Germany: Family benefit rule changes encourage parents to share childcare duties
In November 2014, the German government remodelled its parental benefit scheme to promote part-time working for mothers and fathers. The reform is a further step towards refocusing the country's family dynamic from the typical male breadwinner model towards a Nordic dual-earner model.
The German government has made changes to rules on child benefit and parental leave to make them more family-friendly.
In November 2014, the German Parliament and the Federal Cabinet made reforms to its act on parental benefit and parental leave (BEEG (330 KB PDF)), with the changes coming into force on 1 January 2015. However, the act only applies to workers in organisations with more than 15 employees.
The overall objectives are to improve the reconciliation of work and family life, and to make childcare more of a partnership between the two parents. The government also wants to increase the numbers of working mothers as well as increasing the number of fathers working part time and taking time off to care for children.
The reform is one more step towards refocusing the German labour market and the country's family dynamic from the typical male breadwinner model towards a Nordic dual-earner model. Sweden in particular has served as a role model for the parental benefit and leave legislation.
The German policy-making, however, has been seen by critics as something of a compromise.
Background to the reform
German family policy took a decisive shift in 2006 when the federal government replaced the so-called ‘educational' benefit – primarily aimed at mothers – with a ‘parental’ benefit. At the same time, legislation was introduced that aimed to encourage fathers to take at least two months of paternity leave following the birth of a child. In addition, by limiting the duration of the tax-based parental benefit to 12 months, the rules encouraged mothers to return to work before the end of the potential maternal leave period of 36 months.
An evaluation by the German Institute for Economic Research (DIW) showed that the reform had been successful in raising the percentage of 'leave -taking' fathers and of the number of working mothers. However, the government’s Family Report in 2012 revealed that:
- parents of young children tended to take on traditional gender roles;
- the incentives introduced tended to favour the conventional 'single earner' or 'one-and-a-half earner' model.
The report sent out a strong message saying that the conflict in balancing work and family life, along with the lack of flexibility in the allocation of time for family life, was having a negative impact on the birth rate and on the education of children.
In 2012, the coalition partners in the government agreed to remodel the 2007 reform. However, the 2014 reform appears to be something of a compromise in that it combines ideas from both the Christian Democrats and the Social Democrats.
The Christian Democrat concept is one of extending the duration of parental benefit for an individual parent who returns to work for up to 15 hours per week. A new approach comes from the Social Democrats to grant a bonus to both parents if they choose to both work between 25 and 30 hours per week. The bonus concept was inspired by an initiative of the Friedrich Ebert Foundation and Hans Boeckler Foundation to promote a more equal division of care work and part-time work.
Related costs and behavioural effects of the model, called ‘family working time’ and promoting benefits for mothers and fathers working 32 hours per week, were evaluated by DIW and stirred up a lively and largely positive debate (see DIW press release (in German)).
Main provisions of the 2014 reform
Since the 2007 reforms, family benefit – called Elterngeld – is granted if the mother or father reduces their weekly working time to 30 hours per week or less. The benefit is 67% of the net income earned in the preceding 12 months before the birth and a limit is fixed at a maximum of €1,800. In the case of low-wage earners, the benefit is 100% of the previously earned income but no less than €300. Unemployed people also receive €300. Benefit is provided for 12 months.
The new scheme, called ElterngeldPlus, is intended to provide more timely flexibility in using the benefit. If the parent reduces the weekly working time to 15 hours or less, the benefit is reduced by half (ranging from €150 to €900), but can be drawn for double the length of time. An individual parent can choose between the use of up to 12 months of Elterngeld, up to 24 months of ElterngeldPlus, or a combination of both forms.
Since 2007, the parental leave period can be shared between the parents, except for a reserved period of two months which is lost if not used. Benefit is granted for 14 months instead of 12 months if the other parent – typically the father – takes parental leave and the family suffers from income losses. Under the new ElterngeldPlus scheme, four instead of two months are subsidised if the other parent reduces the weekly working time to 15 hours or less.
Single mothers can claim two extra months of Elterngeld or ElterngeldPlus and four extra months of ElterngeldPlus if they work in four sequential months between 25 and 30 hours per week.
To encourage both parents to equally engage in childcare, the new concept of a 'partner bonus' provides for four extra months of benefit for each parent if both parents work not less than 25 and not more than 30 hours a week. Whereas the Elterngeld and ElterngeldPlus concept implies that a parent takes a period of leave while the other is working normal hours, the bonus concept encourages both parents to take parental leave. It will encourage leave-taking mothers to work more hours per week and fathers to take leave and to reduce their weekly working time.
In future there will be a deviation from the current legal situation. The prescribed 36 months of parental leave can be split up into three periods without the need to gain an employer’s approval. A new aspect is that a parent can choose to take 24 months off when the child is between three and eight years-old. In this case the employer is entitled to reject the request for parental leave within eight weeks of receipt of the claim if they can demonstrate there are urgent operational reasons for doing so.
Currently, employees cannot be dismissed once they have put in a demand for parental leave. The reform specifies that, in future, dismissal protection will begin, at the earliest, eight weeks prior to the start of parental leave up the child’s third birthday and at the earliest 14 weeks prior to the start of parental leave between the child’s third and eighth birthday.
Before the parliamentary decision was taken, the Confederation of German Employers' Associations (BDA) published an opinion on the draft law stating that employers supported the overall objectives. However, it stated there was opposition to the splitting of parental leave into three periods, the special dismissal protection of workers in parental leave, and rights to take parental leave without the employer’s approval. BDA said this trend to give more rights to workers to choose their own working time should be stopped as it puts additional burdens on organisations.
The German Confederation of Trade Unions (DGB) supported the draft legislation, saying that it was to be seen as a step towards improving ways of adapting working time to the needs of the workers. However, DGB claims that Article 15 of the new act is not consistent with the previous EU framework agreement on parental leave (Directive 1996/34/EC) and calls for the implementation of the new framework agreement on parental leave (Directive 2010/18/EU) concluded by the social partners to provide the right to adapt working time according to family needs after returning from parental leave.
The reform was passed without veto, though there was an abstention from the Left Party. The Left Party is critical of the act for ignoring the situation of unemployed single parents and for the offsetting of parental benefit (as it has existed since 2011) against ‘unemployment benefit'.
The Greens support the reform but say ElterngeldPlus does not sufficiently take into account the needs of female part-time workers and low-wage earners. The party has also called for the provision of even more flexible parental leave schemes.
More flexibility in leave taking and the partner bonus are a big step forward, whereas the effect of the ElterngeldPlus scheme will be limited and will only apply to couples who can afford to have their benefits cut by half. Highly skilled dual earners are likely to use the new scheme the most; however, it only applies to those working in businesses with more than 15 workers. The leave legislation is expected to be an ongoing issue.