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Documentation of APW calculations for Germany, 1997
Single APW:
The German Ministry of Finance has provided the information on the 1997
gross wage level.
1997
Non-insured
1)
Gross wage
58,338 DEM
Tax and social security
24,989 DEM
2)
Disposable income
33,349 DEM
APW-couple: The husband has the same gross wage as the single APW, the wife has 50
per cent of that income. There are no children.
1997
Insured
1)
Gross wage
87,507 DEM
Tax and social security
33,928 DEM
Disposable income
53,579 DEM
1)
Unemployment insurance is mandatory in Germany.
2)
Cf. the annex for a documentation. The standard deduction has been applied instead of church tax
paid.
’Standard’ income events
1.
Ill for one week. Single APW
Nearly all employees in Germany still received their usual wages for the first 6
weeks of illness in 1997, even after the legal requirement has been reduced to 80 per
cent of the former wage.
For those (few) not eligible for wages, the compensation from the insurance scheme
is 70 per cent of the gross wage, with a maximum limit equal to 90 per cent of the
net wage (disposable income). At APW income level, there is no change in disp.
income in 1997, for illness in one week. This is because the remaining wage income
for 51 weeks is taxed a little milder.

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2.
Unemployed for 3 months during the year, insured. Single APW
The gross wage is reduced by 1/4, i.e. 14,585 DEM. 3 months compensation equals
60 per cent of the lost net wage for the single APW with no children. The compensa-
tion is 4,867.20 DEM.
The net compensation percentage is, as mentioned, 60, cf. also case 3. It should be
noted, that the compensation is non-taxable income, but it has the effect, that the
remaining income is taxed harder via the ’Progressionsvorbehalt’. With 3 months of
unemployment the disposable income of the APW is 31,119 DEM.
The decrease in disposable income compared to the situation with no unemployment
is 33,349 - 31,119 = 2,230 DEM or 6.7 per cent.