Implications of the activation paradigm on poverty and social exclusion in Germany: facts, hypotheses, uncertainties.

VerfasserBohnke, Petra

1 The discourse about poverty in Germany

For a long time, poverty was a matter of material resources. Of course, living in poverty means struggling to meet basic needs and is closely related to lack of money and an inability into guarantee basic subsistence. This remains unchanged. However, since the late 1990s the discourse about poverty in Germany, inspired by EU social policy thinking, goes beyond this monetary focus. Today, being poor represents more than having little money, because poor people are likely to withdraw from social, cultural and political participation. They face a high risk of social exclusion in non--monetary terms as well, which in turn is likely to diminish a society's capacity to ensure social cohesion in general (Silver 1994, Barnes et al 2002).

Two main axes shape the German poverty debate. One emphasizes the risk that society might suffer from polarization as the gap between rich and poor people is widening. This is related to the debate of a rising underclass: About eight percent of the total population belongs to this group according to a study conducted by the Friedrich-Ebert-Stiftung. Their main characteristics are long-term unemployment and lack of prospects, political inactivity or extremist orientation concentrating to a large extent in the Eastern part of Germany (Neugebauer 2007). The other position is dominated by the opinion that downward mobility is no longer a class related risk. Poverty is supposed to gradually increase, eventually becoming an every--day risk, and is supposed to become especially widespread among the middle class (Bude 2008, Castel and Dorre 2009).

Policy debates throughout Europe make frequent reference to the term "social exclusion" even though there is little consensus on how to define its substance. Poverty, unemployment and the multidimensionality of social disadvantages are commonly understood as bases or even synonyms for social exclusion, taking it for granted that they impede social integration and that a decent standard of living decides who is "in" or "out" in society. The consequences of social disadvantages for individual participation chances as well as for overall social cohesion move to the forefront. This is reflected in theoretical developments which emphasize the capacity of individuals to live a decent life and draw attention to the political circumstances, institutional structures and welfare state arrangements that enable people to live respectable, affluent and secure lives (Sen 1993, 1999).

Due to this change in perspective, EU social policy thinking focused more and more combating unemployment to diminish poverty risks. Access to the labor market is regarded as most important for enabling participation chances, because employment not only significantly increases a household's income but also its social integration. Germany, like other European countries, experienced growing unemployment rates and demographical changes during the recession period, which resulted in a need to diminish social security expenditures and to raise employment rates. Therefore, the activation policy which has been launched during the last decade is surely inspired by the European social policy discourse to ensure social cohesion, but primarily reflects governmental needs to decrease unemployment and social security expenditures.

Moreover, the change in perspective on poverty as such (from distribution to integration) was accompanied by a change in attitude with regard to the question of individual responsibility for the experience of and escape from poverty. The key phrase "Fordern und Fordern" (rights and duties) paraphrases the general approach that institutional as well as individual efforts have to be strengthened in order to improve the labor market situation and diminish poverty rates. On the one hand, labor market agencies have been reformed and supportive measures have been extended. On the other hand, access to unemployment benefits and the level of social assistance have been restricted with regard to the period of entitlement and its eligibility in order to increase effort to return to the labor market as soon as possible and accept work for lower pay. Basically, the social security system changed its underlying paradigm: status maintenance is no longer the dominant principle, but basic allowances. Dependent on the political attitude, this change has been differently interpreted. However, from the poverty perspective, the level of basic allowance is crucial, as are the programs which have been invented to reintegrate the unemployed. The next section will review the changes in policy design in more detail and then describe how they are related to the development of the poverty risk.

2 How policy changed

The European debate on social in--and exclusion is based on the general assumption that there is an urgent need for reforms of the social model and welfare state approach. Weak economic growth, high unemployment rates and a growing share of discontinuous employment histories change the prerequisites for welfare state action. This is reinforced by demographic changes and a rising proportion of elderly people: In short, contributors to the social benefit system have decreased in number while a growing number of people now need social support (Mayer 2001, Kaufmann 1997). Since the 1980s, the globalization of financial markets, rising national debts, supranational ties and, in the German case, high fiscal costs of unification have restricted the scope of governmental action. Altogether, social security benefits have been diminished; however, until 2005 they did not question the core of welfare state maintenance in general. With such structural changes and shortenings come insecurities. The fear of a rising underclass and the anticipated loss of durable security among the middle classes are closely related to these changes.

Social security in Germany is connected to a long and constant employment biography and also, at least for women, to marriage stability. At the core of the German social security system is the link between employment and benefit entitlements, which follows a system of equivalent compensation and the principle of status maintenance. Benefits were meant to maintain the worker's social status during unemployment, and payments were linked to previous earnings, employment duration and age. This implies that short employment contracts, several interruptions or low earnings result in low entitlements.

With regard to social assistance (Sozialhilfe), there were some minor changes during the 1990s: The benefit level was capped, the principle that benefits must be lower than wages was stipulated, and possibilities to combat misuse and to impose sanctions were extended. The levels of unemployment benefits (Arbeitslosengeld) and unemployment assistance (Arbeitslosenhilfe) were also been reduced. Since 1993, asylum seekers cannot claim social security benefits anymore. Instead, they receive benefit in kind and pocket money, which results in drastic shortenings. Pregnant women and single parents profit from increased payments with regard to additional demands.

During the last years of the Kohl-government much effort was made to increase incentives for the unemployed to return to work. For example, financial restrictions were imposed when refusing a job offer, and additional pay was offered in case a new job was below the standard benefit rate.

After the government changes, SPD/DIE GRUENEN increased the standard rates in 1999. Since 2003, a means-tested basic security allowance for elderly people has been initiated. In the year 2000, eligibility criteria and benefit amounts for unemployment assistance were downgraded: Only those unemployed who had received unemployment benefits before (which itself depended on a certain former period of uninterrupted employment) remained entitled, and earnings as well as savings of related household and family members were considered. Even without reviewing the changes in detail, the overall trend during the 1990s was characterized by retrenchments of the amount of benefits and exacerbating sanctions, and by criteria of reasonability. At the same time, efforts have been made to promote and deregulate employment and to expand working opportunities for specific risk groups such as the long-term unemployed and young adults. Despite variations in the amount of benefits and changing eligibility criteria, the core of the social security system remains unchanged except for asylum seekers. However, the discourse about the accessibility of social security benefits has sharpened. It was discussed, for example, whether or not to oblige social benefit receivers to help in nurseries or elder care institutions, or to reinforce employment activities of single parents by taking over child care costs. The public did not hesitate to call the long-term unemployed and social assistance receivers faineants and freeloaders.

During the period from 2003 to 2005, a comprehensive and far-reaching set of labor market and social policy reforms was implemented, which brought about a fundamental change in the German social security system. The so-called Hartz reforms (1) aimed at improving conditions so that people could return to work more easily. They consisted of comprehensive modifications of the unemployment benefit and social assistance scheme. Moreover, the organizational structure of public employment services has been modernized. Active labor market policy instruments, deregulation strategies and sanctions for low engagement in job searches were reinforced...

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