-Caveat Lector-
> WSWS : News & Analysis : Europe : Germany
>
> Social Democrats and Greens propose drastic cuts in welfare,
> health, pensions
>
> Germany's new budget: the beginning of the end of the welfare
> state
>
> By Stefan Steinberg
> 2 July 1999
>
> Back to screen version
>
> Details have emerged on the cuts proposed in the German welfare
> system by the Social Democratic (SPD)�Green Party coalition
> government and SPD Finance Minister Hans Eichel.
>
> Eichel is seeking to save a total of 30 billion marks over the
> next year, half of which will be deducted from the single largest
> government department, Employment and Social Services. The
> planned slashing of the department's budget will result in a cut
> of 12.8 billion marks and mean drastic reductions in all social
> security payments�from unemployment benefits to social
> assistance.
>
> Also in the past week the government has revealed its plans for a
> dramatic �reform� of the health and pension system. For decades
> the German welfare state had the reputation of being one of the
> most progressive in Europe, providing a broad range of services
> and a financial safety net to the unemployed, sick and elderly.
>
> Besides providing huge savings for the employers and imposing
> increasing costs on ordinary workers, the new budget
> fundamentally breaks with the principle upon which the German
> welfare state was built. Now the huge sums contributed over
> decades by workers to the pension and health funds are
> increasingly to be freed from state control and made available
> for speculation on the stock market and international exchanges.
>
> To appreciate the political significance of the new measures it
> is useful to briefly review the historical origins of the German
> welfare system.
>
> The very first measures providing insurance for workers in
> Germany date back to the rule of Chancellor Bismarck in the
> closing decades of the nineteenth century. Known as the �Iron
> Chancellor�, Bismarck was sufficiently astute to realise that it
> was necessary to offer certain concessions in order to make his
> government's dictatorial measures more palatable.
>
> Confronted with a powerful and rapidly growing industrial
> proletariat, Bismarck moved to block its political development by
> banning the Social Democratic Party in 1878. In order to head off
> opposition to this intensely unpopular law, Bismarck introduced a
> broad programme of social protection for workers.
>
> In 1883 a basic form of health insurance was introduced. A year
> later workers were provided protection for on-the-job accidents,
> and in 1889 an insurance system was introduced to provide
> long-term financial support for disabled workers. This latter law
> was to become the foundation for the pension funds established to
> provide workers with a comfortable income following retirement.
>
> For much of the 20th century such provisions were improved and
> expanded by the government whenever class divisions reached fever
> pitch, so as to forestall a radicalisation of the workers (e.g.,
> during the Weimar Republic and following the Second World War).
> The welfare system was based on the principle of �solidarity�,
> i.e., that the state would require equal contributions to the
> health and insurance schemes from both workers and employers.
>
> Close collaboration between the employers and workers in
> developing the welfare state was a key factor in Germany�s
> political stability and the �economic miracle� which the country
> experienced in the second part of the century. With these new
> measures, however, the employers are broadly freed from their
> responsibilty to contribute to the schemes and provide guarantees
> for their workers. Health and pension programmes are to be
> removed from government jurisdiction and subordinated to the
> vagaries of the market.
>
> SPD and Green politicians alike argue that these fundamental
> changes are necessary to overcome huge deficits and a so-called
> �cost explosion� in pensions and health benefits. In fact, a
> number of experts have demonstrated that the �cost explosion� is
> fictitious. Over the last 20 years, for example, the cost of the
> German health insurance scheme as a percentage of gross national
> product has only risen from 5.87 percent to 5.95 percent.
> According to professor Heinz-J. Bontrup from the University of
> Gelsenkirchen: �Based on this growth there is no visible
> `dramatic` increase in health costs.� He continues, �...only
> after German reunification did financial problems arise in the
> state-regulated health insurance system. To a large extent the
> financial difficulties are not the result of a cost explosion but
> are, above all, due to a drop in contributions caused by high
> unemployment and low wage deals.�
>
> Not only does the Red-Green coalition government regard mass
> unemployment as inevitable�at the moment nearly four million are
> officially unemployed in Germany and many millions more are
> underemployed�the government is also deliberately utilising mass
> unemployment to introduce cheap labour jobs on a broad scale.
>
> Health care
>
>
> As part of the �reform� package the government's Health Minister,
> Andrea Fischer (Green Party), is proposing major changes to
> health care in Germany. Up until now workers and professional
> people who paid regular contributions to the various health
> schemes were, in the event of sickness, able to visit specialists
> to obtain treatment. Government regulations created a framework
> within which the various health insurance agencies were required
> to provide consultation and treatment, including subsidised
> medicines. These rules are now to be relaxed, enabling the health
> agencies to prescribe on the basis of market-orientated criteria
> the most economic forms of treatment, or deny treatment
> altogether.
>
> The new measures envisage increased use of the �cost-effective�
> house doctor to deal with most complaints. The aim is to limit as
> far as possible access to more expensive specialists and clinics
> and to minimise hospital stays. The number of subsidised
> medicines is to be drastically reduced and the present system of
> state subsidy for hospitals is to be done away with. Capital
> investment in hospitals will be slashed, resulting in hospital
> closures and reductions in service. Private insurance agencies
> will be responsible for subsidising the hospitals on a case by
> case basis. Hospitals will be rewarded, therefore, to the extent
> they can process patients on a sort of �assembly line� basis.
>
> The consequences of such policies can be observed in a number of
> other countries, for example Britain and the Netherlands. In
> these countries similar measures, introduced some years ago, have
> resulted in a drastic deterioration in the quality of the health
> service and long waiting lists for patients requiring hospital
> treatment, including those suffering from chronic illnesses.
>
> Pensions
>
>
> The government's proposals for pensions were outlined by Labour
> Minister and ex-trade union boss Walter Riester (SPD). In his
> initial statement Riester anounced plans for moving from a
> state-based pension system and adopting measures to force workers
> to enroll in alternative private pension schemes. His
> pronouncements unleashed a storm of protest and Riester has since
> declared that the element of compulsion in his original proposals
> will be dropped.
>
> Nevertheless the government plans to proceed with measures which
> will erode the state-based pension system in favour of private
> schemes, thereby excluding the employers from any requirement to
> pay their own share toward pension funds. The employers� share is
> to be financed through increased contributions from ordinary
> workers, who will also be hit by additional indirect taxes, such
> as higher-priced petrol and increased costs for gas and
> electricity.
>
> The net effect of the government�s measures will be to reduce
> controls and regulations over pension and health funds and
> release additional billions to fuel a stock market boom. The sums
> involved are vast. In 1997 alone the three main pension funds for
> workers and professional people in Germany cashiered a total of
> 421 billion German marks.
>
> The yearly turnover of the private health system alone already
> totals 250 billion marks. The whole issue of private health and
> medicine is regarded by one expert as Germany's �number one
> future prospect�. Many additional billions will be funneled into
> the private health schemes through the implementation of the
> government�s plans.
>
> The Eichel budget has provoked widespread opposition.
> Pharmaceutical companies have complained that the cuts will
> affect their profits and limit the finances necessary for
> research. Doctors, nurses and specialists have taken to the
> streets to protest the health care proposals and pensioner groups
> have made clear their opposition to the proposals. However, most
> of the interest groups have expressed their opposition while
> accepting market criteria in the sphere of health and welfare,
> limiting their protest to complaints about unfair treatment for
> their specific group.
>
> In fact the real victims of these measures are the majority of
> ordinary working people who are being forced to sacrifice
> longstanding protective measures on the altar of the free market
> and stock exchange profitability. The net result will be an
> enormous intensification of the polarisation between rich and
> poor in Germany and, in view of the central role played
> historically by German welfare reforms, the further
> destabilisation of the country's political foundations, already
> shaken by the Balkan War.
>
> -----------------------------------------------------------------
>
> Copyright 1998-99
> World Socialist Web Site
> All rights reserved
>
>
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