WEEK 17 READING SUMMARIES - 4 Aust, A & Bnker, F., New Social Risks in a Conservative Welfare State. In: P.

Taylor-Gooby (ed), New Risks, New Welfare, Oxford: Oxford University Press, 2004, 29-53. This chapter focuses on the emergence of, and the reaction to, new social risks in Germany. The German social policy tradition, structured to meet the needs of traditional breadwinners within an industrial labour market, faces sharp challenges from shifts in family roles and from the rise of nonstandard employment . The conservative welfare regime exerts a strong influence on the way in which new social risks emerge, and the policy-making framework with its multiple checks and balances imposes constraints on the response to them. The Emergence of New Social Risks New social risks have been associated with three kinds of changes: 1) in family and gender roles, 2) in the labour market, and 3) in the welfare state itself. In the following, we analyse to what extent these changes, and the resulting risks, have been shaped by 1) the existing welfare state institutions and, 2) the conservative nature of the German welfare state. 1) New Social Risks Associated with Changes in Family and Gender Roles: Changes in family structure Marriages have declined and divorces increased, the proportion of lone parents has risen. This also caused changes in gender roles As the role of the housewife has lost its normative appeal, the share of women who regard paid work as a normal part of their life has risen. The results of those changes are: 1) Issues about childcare: The most important challenge raised by these changes has been the reconciliation of paid work and family responsibilities. The limited care facilities have been a major obstacle to the expansion of female employment. There is strong evidence that more women with caring responsibilities would like to enter the labour market, but refrain from doing so because of a lack of public social services. 2) Issues about family support: Changes in relation to the family and to gender roles have also reduced the scope for family support in case of frailty. Alongside increased life expectancy and the changing age structure, the eroding potential for family support has given rise to a growing gap between the need for care on the one hand and the availability of informal care on the other. Weak infrastructure is an important problem of German Welfare State The competencies of the federal government in the field have been limited, as most legislation has rested with the states and provision with the municipalities and non-profit organisations. This institutional fragmentation has worked against an expansion of services by increasing the need for cooperation and provoking conflicts over competencies. 2) New Social Risks Associated with Labour Market Changes: Two changes: 1) the de-standardisation of employment: Germany traditionally has been characterised by a high share of permanent, full-time employment. As the industrial sector has shrunk and as more women have entered the labour market, alternative forms of employment have gained ground expansion of part-time employment and other forms of employment. In consequesnce, the strong increase in

mini-jobs and dependent self-employment has been driven by the attempt of employees and employers to avoid Germany's high social security contributions. At the same time, the close nexus between contributions and benefits that has characterised the conservative German welfare state has increased the risk of inadequate social security coverage in the case of atypical employment. 2) the weakening labour market position of the low-skilled: It has manifested itself in a strong increase in low-skill unemployment rather than in a rising number of working poor. The high low-skill unemployment, along with the high incidence of long-term unemployment in Germany, has raised fears of persistent exclusion from the labour market. Some reasons for the high rate of low-skilled unemployment are weak overall economic performance, problems with integrating migrants, and various cultural and institutional barriers to an expansion of service employment. 3) New Social Risks Associated with Welfare State Change and the Privatisation of Welfare: Move from state service to state-regulated, but privately provided services. In German case, previously the role of such welfare markets has for long been limited, as the conservative welfare regime has relied on the state and the family rather than on the market (especially at old-age protection). However, recently (2001) a new public-private risk occurred: a state-subsidised private pension pillar. With regard to personal social services, the main change has been the 1994 law on care insurance which, for the first time, explicitly put welfare associations and commercial providers on an equal footing and imposed major organisational reforms on the welfare associations. Policy Debates and Developments Analysis focuses on the reactions to five different challenges: 1-The difficulties in reconciling paid work and family responsibilities: Balancing paid work and family responsibilities. Compared to the reconciliation of child care and paid work, the balancing of care for the elderly and employment has featured less prominently in Germany. The effects of long-term care insurance on the balance of paid work and family responsibilities appear mixed. By providing benefits for the frail elderly and by contributing to an expansion of professional care services, the scheme has reduced the burden on caring relatives, thereby making it easier for them to reconcile family and work. At the same time, the substantial improvement of the situation of informal carers has created incentives to leave, or to stay outside, the labour market. This conflicts with the objectives of new risk policies in the labour market. 2-The rising number of frail elderly people: The introduction of the long-term care insurance scheme has substantially improved the financial situation of the frail elderly and has made them less dependent both on their relatives and on social assistance. By increasing the purchasing power of the frail elderly and by reforming the structures of service provision, it has also contributed to an expansion of social services for this group. As a result, the new scheme has reduced the risks in case of frailty, including the risk of lack of family support. Meanwhile, however, the limits of the new scheme have become visible. The coexistence of the long-term care and the health insurance scheme has created high transaction costs for the frail and the service providers. These developments, together with a gradual deterioration of the fiscal situation of the long-term care insurance scheme and a controversial decision of the Constitution Court on the financing of the long-term care insurance scheme in 2001, have put major reform of the long-term care insurance scheme on the agenda. 3-The de-standardisation of employment: The de-standardisation of employment and the associated risk of insufficient social insurance coverage have been a prominent issue in German social policy debates since the mid-1980s. Controversies have focused on two issues: first, whether to limit or to encourage the rise of atypical employment; second, how to adjust the welfare state to labour market

changes. The 1998 coalition treaty of the redgreen government, emphasised the danger of inadequate pension entitlements resulting from labour market changes. It called for the inclusion of the self-employed in the public pension scheme and the creation of a minimum pension. However, these goals have only partly been met. The government has so far refrained from extending the scope of the public pension scheme. Likewise, the initial plans to create a minimum pension have been watered down. Owing to fierce resistance by the CDU/CSU, the government retreated from its original plan to introduce a minimum pension within the framework of the pension scheme. Instead, the new minimum benefit which was introduced as part of the 2001 pension reform, is now administered by the municipalities and is little more than a renamed social assistance. The main difference concerns the principle of subsidiarity. Only children with a yearly income of more than 100,000 euros are legally obliged to support their parents in contrast with normal social assistance. 4- The weakening labour market position of the low-skilled: The traditional measures for improving the labour market position of the low-skilled have combined different elements: governments have sought to ensure the supply of a sufficient number of apprenticeships by a combination of subsidy and the moral suasion of enterprises. They have tried to prevent skill mismatch by updating curricula. Finally, the low-skilled have been seen as a key target group of active labour market policy. The changes in labour market policy have been highly controversial. Benefit cuts in particular have been strongly opposed by the trade unions and, at least until 20023, most social democrats. As with the expansion of child care, German federalism has complicated reforms. States and local governments have lobbied against all changes in labour market policy which might increase the fiscal costs they faced. For both reasons, the Kohl and the Schrder government alike have been forced into concession and into limiting the proposed benefit cuts. Nevertheless, the adopted measures add up to a substantial transformation of German labour market policy. The effects on unemployment, especially among lower-skilled people, are not yet clear. 5- The move towards welfare markets: The new social risks associated with the move towards welfare markets have only recently become prominent in debate. The introduction of the long-term care insurance scheme in 1994 has contributed to a new interest in the quality of care. As people have started to receive social benefits and to pay contributions, the sensitivity to service quality has increased. More controversial than the new rules on institutional care has been the regulation of the new private pension pillar. The financial services industry has protested about the constraints on individual choice and the costs of complying with the legal requirements. The CDU/CSU and the FDP also called for liberalisation of the regime. In the 2002 election campaign, they criticised the new Riester pension as a bureaucratic monster and blamed the provisions for the disappointing participation in the scheme. Other critics have argued that the existing information duties are not sufficient to allow consumers to compare products. In an attempt to accommodate the dissatisfaction with the existing regulation, the redgreen government announced a relaxation of provisions in October 2003.