New provisions on parental leave and childcare payments

In July 2000, the German parliament adopted new provisions on parental leave and childcare payments. For the first time, both parents are allowed to take parental leave at the same time and have the right to work part-time during this period. Furthermore, the number of families which are entitled to receive childcare payments will increase.

On 7 July 2000, the German parliament (Bundestag), with the support of the "Red-Green" coalition government, adopted a revision of the Federal Childcare Payment and Parental Leave Act (Bundeserziehungsgeldgesetz, BErzGG) which contains new provisions on parental leave and childcare payments. The new provisions will come into force on 1 January 2001.

Parental leave

According to the current provisions of the BErzGG, parents have the right to take parental leave for the purpose of caring for their child for a period of up to three years after the child's birth. Employees who live in a household with a child of whom they are entitled to have custody, and who care for the child themselves, are entitled to claim such leave. The leave may be shared between the parents, but can be taken by only one parent at a time. During the period of parental leave, the employment relationship is suspended, which means that the employee does not have to perform work and that the employer does not have to pay remuneration. There is, however, the possibility for employees and employers to agree on part-time work up to a maximum of 19 hours per week. In any case, there is an absolute ban on dismissals during parental leave.

In comparison with the current legislation, the new provisions on parental leave contain some significant changes. The most important change introduced by the revised Act is that from the beginning of 2001 both parents will be allowed to take parental leave at the same time. The permitted level of part-time work during parental leave will be extended from 19 to 30 hours per week. Moreover, for the first time parents will have the right to work part time for between 15 and 30 hours per week, with employers able to reject such requests only if this creates considerable problems for the company. After the period of parental leave, the employees concerned have the right to return to full-time work. The right to work part time during parental leave, however, is limited to companies with more than 15 employees, with smaller companies excluded from this provision.

Furthermore, the new BErzGG gives parents the opportunity to postpone the third year of parental leave until the eighth birthday of the child, in order to take parental leave, for example, when the child starts to go to school. If parents want to postpone their third year of parental leave, they require, however, the approval of the employer. Finally, the new Act changes the term used in German law for parental leave from ""Erziehungsurlaubto ""Elternzeit, since the notion of ""Urlaubin German is associated with "holidays," which is no longer seen as an adequate expression for a time of intensive childcare.

Childcare payments

According to the current BErzGG, parents are entitled to receive a childcare payment of up to DEM 600 per month during the first two years of the child's life. The entitlement to childcare payment also depends on the parents' household income. In the first six months after the birth of the child, the current provision remains unchanged, with parents receiving the full childcare payment up to an annual net income of DEM 100,000, or DEM 75,000 for lone parents.

From the seventh month after the child's birth, the upper limits of net annual income, below which parents are entitled to a full childcare payment, have been increased by the new legislation:

  • from DEM 29,400 to DEM 32,200 ( 9.5%) for parents with one child and;
  • from DEM 23,700 to DEM 26,400 ( 11.4%) for lone parents with one child.

For every additional child, the annual income limit below which parents are entitled to childcare payments has hitherto risen by DEM 4,200. The new provisions foresee an increase in this amount to DEM 4,800 in 2001 and a further extension to DEM 5,410 in 2002 and DEM 6,140 in 2003.

Families who have a household income above the defined limits receive up to a further limit a reduced childcare payment. In addition, the new BErzGG gives parents the opportunity to choose a shorter period of only one year of childcare payments, whereby the monthly payments increase from DEM 600 to a maximum of DEM 900.

Reactions to the new provisions

The Federal Minister for Family, Seniors, Women and Youth, Christine Bergmann, declared that the new provisions on parental leave and childcare payments are a core item in "Red-Green" family politics in the current legislative period. According to Ms Bergmann, one major aim of the new act is to overcome the traditional division of men and women regarding childcare. Under the current legislation, in 98.5% of cases parental leave is taken by women, while the take-up rate for men is only 1.5%. The new provisions which allow both parents to take up parental leave at the same time while having a part-time job of up to 30 hours week should make it more attractive for men to become more involved in childcare. In addition, women should have a better opportunity to continue their work during parental leave on a part-time basis in order to avoid a possible break in their career.

Another aim of the new BErzGG is to increase the number of parents who are entitled to receive childcare payments. Under the current provisions, about 95% of families receive childcare payments during the first six months after the child's birth. From the seventh month, however, only 50% receive the full childcare payment and a further 30% receive a reduced payment. According to the Ministry for Family, the rise in the annual income limits will increase the number of families who receive the full childcare payment to 54% and will provide at least a reduced payment even for middle class families. Overall, the new provisions on childcare payments will lead to additional costs of DEM 300 million per year.

Although there has been a broad recognition that the new BErzGG includes some significant improvements in comparison with the current provisions, there has also been considerable criticism from the opposition parties in parliament, as well as from women and parents' organisations. The core of these criticisms has been that the public financial compensation for childcare is still not sufficient. Since childcare payments were introduced for the first time in 1986, they have remained unchanged at DEM 600 per month which – given the developments in prices – today has a value of about DEM 450. Therefore, the opposition parties called not only for an increase in monthly childcare payments but also for regular compensation for price developments. The government, however, rejected these criticisms and declared that the current situation of the federal budget allows no further expenditures for childcare.

Criticism from the Confederation of German Employers' Associations (Bundesvereinigung der deutschen Arbeitgeberverbände, BDA) focused on the new right to work part time which, according to a BDA statement, is not acceptable since it creates "unbearable burdens" for many companies and contravenes the "basic rights of the employers" to conclude freely employment contracts including a determined working time. On the contrary, the German Federation of Trade Unions (Deutscher Gewerkschaftsbund, DGB) supported the right to work part time but criticised the fact that smaller companies with less than 16 employees are excluded from this provision.

Commentary

Considering the strong division of labour between men and women regarding childcare and the very small number of men who take parental leave, there was obviously an urgent need for a revision of the current provisions. Experiences in other European countries, in particular in Scandinavia, have shown that more favourable regulations on parental leave could also contribute to a much higher take-up rate by men (TN9801201S).

The new provisions in Germany mark an important step forward since they create the opportunity for both parents to take parental leave at the same time while both have also the right to work part time during parental leave. Both new provisions are important elements to promote a more equal share of childcare between women and men. But are they sufficient to overcome the traditional gender division of labour?

One important reason for the fact that parental leave is mostly taken by women is that men usually still have the higher income. Moreover, as a recent study by the German Institute for Economic Research (Deutsches Institut für Wirtschaftsforschung, DIW) has indicated, the average income of households with children is significantly below the income of households with no children. Since the presence if children usually makes it more difficult to maintain a family's living standard anyway, there is continuing pressure on women with their often lower income to care for the children. As long a there are significant income differentials between men and women, it seems that parental leave needs considerable compensation from public funds if it is not to perpetuate the traditional gender division of labour.

In Germany, the provisions on childcare payments cannot be seen as a real compensation for income losses during parental leave. The need for further reforms was implicitly recognised by the Federal Ministry for Family when it called the described changes in legislation a "compromise between budget consolidation and family policies". (Thorsten Schulten, Institute for Economic and Social Research (WSI))

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