I n t h I s c h a p t e r y o u w I l L

F o r G e r m a n y,
B e n e f i t s A r e A l s o a B u r d e n
B
Y
E
LIZABETH
N
EUFFER
B
ERLIN
—They grumble and grouse as
they wait for their benefit checks at a
local unemployment office here—about
the lack of jobs, about the stupidity of
German politicians, about how outra-
geously high taxes are.
What today’s unemployed Germans
don’t complain about is this: the size of
their benefit checks.
“I get unemployment benefits, I
make some money working on the black
market, I make a living,” says Michael
Steinbach, a 30-year-old electrician who
sports a well-ironed shirt, fashionable
glasses, and a briefcase as he waits his
turn at the Prenzlauer Berg unemploy-
ment office. “For now, it’s comfortable.”
Germany’s social welfare system
takes good care of the jobless, with ini-
tial average monthly checks of nearly
$900 per month for someone married—
and the prospect, for those who know
how to work the system, of remaining on
benefits for life. So blatantly do people
abuse this system that Chancellor Hel-
mut Kohl once critically described his
country as “Leisurepark Germany.” . . .
Now—partly because . . . such gen-
erous benefits are seriously straining the
nation’s economy—questions are being
raised about whether one way to combat
unemployment is to reform the social
welfare system itself. . . .
Combating unemployment, always a
hot topic here, leapt back into public de-
bate last week, after the German Labor
office released figures showing that job-
lessness inched up to 11.7 percent in
September, the fifth consecutive post-
war record. . . .
The unease here also stems from
memories of when Germany last faced
such levels of joblessness: 1933, when
the unemployed were so desperate they
begged in the streets for spare change,
relied on soup kitchens for meals, and
ushered the Nazis into power.
Postwar Germany’s reaction was to
create a massive welfare state, designed
to squelch social unrest through social
benevolence. “It’s more important to
have modestly happy people on benefits
than poverty and all its side effects such
as a high crime rate as in the United
States,” said Heiner Geissler, a leading
figure in the ruling CDU party.
It is becoming increasingly clear,
though, that preserving benefits has
trapped Germany in something of a vi-
cious circle.
The nation’s high-cost social welfare
system is one reason its labor costs are
among the highest in the world: Both
employees and employers must pay
generously into the system, so they
need higher wages and profits. More
than half of a worker’s paycheck goes to
taxes. Employer/employee-funded taxes
this year alone totaled 52.8 billion
deutsche marks, or nearly $30 billion.
But high labor costs are a major
reason companies are now fleeing for
cheaper, neighboring Poland—meaning
job losses for Germany. At the same
time, unemployment benefits have be-
come something of a velvet coffin for the
unemployed, discouraging them from
taking jobs. Until recently, workers who
worked part-time were effectively penal-
ized, as they would receive less unem-
ployment benefits if they were laid off.
And generous unemployment bene-
fits mean there is no incentive to take