Wednesday, January 30, 2008

"Promoting Families"

There were some comments on my post a few days ago questioning the system of maternity leave in Germany. I thought this might be a good time to clarify the system in Germany and show an interesting contrast to the way things are done in the U.S.

First, there is an important piece of background information that is important to understanding the German system. The German population is shrinking. Every year more people die and not enough babies are born to replace them. As a result, the population is getting older. When the population is full of pensioners, then the state pays out more in retirement (i.e. social security). However, if there are no younger people to work and pay taxes into the system, then the state experiences a cash flow problem. Thus, promoting a stable population is not only a question of demographics but also one that impacts fiscal responsibility.

As a result of this dilemma, German public policy has long sought to “promote families.” This not only fits the moral imperative of parties such as the CDU (Christian Democratic Union), but also seems to be good public policy given the demographic problems I described above. There are several different initiatives created to encourage birth rates. The details that I list below are as of January 1, 2007.

First, there is the length of maternity leave, which is called Mutterschaftsurlaub in German. In Germany, a woman can take up to 14 weeks of maternity leave while receiving 100% of her monthly income. Contrast that with the U.S., where 6 weeks unpaid leave is the norm. If a woman in the U.S. is lucky, she works for a company that has some private guarantees.

Long-term maternity leave (Elternzeit, previously Erziehungsurlaub) is also available. A woman (or a man) can take up to three years of maternity leave and their employer must secure their job so that they can return. Unlike short-term maternity leave, this time out is not completely paid. In fact, only the first year is paid, as described below. The important thing to note here is that there is significantly more job protection for a woman (or a man) in Germany than in the U.S.

Second, there are several financial incentives in Germany. The simplest incentive is Kindergeld, which is a flat subsidy paid to a family to support raising a child. The current amount is 154 Euro pro child for up to three children. This is most definitely foreign for American ears, but Kindergeld actually has a long history in Germany, going all the way back to 1938. Many other countries in Europe also provide parents a similar subsidy.

A second, more complicated incentive is Elterngeld. Elterngeld is available for up to 12 to 14 months after a child is born. The formula for this payment is approximately 67% of a parent’s average net monthly income before the birth of the child, or a maximum of 1800 Euro. For those who are unemployed, a minimum payment of 300 Euro is available. Both mother and father can apply for Elterngeld. Last year, the number of people applying for Elterngeld was higher than expected. The number of men applying for Elterngeld was especially surprising, indicating that perhaps German men do not mind staying at home with the kids for a few months. A woman receiving her normal monthly income during the first two months would, of course, receive less. There are also bonuses available for those families with more than one child. Overall it is a pretty complicated system that includes lots of paperwork.

All of these legal guarantees may seem foreign to an American. However, Germans are guaranteed in their constitution (Article 6, Paragraph 2) the right to take care of and raise their children. In the U.S. the choice to have children, as my mom would say, “is a personal decision, which is neither supported nor condoned by the government.” This is a major difference between politics in the U.S. and Germany.

When you consider the political rhetoric of some American politicians, who claim to promote families and family values . . . well, frankly they do not even come close to the German system. I think that some Republicans who “promote families” would have a stroke over implementing such generous incentives. Clearly the Germans have the policy advantage.

However, there is one problem with the system, which is similar to the U.S. Affordable day care continues to be an issue here in Germany and in the U.S. Although the German parliament passed the Tagesbetreuungsausbaugesetz (a fancy word for day care law), which is supposed to promote the building of affordable day care, there are still very few options for women who want to go back to work before a child turns three. For example, when I go back to work, I will have to hire someone to come to my house and look after my child. This is not cheap, and the majority of my income will go towards paying the nanny. This begs the question, “Why work?”

In the end, there are a few more choices that a woman has in Germany than in the U.S. However, what a woman decides to do depends on her individual circumstances. My case is pretty complicated. First, I am self-employed and own my own business. Everyday that I do not work, I put pressure on my business. My tough business partner, the New Yorker, is putting in 12 hour days while I am out. Just yesterday I had to turn down a new customer. Yes, my son must come first, but I don’t want to see my business go down the drain either. It is an extremely conflicting situation.

Because of this, I have decided to start teaching again part-time the first week in April. However, I have arranged a schedule that involves evening classes that are not far from my home (and some of which I will teach in my home), which hopefully enables me to maximize my time with my son and minimize my child care costs.

I have gotten some criticism from Germans for my choice to go back to work part-time after just 8 weeks. Ironically the same people, who encourage me to stay home with my son, are the same people who demand to know when their English lessons will start. They don’t seem to recognize the hypocrisy of their statements. It puts me under tremendous pressure and makes me very angry.

Unfortunately, the German will not be able to take advantage of the Elterngeld. He makes a lot more than 1800 Euro a month and his income pays all of our fixed monthly expenses. We simply could not afford for him to take two months off, even though I am sure he would love to stay home.

In sum, I do not think that there is a best way to “promote families.” I am not sure that the German system would work in the U.S. The U.S. is so large and has such a large population that the incentives might not actually work there. Also, German and U.S. political cultural is fundamentally different in regards to the role of government. As with the choice of epidurals, it turns out that what you do is a question of circumstance.

(For more detailed information about family policy in Germany, check out the Federal Agency BMFSFJ website.)


G in Berlin said...

Just as a comment from a new expat here in Germany, with two kids, I think that you need to check out your childcare options a bit more. I find that childcare is extremely subsidized and I am extremely grateful for it. right now, my 2 year old is in a kindergarten with my 4 year old and in the 2 yo class are kids as young as 13 months. I'm not certain how young classes may go, as I did not extend my search. But know that this care costs approximately 12% of what I would pay in NY and is available to me so that I can take German classes and is also available, state supplied/subsidized (for more daily hours) to women who work.
But I truly love the German system for family and frequently note that the US tax system subsidizes home ownership while the German system subsidizes the family.

Claire said...

Yes, G. They are getting better. But options are bigger in Berlin than in the small town in the middle of nowhere, which is where I live.

Dr. J said...

I have a very mixed idea about the three year Elternzeit. On the one hand it's great that a parent (okay, primarily the mother) can stay home withthe kids for (basically) as long as she wants too, on the other hand it works against young women getting into the workforce in the first place. I know a number of (very unofficial, er-herm, don't want to mention this in public in case they get done for discrimination) employers who have deliberately NOT taken on the mid-20 to mid-30 year old woman because they simply cannot afford to potentially lose a worker for several years while having to ensure them a job afterwards. So in that situation I find it almost more harmful than good.

It's a tough call.

G in Berlin said...

Interestingly enough, my brother-in-law( if that is my sister-in-law's husband) is the one who is staying home with the kids. He is on year two of the 3 years. Another two of my cousins-in-law have husbands that stay home, which I find interesting.

Diane Mandy said...

Thanks for explaining. This was a topic I had a lot of questions about!

Anonymous said...

I can't make any comments about your recent entries because, at my age none of that stuff is relavent. However, you never mentioned if the Mother ever showed up.

Love from Racine.

hexe said...

I enjoyed this post because it is interesting to see how another country is dealing with how to address parenting and working. It is such a balance and I have yet to find the perfect answer. Don't let anyone make you feel bad for your decision to work or not. Only you know what is best for you, your family, your child and your business.