Managing Welfare Expectations and Social Change by Ka Ho Mok Stefan Kühner

Author:Ka Ho Mok, Stefan Kühner [Ka Ho Mok, Stefan Kühner]
Language: eng
Format: epub
ISBN: 9781138564046
Amazon: B07S3WZZVJ
Barnesnoble: B07S3WZZVJ
Goodreads: 50652380
Publisher: Routledge
Published: 2017-10-31T00:00:00+00:00

Change in policy instruments and policy ideas

The political scientist Hall has developed a theoretical model to delineate policy change by distinguishing first-, second-, and third-order change (Hall 1993). First-order change refers to the alteration of the setting of the policy tool, and second-order change encompasses change in policy tools. The most relevant for the purposes of this article is third-order change, which presumes that in cases of dissatisfaction with the status quo, the policy goal and the frame to understand policy problems are modified. Third-order change labelled as a paradigm shift is comparatively rare because of the restriction of conventional institutions (path dependence) (Hall 1993). The pension reforms in Germany can also be classified according to different levels of policy change.

In the post-war period, an unrecorded consensus was prevalent in Germany, in which it was thought that the net pension replacement rate of the old-age pension should be maintained at about 70% of the earnings of the insured (Döring 2002). Owing to the demography-related shift of the share between contributors and recipients, this tenet of the German pension system has been undermined. The key question now concerns how the system can keep up with the 70% replacement rate under these new circumstances. Various reform concepts have been elaborated, debated or partially put into practice in Germany since the 1990s. The following are the reforms relating to change in policy instruments and policy goals as well as recommendations for reform:

(1) Pension contributions should be raised incrementally. The increase of pension contributions is a pressing issue that has been widely debated in scientific and political circles since the 1990s (Döring 2002). Most scholars and policy makers have acknowledged that the contribution rate for pensions is already too high. It already surpassed 19% in 1986, and afterwards, it was maintained at a very high level until it exceeded 20% in 1997 and 1998 (20.3% in both years; see Figure 1). It soon became clear that there was less space for further increases in pension contributions when the factor of competitiveness in the national economy under the challenge of globalization was taken into consideration. At the dawn of the new century, critical voices have emerged that suggest pension contributions should be reduced to a rational level. Some have suggested that German policy makers need to take a bold step to prevent contributions from reaching 22% by 2030 – a critical threshold that will fundamentally jeopardise the status of Germany as an international investment location (Marschallek 2004).

(2) The extension of the retirement age is another issue discussed amongst German politicians and scholars. The basic idea is that every increase in the retirement age will change the ratio between recipients and contributors. But the critical view assumes that the basic question does not relate to the relationship between retirees and employees; rather, it relates to the question of how the labour market can absorb an additional labour force of elderly employees (Schmähl 2009). Moreover, increasing the retirement age is a highly controversial issue that dovetails with diverse interest groups, such as trade unions and industrial associations.

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