Gerd's Family Policy Gets Down to Business

As Germany struggles to maintain the viability of its state pension scheme amid an imminent demographic crunch caused by falling birth rates and an ageing population, Chancellor Gerhard Schröder on Wednesday renewed his commitment to encouraging families to have children and outlined new initiatives which would provide financial and job benefits to working Germans who decide to start a family or expand an existing one.

Children are our future," said Chancellor Gerhard Schröder at the conference called "Family -- Success Factor for the Economy."

"They are our future workforce, consumers and parents. Our future, our pensions and the economic strength of our country, rests in the hands of our children."

The family challenge

The number of children born in Germany has fallen a dramatic 50 per cent from 1.4 million in 1964 to just 700,000 in 2005. As the country's unemployment figures continue to swell, to many, the prospect of raising a family seems just too challenging. Given the nation's nagging economic woes, women in particular see the difficulty of combining child-rearing and career as too much of a deterrent.

It's a trend Germany can't afford to let develop.

"Creating good conditions for families became an economic issue a long time ago," said Schröder. A reduced younger generation means a declining workforce, lack of innovation and ever fewer consumers.

"We cannot allow a woman to decide against having children because she's reluctant to have to choose between having a child or having a career," stressed Schröder. "We cannot allow a family on a normal income to decide against another child for financial reasons. In future, family policy has to create conditions which enable more people to have children."

Benefits for both sides

In 2003, the government joined forces with business to form the Alliance for Family Policy, which aimed to develop improved work-family reconciliation policies.

But despite the government's efforts to provide day care and tax relief for families, Germany is still short of some 1.2 million nursery places for children under three. Schröder pledged once again to increase day care for working families.

"Flexible working hours and family-friendly employment policies are good, because both sides reap benefits," he insisted.

Throwing out the three-year job guarantee

He also said industry should do more to support employees with children.

But President of the German Employers Association, Dieter Hundt, pointed out that two thirds of all firms already offer their employees flexible schedules and that business shouldn't be blamed for the problem. He contended that it was the state which has to reform its policies regarding families.

For now, mothers are allowed to take up to six months of paid maternity leave and unpaid leave of up to three years.

"Something needs to change"

"As far as employers are concerned, we need to take a new look at reducing parental leave," said Hundt. "So far, our relatively generous family support of €150 billion has led to neither higher birth rates nor improved integration of parents within the labor market. Something needs to change."

Hundt believes that parents need to return to the work faster than is currently the norm, because the German economy simply can't afford to forfeit qualified workers with know-how.

The government largely agrees. Its latest proposal, outlined at the conference by Minister for Family Affairs Renate Schmidt, would introduce a sliding scale benefit scheme dependent on income.

But as Schröder said Wednesday, the issue is by no means purely financial. "Parents need more infrastructures, not just more money," he said.