results from one has therefore abstained from making tax payments amounting to 227,400 euros any deductions for their minor use of public and a cash value for the total tax-financed goods. state benefits claimed of –391,000 euros.

Finally, the calculations must also take into Total result All individual results account that the financial policies currently All individual results calculated here amount calculated here amount pursued in Germany are not sustainable. to a total positive fiscal balance for an ave- to a total positive fiscal balance for an average Despite the massive rise in social security rage child of 76,900 euros. This is how high child of 76,900 euros. contributions included in the calculations, the surplus of estimated taxes and social the projected revenues and expenses of the insurance contributions is over the counter regional authorities will lead to continuously value of expected state benefits claimed, Germany’s current high new debt with an exploding debt-GDP expressed in accumulated cash equivalents finance policies are not ratio. At some point during the life span of based on the year 2000. Of these, 42,800 sustainable in the long run. Despite massive the examined child or later on, with a subse- euros are directly accrued during the life increases in social quent effect on his descendants, the current cycle of the examined child, while a further security contribution financial policy course will have to be cor- 34,100 euros are apportionable to the similar rates included in the calculations, the pro- rected by substantially reducing the public though delayed effects, with a declining cash jected revenues and expenses. In doing so, the following applies: value, for the original child’s estimated ave- expenses of the regional The later the correction is made the more it rage number of descendants. authorities will lead to continuously high new will relieve the fiscal balance of the child and debt with an exploding his descendants, as people living today are Figure 4 provides an overview of the extent debt-GDP ratio. not affected as much by it. With the help of a and structure of all fiscal effects that are method developed by the EU Economic Poli- accrued during the life cycle of the examined cy Committee 2003, it is therefore possible to child. Taking into account the effects of his determine a sort of lower threshold for the grandchildren etc., Figure 5 illustrates the current value of the »sustainability gap«. total fiscal balance for the, in all respects, This presupposes an immediate and perma- average child born in 2000, resulting from a nent reduction of all public expenses by continuation of the German tax and social about 1.9 per cent of the current GDP. Con- security policies under the current legal verted into the share of the examined child, framework conditions. this amounts to a positive fiscal effect of 34,100 euros. Again, it is possible that the Variants actual effect of a delayed budget consolidati- The fiscal balance for a child born today, of on at the expense of the examined child may whom one may sensibly expect to be average be underestimated. It could, for instance, in all respects, in actual fact results from a nearly double if the corresponding measures number of different life courses and plans of are postponed until 2100 or later. different children. The fiscal effects of individual children are correspondingly diffe- Figure 3 provides a summary of the results rent. Hence, a selection of variants is com- of all calculations for tax payments and plementarily considered, which focuses on tax-financed state benefits that are apportio- two aspects in particular, namely cases with nable to an average child during his life 95

3 | Taxes and tax-financed benefits in the life cycle of a child (*2000)

Taxes 2.000

2.000

4.000

6.000

8.000

10.000

Benefits 12.000 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 Income and consumption taxes Other benefits .\. Sustainability correction Childcare and education Family policy instruments Public share of opportunity costs

All figures in euros (cash equivalents for the year 2000). Source: ifo calculations

4 | Fiscal effects in the life cycle of a child (*2000)

10.000 Contributions

8.000

6.000

4.000

2.000

4.000

6.000

8.000

10.000

12.000 Benefits 14.000 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 Taxes Social security contributions Social security benefits Tax-financed benefits Running accounts

All figures in euros (cash values based on the year 2000). Source: ifo calculations 96 The Family as a Benefit to Society – The Fiscal Effects of Children

varying levels of income and cases with per balance a burden on the other tax payers varying numbers of children. and recipients of state benefits amounting to –167,600 euros. (Detailed fiscal balances for Above and below average income these two »clear-cut« cases can be found in For cases with varying levels of income, speci- Figures 14 and 15 in the Annex to this chap- fic calculations were made, in which all income ter.) In general, it becomes clear that the payments were set at 150 per cent or 66.67 per fiscal effects of a child strongly depend on cent of the comparative values for an average the employment and income trends. child. This was also adjusted for the supposed levels of education (university graduates ver- Varying numbers of children sus persons without a completed professional To cover variants with varying numbers of training qualification) as well as the actual, children, two additional scenarios were specific risk of becoming unemployed later on investigated, in which the original child in professional life. In the case of children with was either childless or chose to have 2.1 an above-average income this would not only children, instead of the average number of result in higher contributions and wage-de- 1.5 children (per female descendent). If all pendent varying claims to state benefits, but women chose to have a higher number of also higher state expenditures in the field of children in future, this would lead, in the education, in particular. second of these cases, to a return to »sustainable« child-bearing patterns in Ger- In the case of children with a below-average many, with a constant population number income during their occupational phase, and a stable age structure of the resident additional claims to subsistence-based so- population in the long run. cial security benefits (supplementary social welfare and housing benefits or, as of late, An overview of the results reached under ‘unemployment benefit II’ (Arbeitslosengeld these assumptions is depicted in Figure 7. The II) and the associated allowances for cove- fiscal balance of a child who remained child- ring the costs of living and heating need to less would be limited to the fiscal effects accru- be taken into account. ed during the course of his life span, amounting to 42,800 euros. This would cancel all Furthermore, one must also factor in that the additional effects of potential descendants. By level of income of all generations influencing contrast, for a child with an above-average the fiscal effects (including parents, the child number of children, the fiscal balance would itself and its descendents) may deviate from rise to 109,600 euros. Overall, both variants the average in any number of combinations. produce positive fiscal effects, which do howe- Figure 6 provides an overview of individual ver have to be correlated with the presumed results for the fiscal effects of children with number of children in each case. varying levels of income, itemised by the components of their fiscal balance that are When interpreting these results, one aspect For families with a dependent on the income of their parents, of must not be overlooked. In order to achieve a uniform level of income the child and its grandchildren, etc. change in the average child-bearing behavi- across all generations, the fiscal balance of the our, so that the birth rate becomes more examined child with an For families with a uniform level of income »sustainable«, either the attitudes of potenti- above-average income across all generations, the fiscal balance of al parents must change or the underlying amounts to no less than 299,000 euros. the examined child with an above-average conditions on which they base their decision income amounts to no less than 299,000 about the number of children they will have euros. In the case of a below-average income, are adjusted. In other words, to the same this will result in a negative fiscal effect, i. e. extent to which the fiscal externality deter- 97

mined for an average child has contributed 5 | The fiscal balance of an to a decline in birth rates in Germany, the average child (*2000)

German tax and social system must be alte- Fiscal red, so that the fiscal balance of a child is effecta substantially lower than it is today. Social security contributions and benefits 240.500 Conclusions thereof: The calculations lead to the conclusion that a statutory pension scheme 139.300 child born today, who is average with re- statutory health insurance 69.800 spect to his employment behaviour, income social long-term care insurance 20.600 and numerous other criteria, generates unemployment insurance 10.800 positive fiscal advantages for the state Taxes 227.400 within the framework conditions of the cur- thereof: rent German tax and social system. Over the income taxes 102.000 course of his life and taking into account the consumption taxes 125.500 effects of all the descendents he is expected Tax-financed state benefits – 391.000 to have on average, this amounts to a total of thereof: around 76,900 euros. Certain uncertainties childcare and education – 136.000 with regard to his externality, resulting from family policy benefitsb – 64.900 the incompleteness of the available data and share of opportunity costsc – 119.800 the methods of imputation used here must, other tax-financed benefitsd – 104.400 however, be borne in mind. sustainability correctionee 34.100 Balance 76.900

The main source of this effect, which is fa- All figures in euros (cash equivalents based vourable for all other tax payers and recipi- on the year 2000).

ents of state benefits is the German social Comments: security system and, first and foremost, the a Taking into account the average gender distribution and statutory pension scheme. The German tax chances of survival, average age-specific education and employment participation (for employees, civil servants, system and various tax-financed state bene- the self-employed or low-wage employees, subject to fits, including public spending on higher social security contributions) and their average employ- education, in particular, and specific family ment and retirement incomes; including the effects of the average expected number of grandchildren etc. policy benefits, have helped to reduce the b Child-rearing allowance, child benefits and income tax- net fiscal effect on the balance of an average based children’s allowance, discounted contributions for child but are far from balancing it out. As parents in the long-term care insurance and crediting of parental leave in the statutory pension scheme. emphasized above, the German tax and c Missing taxes and social insurance contributions through social system induces a continuous redistri- the employment constraints of the mother. d bution from young and future generations to Per capita share of domestic expenses of regional authorities for »general administration«, »defence«, middle and old generations, which within »homeland security«, »economic affairs«, »environmen- each generation also leads to a redistributi- tal protection« as well as »sport and leisure activities«; on of financial resources from families with for employable persons: plus tax-financed expenses of the Federal Employment Office. an average or above-average number of e Per capita share of the required cuts in expenditures, children to those with few or no children. according to the »sustainability gap« concept developed by the EU Economic Policy Committee.

Although the magnitude of the fiscal effects Source: ifo calculations identified here does not prove that, beyond these distribution effects, this also has repercussions on the birth rate, such effects are likely. If child-supporting measures have 98 The Family as a Benefit to Society – The Fiscal Effects of Children

6 | Fiscal effects of a child (*2000) with varying income in each generation

Income of the parents, child and all grandchildren etc. in per cent of average income 66,67 % 100 % 150 % Effects that depend on the parents’ incomea – 70.300 – 87.300 – 132.200 Effects that depend on the child’s income, and wage-independent effectsb – 54.200 91.500 240.200 Effects that depend on the grandchildren etc.c – 43.100 72.700 191.000

All figures in euros (cash equivalents, based on the year 2000). Comments: a Family policy benefits, public share of parents’ opportunity costs, consumption taxes on the child’s living expenses, subsistence-based social security benefits for the child living in the parental home. b Public spending on higher education, taxes, contributions paid with the child‘s own income .\. social security benefits for the child, subsistence-based social security benefits for the adult child, other tax-financed benefits and the sustainability correction during the child‘s life span, benefits for the grandchildren that are dependent on the adult child’s income (cf. a). c Accumulated effects of the wage-dependent financial contributions and benefits of all children etc. (cf. b).

Source: ifo calculations

an impact on the birth rate, then one can where this lifestyle is no longer economical- conversely expect the discrimination con- ly sustainable and has therefore become a tained in the German fiscal system against political issue that can no longer be ignored. having children will have an adverse affect How strong the fiscal effects have influenced on it. The fact that, among all OECD coun- the fertility rates in Germany is debatable. tries, Germany has the lowest birth rate in The »economic theory of the family« has relation to its population size, must be consi- demonstrated in a number of theoretical dered in the light of this. studies that such »fiscal externalities« offer parents an important and economically Germany is the country which invented the distorting reason against having an (additio- pension scheme. No wonder then that birth nal) child, which is resulting in the long-term rates take the back seat. Before Bismarck decline in birth rates that can be observed in The heart of the pro- introduced the pension scheme, everyone Germany and in numerous other developed blem is that the current was aware that they needed children to live countries. German tax and social security system to a sufficiently well in old age. After Bismarck, it large extent socialises became clear that one could enjoy old age The heart of the problem is that the current the potential financial without children. As long as the neighbours German tax and social security system to a rewards of raising children, particularly in still had children, it was possible to lead an large extent socialises the potential financial the pension scheme, economically satisfactory life without nee- rewards of raising children, particularly in without taking the ding to plan in children. ließ sich ein Leben, the pension scheme, without taking the individual assumption of costs into account and bei dem Kinder nicht eingeplant waren, in individual assumption of costs into account transfers these to all wirtschaftlicher Hinsicht zufriedenstellend and transfers these to all members of the members of the parent führen. parent generation. When deciding about the generation. From generation to generation, the number number of children, parents therefore lose of people who have followed the trend of sight of the effect of an additional child as an choosing not to have children, albeit coinci- old-age security incentive and choose a dentally and unintentionally at first, has smaller number of children. This is creating grown. Today, Germany has reached a point, a divergence between the individual’s 99

7 | Fiscal effects of an average child (*2000) sing children, which takes the form of mis- with varying numbers of grandchildren etc. sing taxes and social security contributions from the parents’ limited ability to work Fiscal effecta during child-raising. Yet the fact that, despi- Fiscal effects of the original child 42.800 te the state’s noticeable share of the costs for Fiscal effects of his grandchildren etc. with varying numbers of children in an average child’s birth, upbringing and each generationa education, the child still has a positive fiscal 0 Kinder – externality demonstrates that the public 1,5 Kinder 34.100 share of child-care costs is still too little. 2,1 Kinder 66.800 There is no mono-causal method of explana- All figures in euros (cash equivalents, based tion for parents’ decisions to have children on the year 2000). underlying these findings. Not even that

Comment: people‘s decision to have children is mainly a Number of children of the original child and – motivated by economic considerations. possibly – the average number of children of all There are, of course, a multitude of influ- female descendents. ences affecting this decision, most of which Source: ifo calculations lie outside the economic sphere. But, for this very reason, the government should not interfere with family planning. It should grounds for choosing to have children and allow people to make up their own minds The government de the actual economic foundations of a pay-as- about whether they want children, since facto penalises the birth of every newborn child you-go pension scheme. However, the state’s nobody can decide this better than they by imposing a life-long pension scheme and fiscal system as a whole themselves. Yet the government does not tax of nearly 80,000 depend for their future functioning on the behave neutrally and de facto penalises the euros. existence of children. If Germany adheres to birth of every newborn child by imposing a its current tax and social security system, life-long tax of nearly 80,000 euros. this will raise the level of the inter- and intra- generational distribution of wealth and Family support measures do not therefore increase the risk that the German fiscal sy- interfere with a person’s ability to decide stem will destabilise itself in the long run. freely; on the contrary. As long as they do not overshoot the mark and turn fiscal externali- However, the calculations made here also ty on its head, they can serve to free the show that the state does to a considerable ex- decision to have children from state influ- tent participate in the costs of birth, child- ence. Such measures not only make sense rearing and education through family policy from a justice point of view. They also help measures and public spending on higher society to come closer to having what it per- education. Parents directly finance around ceives to be the optimal number of children, 52.6 per cent of the costs of raising an ave- whatever that number may be. Also the que- rage child from birth to the age of 18. The stion of how heavily people have ultimately rest falls to the state, although, here again, reacted to fiscal measures and may still react this share is largely financed by the parents to new fiscal incentives is of secondary im- – as tax payers and social security contribu- portance. What people really want once they tors. Furthermore, the state’s share of finan- are liberated from the state‘s influence by cing the cost of children is only partly de- appropriate reforms will become apparent rived from state benefits. A considerable and what they choose in the end will be part is automatically covered by the state’s good, since no moral, legal or other authori- share of parents’ opportunity costs of rai- ty is in a better position to make a decision. 100 The Family as a Benefit to Society – The Fiscal Effects of Children

The following measures come into conside- security, financed by tax revenues and already ration for reducing fiscal externality: part of the current system. Already in the :: Reducing the scope of pay-as-you-go statutory 2030s, today’s pension level will reach a basic old-age provisions, and especially that of the level of care, which will be open to all who have pension scheme. Yet such a reform alone does paid contributions and/or taxes, and will be not ensure that the child-raising incentives that enhanced by two other pillars of old-age provi- have been distorted by the current system are sion. For one, parents will receive a tax-fi- improved. nanced »children’s pension«. This children‘s pension will be granted independent of the :: Enhancing family policy benefits directed to a type of work their parents have. The more child or his family during childhood and adole- children one has had custody of, the higher that scence. One negative impact of this policy, pension will be. however, is that it will offset the negative effects of state intervention through the positive ef- :: Childless couples – and also parents with few fects of additional intervention measures. Due children – will have to accumulate private to the diverse distortions, which public reve- savings to supplement their old-age provisions. nues and expenditures inevitable create, this If a child is born to a childless couple, the need will hardly be possible. False incentives in the to save for old age will decline in proportion to field of migration and employment behaviour the height of the children‘s pension they recei- can not be excluded altogether with this kind of ve. Savings already made can then be used What Germany needs is double intervention. tax-free for the child-rearing purposes. The a family policy initiative, children’s pension scheme will reach its full which will completely restructure the pay-as- : What Germany needs is a family policy initiati- potential in 25 years when the old system is you-go system of old- ve, which will completely restructure the pay- replaced by the new one. It is necessary to start age provisions and as-you-go system of old-age provisions and accumulating capital immediately by saving. particularly the public pension scheme. particularly the public pension scheme This reform must overcome the discrimination :: However, the socialisation of children’s pro- against families contained in the existing sy- ceeds is an inherent part of today’s system and stem. It must try to do away with the illusion fed therefore difficult to remove. But at least part of by the current retirement system that old-age the natural economic grounds for having child- retirement is secured even without children. ren will flow back into the individual life plans, The revised system must show young people since families will be given back some of what plainly that to have a comfortable and good life they invested and what they generate for socie- in old age, one must either save money or have ty. At the same time, childless couples will be and raise children, and that there is no alterna- given enough notice to supplement their pensi- tive to these two forms of old-age provision. The ons through personal savings. The capabilities new system of old-age pensions must make the exist since the time and money parents invest in importance of these interrelated issues clear to raising their children is available for the reque- the individual, so that he can choose between sted Riester savings scheme. Thus, a system is alternative lifestyles in the full awareness of developed that is not only must be fairer than these issues and their consequences. The Com- the existing pension scheme but also creates mission specifically assumes that the existing incentives that are necessary for the healthy pension scheme will very soon have to be con- development of the population. Germany in- verted into a new statutory pension scheme. vented the pension scheme; Germany feels the The expenses of the current system will have to consequences of it much more strongly than be minimised effectively: by freezing the con- any other country; Germany should be the tribution rate and the federal subsidies. As a pioneer for the construction of a much better consequence, the pension level will slowly be pension system, one that no longer stands in the reduced and move towards a basic level of way of its citizen‘s desire to have children. 101

8 | Gender and probability of a child‘s survival (*2000) in per cent

100%

90%

80%

70%

60% Births 2000: 51.3% male 50% 48.7% female

40%

30%

20%

10%

0% 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 until age … male female

Source: Federal Statistics Office; ifo calculations

9 | Discounting future payments

100% Cash value factor (Basic year: 2000)

90%

80%

70%

60%

50%

40%

30%

20%

10%

0% 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 Discounting over … years Assumed real interest rate: 3.5 % p.a. as of 2005

Source: OECD; ifo calculations 102 The Family as a Benefit to Society – The Fiscal Effects of Children

10 | A child’s share of education (* 2000)

100% Age-specific participation ratio Girls and young women

90%

80%

70%

60%

50%

40%

30%

20%

10%

0% 100% Age-specific participation ratio Boys and young men

90%

80%

70%

60%

50%

40%

30%

20%

10%

0% 0 5 10 15 20 25 30 Age Pre-primary education Primary education Lower secondary education Upper secondary education Post-secondary education Tertiary education

Source: BMBF; ifo projection

Comment: By extrapolation the existing education figures, we assume that the education system will be streamlined, leading to faster transfers to higher education levels and a general trend towards higher qualifications. 103

11 | Labour force participation of a child (*2000)

100% age-specific employment ratio Women (accumulated shares)

80%

60%

40%

20%

0% 100% Men

80%

60%

40%

20%

0% 15 20 25 30 35 40 45 50 55 60 Age Unemployed Low-wage employees Self-employed Civil servants Employees subject to social security contributions

Comment: The extrapolation of the existing employment figures is expected to lead to a general increase in the employment rate of women and elderly employees of both sexes, as well as a decline in the current unemployment rate of 8.4 % to the present level of »structural« unemployment of 7.2 % by 2010.

Source: IAB; Federal Statistics Office; ifo calculations and ifo projection 104 The Family as a Benefit to Society – The Fiscal Effects of Children

12 | Income earned over a child’s life span (*2000)

120.000 Gross annual income Women (in prices of 2000)

100.000

80.000

60.000

40.000

20.000

0 120.000 Men

100.000

80.000

60.000

40.000

20.000

0 2020 2025 2030 2035 2040 2045 2050 2055 2060

Civil servants Self-employed Employees subject to social security contributions

All figures in euros. Comment: We assume that the extrapolation of the current wage figures will lead to a further approximation of men’s and women’s wages for jobs with the same qualification, as well as a relative decline in the salaries and wages of elderly employees of both sexes, while at the same time raising this age group’s labour force participation.

Source: SOEP; BIBB/IAB; ifo calculations. 105

13 | Wage profile of employed mothers subject to social security contributions with stylised employment constraints due to parental leave

120% Gross annual wage (in per cent of average wages subject to social security contributions)

100%

80%

60%

40%

20%

0% 20 25 30 35 40 45 50 55 60 Age Women in full-time positions Mothers with employment constraints

Comment: It is assumed that employed mothers will return to work after the birth of their child; first they will take parental leave for three years; then they will work part-time for a further three years covering 50 % of their full-time position, then for five years covering 75 % of their full-time position; only when the child is 12 does the mother return to full-time employment. Since she has less work experience, she will receive fewer wages. The same material assumptions also apply to mothers in other forms of employment.

Source: SOEP; ifo calculations 106 The Family as a Benefit to Society – The Fiscal Effects of Children

14 | The fiscal balance of a child (*2000) with 15 | The fiscal balance of a child (*2000) with an above-average income a below average income

Fiscal effecta Fiscal effecta Social security contributions and Social security contributions and benefits 422.000 benefits 95.800 thereof: thereof: statutory pension scheme 208.900 statutory pension scheme 92.800 statutory health insurance 136.600 statutory health insurance 9.200 social long-term care insurance 32.300 social long-term care insurance 10.400 unemployment insurance 44.200 unemployment insurance – 16.300 Taxes 405.000 Taxes 131.500 thereof: thereof: income taxes 229.600 income taxes 44.700 consumption taxes 175.400 consumption taxes 86.800 Tax-financed state benefits – 527.900 Tax-financed state benefits – 394.900 thereof: thereof: childcare and education – 178.100 childcare and education – 86.100 family policy benefitsb – 76.800 family policy benefitsb – 68.500 share of opportunity costsc – 202.700 share of opportunity costsc – 71.000 other tax-financed benefitsd – 104.400 other tax-financed benefitsd – 104.400 sustainability correctione 34.100 sustainability correctione 34.100 Balance 299.000 existenzsichernde Sozialleistungenf – 99.000 Balance – 167.600 All figures in euros (cash equivalents based on the year 2000). All figures in euros (cash equivalents based Comments: cf. Figure 5 on the year 2000). Comments: Source: ifo calculations a–e cf. Figure 5f Social welfare and housing benefits or, as of 2005, unemployment funds II and grants for covering living and heating costs.

Source: ifo calculations 107 108 Literature

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