Saturday, January 6, 2007

Germans Get Paid (Tax Free!) To Reproduce

Parents of babies born in Germany will now benefit from generous new family subsidies. This is apparently an effort to address the demographic pensions timebomb.

Under the new Elterngeld, or "parents' money" law, parents who stay home to look after the newborn child will receive 67 per cent of their last net income tax free, or up to £1,800 - more than £1,300 - a month, for the first 12, or in some cases 14, months after the birth. Before the 2007 New Year, when the law took effect, German women were doing all sorts of crazy things to delay their children's births.

Of course this seems to be a major benefit to the already affluent. Currently, parents whose annual net income lies below a certain level - £30,000 per couple - can choose between up to 24 monthly payments of up to £300 or 12 monthly payments of up to £450. The law is of course a boon for many families, but will put the unemployed at a disadvantage for having children, since payments by the government are based on what level of income one is currently making. Under the new scheme, the jobless may only get £300 a month for up to 14 months. Critics are saying that this is just a scheme to encourage the upper classes to have more children.

In any case, this is an all out effort to get Germans to start reproducing because the German birth rate has fallen to an average of 1.3 children per woman - far lower than the 2.1 children per family replacement rate needed in industrialized countries. Their Federal Statistics Office has ominously forecasted a drop in the population from today's 82 million people to just 69 million by 2050 - this spells disaster to their country's troubled pension system. The shrinking population will also result in a shortage of skilled workers.

Hmmm.. where else have I heard that has been happening? Baby Boomers, Failing/Bankrupt Medicare, unfilled management positions and loss of experienced managers in American business. I guess we've just gussied up the nomenclature and instead call it "paid family leave" here in the USA.

Gee.. whodathunk that having babies could be a "career option".

1 comment:

Dana said...

Funny that you write on this. That is what I was reading about on Spiegel before my computer decided that it no longer wished to remain connected to the internet and went on strike.

That is the main problem with a centrally planned economy. We have the same things here in effect which got Germany into this situation, but the central government (still) has decidedly less power to implement its population control/education measures so not much happens with it.

But then, we realize that to support the social state, we need more babies than seniors, and that means net sustained growth.