Essay: What is the relation between trade openness and migration with the German welfare system?

Alexander Gauland, from the German party AfD, stated in a speech last year: “The welfare state and open borders cannot function together. It’s as if someone were to open the window in winter while continuing to turn up the heating in order to maintain the temperature” (Gauland 2018). Welfare has been a part of German identity for many years and can even be found in the German constitution (Schulz 2000, 42 and 43). Nowadays, it is confronted with changes under the heading of “globalization” (Schulz 2000, 43). German parties such as the AfD, use those modern challenges to spark dissent and protests. With slogans such as “Defend the Welfare State” that call for demonstrations against migration, they try to work against present-day forces (Höcke 2018). Their argument is clear: migration is detrimental to the welfare system (Gauland 2018). Also in academia, there has been an extensive debate around the same question: what are the effects of globalization developments on the welfare state (Brady, Beckfield and Seeleib-Kaiser 2005, 921)? In order to address a gap in current research, this essay will focus on the question: “What is the relation between trade openness and migration with the German welfare system?” By choosing to narrow down the question it will be able to comply to the suggestion of Brady, Beckfield and Seeleib-Kaiser, which criticize not only the lack of recent data but also the way globalization is measured as a single element (Brady, Beckfield and Seeleib-Kaiser, 926). Furthermore, the essay will deal with a single case study, namely Germany. This can help to avoid holistic conclusions and potentially ignoring differences in welfare states. The reason for choosing Germany as a case study is that it is often considered the founder of the welfare system and also represents a crucial economy in Europe (Schulz 2000, 41 and Holmes and Castañeda 2016, 14). In order to answer the question, the essay will use the following structure: First, it will give a definition of the term “globalization” and how it will be used throughout the rest of this essay. Next, it will give an overview of the current scholarly debate around the topic of welfare states and globalization. Then, it will give a brief introduction on Germany and its welfare system. Next, it will continue by describing the graphs, made with data on trade, migration and welfare. Besides a graph on overall social spending in Germany, the chosen parameters to measure German welfare are: health spending, family benefit spending, public unemployment spending and pension spending. The graphs use data from 1990 – 2017 to ensure recentness. Following the description, will be an examination of the measured correlation of each parameter with migration and trade. Finally, the essay will interpret the findings, before eventually concluding the essay. Overall, this essay uses a mix of primary and secondary sources. Secondary sources are used for the academic background while primary sources provided data for graphs.
Definition of Globalization
Definitions for globalization vary. When dealing with this ambiguous term, several scholars are not clear about what their understanding of the word is. Some articles, such as Avi-Yonah’s “Globalization, Tax Competition, and the Fiscal Crisis of the Welfare State”, do not provide any definition at all (Avi-Yonah 2000). Others do not differentiate between globalization and concepts such as Europeanisation (Hay 2006, 3), and again others do not take into account the different features that make up globalization (like Brady, Beckfield and Seeleib-Kaiser, 922). This essay will avoid committing a similar mistake by clearly defining, what is meant with the concept of globalization. Globalization, as defined by Brady, Beckfield and Seeleib-Kaiser, mainly encompasses economic activities. They call it the “intensification of international economic integration” (Brady, Becker, Seeleib-Kaiser, 922). However, according to Vujakovic, globalization is a multidimensional concept, which should also be reflected as such in its definition (Vujakovic 2009, 5). This is why it can be argued that Keohane’s and Nye’s definition of globalization is a more appropriate one. The authors split globalization into various dimensions, namely economic, military, environmental and social/cultural globalization (Keohane and Nye 2000, 4 – 6). Vujakovic, additionally, stresses the importance of the international character of globalization, in that it affects not only a few but all countries (Vujakovic 2009, 5). This idea is also reflected by Keohane and Nye who argue that globalization can be seen as a world that becomes smaller (Keohane and Nye 2000, 2). On the basis of these similar approaches, this essay will use Vujakovic’s and Keohane’s and Nye’s definitions while adding another layer added by Vobruba, who argues that a definition of globalization is not complete if it does not take into consideration the fact that globalization is a social construct (Vobruba 2004, 262). Hence, the final definition used in this essay is: globalization can be defined as a socially constructed, multidimensional process, which can be divided into multiple dimensions, and has a global cross-border nature. As becomes clear by this definition, globalization is an extremely broad term, making it difficult to measure. Due to the limited scope of this essay, the following text will deal with only two facets of globalization, namely migration and trade openness, as mentioned above. Those two features come from different dimensions of the KOF Index, designed to measure globalization (Dreher 2006, 1094). In this index trade openness as percentage of GDP falls under economic globalization (Dreher 2006, 1094). Alternatively, migration can be categorized as social globalization but has not been directly mentioned in the index. Rather, Dreher refers to foreign population compared to the overall population (Dreher 2006, 1094). Due to data availability, this essay argues that looking at migration flows should be comparable to the developments in foreign population and indicates how open a country’s borders are. By choosing those two features it takes into account more than one dimension of globalization within a limited scope. Furthermore, the chosen features allow for a relatively reliable way of measuring, as both trade openness and migration have data from reliable sources available, contrary to facets such as internet hosts which can vary greatly per day (Dreher 2006, 1094). Despite the importance of defining globalization, it should be noted that this essay does not claim to find a conclusion that is applicable to the relationship of welfare and globalization as a whole. Rather, it will deal with welfare and two features that can be considered by-products or parts of globalization in a specific case.
Literature Review
As can be expected, the relationship between welfare and globalization has received a great deal of academic attention. Throughout the research process for this essay, it became clear that there is no consensus on this topic yet. Some authors, such as Navarro, Schmitt and Astudillo believe that globalization is beneficial for welfare systems (Navarro, Schmitt and Astudillo 2004, 151), whereas others like Avi-Yonah argue for the opposite effect, namely that globalization leads to a welfare retrenchment of states (Avi-Yonah 2000, 1633). This ongoing debate is the starting point for the following essay. It is intended to make a contribution on the topic of globalization and welfare by delving deeper into singular facets of both, globalization and welfare. The literature review will give a crucial insight into the current academic debate on this topic by first of all, introducing the main points of views on globalization and its effect on welfare states. Then, it will look more closely at the two later applied features of globalization, namely migration and trade openness and how they connect to welfare, according to existing literature.
In order to grasp the current academic debate on the relationship between globalization and welfare states, it is useful to start with the basic arguments presented by scholars. Throughout the years of contradictory evidence, three dominant views have been established, namely a positive, negative and “skeptical” view (Kim and Zurlo 2009, 131). First, positive scholars such as Navarro, Schmitt and Astudillo reason that globalization has a positive effect on welfare because it creates an enlargement of social spending. The reasoning behind their claim is that, over the past years, data on welfare countries illustrated a tendency for them to expand, despite forces of globalization (Navarro, Schmitt and Astudillo 2004, 151). This view has also been confirmed by Swank, who references Cameron’s “openness thesis”, which presents the following line of argument: Open economies usually come with other features such as “strong trade unions, centralized bargaining, and powerful left parties”, which all naturally lead to an expansion of social spending (Swank 2004, 60).
Contrary to that view, is a group of scholars who come to an opposite conclusion. In his article, Avi-Yonah studies how taxes are becoming weapons in the international market (Avi-Yonah 2000, 1575). In this context, he explains the need for countries to reduce taxes in order to stay competitive in an era of increasing globalization. Taxes, he argues, are needed to fund the welfare system. Thus, governments will be forced to make cuts in their welfare system to remain an attractive destination for multinational companies. To stay competitive, countries will have to continue reducing taxes, leading to an eventual retrenchment of social spending (Avi-Yonah 2000, 1578). In another article, called “Political Ideology, Globalisation and Welfare Futures”, Vic added to Avi-Yonah’s argument, that it is not only external pressures, such as competition, that make governments retract their welfare, but also internal factors like changes in national laws, as well as technological development, which facilitate globalization and capital movement (Vic 1998, 31 and 33).
The last view on globalization and welfare states is the skeptical view, which is portrayed by authors like Brady, Beckfield and Seeleib-Kaiser. In their study about the influence of globalization on welfare, they come to the conclusion that ultimately the connection between globalization on welfare should be treated cautiously and should not be overstated (Brady, Beckfield, Seeleib-Kaiser 2005, 944). What combines all these different views is the fact, that they argue from an economic point of view. However, there are also scholars who do not find this approach appropriate and argue that the relationship between welfare and globalization is best explained through politics. Huber and Stephens, in their book Development and Crisis of the Welfare State, claim that it is in fact politics rather than economics, that determined the route social spending took and continued to take in different countries. Thus, it was possible to foresee which type of government would choose what type of welfare system (Huber and Stephens 2001, 312). Nevertheless, this view does not remain uncontested. Navarro, Schmitt and Astudillo criticize this argumentation by referring back to economic arguments. According to their article, politics can no longer make decisions related to welfare due to the forces of globalization. They repeat the above mentioned argument that, in order to stay competitive, governments must reduce welfare spending. Then, they take it a step further by claiming that every government in the global economy wants to stay competitive (Navarro, Schmitt and Astudillo 2004, 133). Hence, the politic view of the government in charge is unimportant, as all governments face the same struggle of staying competitive and are compelled to cut taxes and welfare (Navarro, Schmitt and Astudillo 2004, 133). Besides those main views divided into positive, negative and skeptical, as well as into economic and political, there are several other arguments aiming at explaining the relationship between globalization and welfare. Swank, for instance, comes to the conclusion that there is not a single reaction of welfare systems when confronted with forces of globalization, but rather the relationship between the two varies across cases (Swank 2004, 58). Keeping in line with this idea that there is not one single answer are Brady, Beckfield and Seeleib-Kaiser, who emphasize that different features of globalization tend to react differently in relation to welfare systems, depending on the way globalization is being analyzed and measured (Brady, Beckfield and Seeleib-Kaiser 2005, 944). The three authors further formulate a critique towards current research, in that the data that is being used is not recent enough, globalization is not defined well enough, and that studies are not open enough to contradicting studies. As a consequence, they call out for a research that uses specific case studies, with data after the 1970s and that show various measures of globalization, instead of treating it as a single-level entity (Brady, Beckfield and Seeleib-Kaiser 2005, 926). This essay formulates another critique. During research it was noticeable, that scholars tend to look at “Europe” as a single case study. Articles about the connection between globalization and European welfare were plenty (e.g. Mau and Burkhardt 2009 or Hay 2006). However, this can be problematic, because Europe consists out of many different countries with a variety of political scenery, economic prosperity, cultures, etc. Kim and Zurlo noticed a similar problem and argue that it is important to look at individual welfare states instead of making universal claims (Kim and Zurlo 2009, 130).
Next, when dealing with the literature on migration and welfare it becomes clear that there is no consensus in the existing views. On the one hand scholars argue that net migration is accompanied with an increase in social spending (Brady, Becker, Seeleib-Kaiser 2005, 942). This can be attributed to the fact, that a bigger workforce alleviates strains of the pension system, since pension relies on the taxes and thus workforce (De Giorgi 2009, 353). However, there are also those, such as Mau and Burkhardt, that present data which shows that a higher level of migration puts strains on the sustainability of welfare, as migrants tend to be more reliant on social benefits (Mau and Burkhardt 2009, 214). In their article, Mau and Burkhardt focus on the perception of people on migration and welfare (Mau and Burkhardt 2009, 214). The authors argue that ethnic heterogeneity within a nation leads to a retrenchment in social spending due to the fact, that public opinion pressures governments to cut welfare (Mau and Burkhardt 2009, 224). In another article “EU-Enlargement and the future of the welfare states”, Sinn complements this reasoning by claiming that countries also use the retrenchment of the welfare state as a shield to protect themselves from migrants, that tend to choose countries with broad welfare benefits (Sinn 2002, 107 – 108). Moreover, there is also numerical evidence that shows a correlation between heterogeneity in society and welfare retrenchment according to Mau and Burkhardt (Mau and Burkhardt 2009, 215). As can be expected in such a debate, there is also the view that migration as a determining factor of welfare should not be overstated. Geddes, in his article, claims that migration does not have a strong enough effect to determine the future of welfare systems (Geddes 2003, 151).
The other feature of globalization that will be examined in relation to welfare systems, is trade openness. As has been mentioned above, the argument that globalization tends to lead to welfare state retrenchment, due to the fact that countries need to preserve international competitiveness, has been presented by scholars such as Avi-Yonah (Avi-Yonah 2000, 1575). However, there are also arguments that point out how trade openness can actually lead to an expansion in welfare. According to Iversen, society prefers a strong welfare system in times of uncertainty, such as globalization. This means that in democracies, parties that want to stay in charge need to adapt to public opinion and extent, or at least maintain, extensive social policies (Iversen 2001, 46).
This literature review illustrates the need for further research on the topic to fill gaps and contribute towards the existing debate. This essay especially tries to accommodate the above mentioned recommendations made by Brady, Becker and Seeleib-Kaiser to look at one case study with recent data and use more than a single measure of globalization (Brady, Becker, Seeleib-Kaiser 2005, 926).
For the purpose of completion, it is important to mention how this essay understands the term “welfare state”. This is crucial because welfare can have different meanings to different people in different scholarly disciplines (Greve 2008, 57). The definition used in this essay will follow the one presented by Barr, who defines the welfare state as “copmris[ing] cash benefits and benefits in kind” (Barr 2012, 8).
The German Case
To understand the changes of Germany’s welfare system, it is important to examine the historical development of the German welfare state. Thus, this part of the essay will deal with changes in social policies of Germany over the course of years. The first time the concept of a welfare system in Germany came up was in Bismarck’s period. In his reforms during the 1880s, he introduced several welfare laws, which would later be the foundation of the modern German welfare system (Briggs 1961, 246 – 247). Under his reforms, insurances against health problems (including accidents and invalidity) and a first pension model were introduced (Briggs 1961, 246 – 247). After WWII, the idea of ensuring a certain quality of life for German citizens at all times, led social policies to expand further (Seeleib-Kaiser 2002, 26). One instance would be pension, which was increased in 1957 (Seeleib-Kaiser 2002, 27). Furthermore, if a person was unemployed, they would not have to accept any job offered to them. Rather, the job had to fulfill a set of criteria such as a salary that was at least as high as in previous employment and the job had to be in the same field (Seeleib-Kaiser 2002, 27). About 12 years later, strikes led to an additional reform, which made employers guarantee a full salary for the first six weeks of illness. For any longer period of time the health insurance would cover about 80 percent of the original wage (Seeleib-Kaiser 2002, 27). With regards to the insurance for disability, there was a distinction between being fully disabled and not being able to work in the same field anymore. Depending on that distinction, employees got different levels of benefits (Seeleib-Kaiser 2002, 27). It should be noted that the benefit for someone that could not work in the same profession anymore, would get a fiscal benefit that was only slightly lower than the benefit for when an employee was fully disabled (Seeleib-Kaiser 2002, 27). The German welfare state during that time could be described as a “conservative welfare state” (Seeleib-Kaiser 2002, 26). What characterized it was for instance its social insurance as basis for governance, as well as its focus on communal units, such as family to provide welfare (Seeleib-Kaiser 2002, 26). Earlier forms of insurances would only provide benefits, if the family support was not enough to ensure a standard of life (Seeleib-Kaiser 2002, 27). Initially funds for social benefits were to be collected from both employers and employees, which meant there was no general tax for everyone who was not employed (Seeleib-Kaiser 2002, 26). Thus, in order to receive social benefits, prior employment is a key requirement, since the state finances welfare through laborers and not through taxes (Seeleib-Kaiser 2002, 26). The consequence of such a system is that unemployment threatens the welfare system, which is still criticized today (Schulz 2000, 44). Thus, whenever unemployment is high, individual contribution to the welfare funds have to be increased. This is especially true for health insurance funds, since they are based solely on the contributions of German citizens (Manow and Seils 2007, 140). Naturally, over the course of years, the German welfare state has changed significantly (Seeleib-Kaiser 2002, 28). First of all, benefits were reduced. From 1996 onwards, health insurance covered only 80 percent of the salary instead of 100, and pension was reduced about 6% (Seeleib-Kaiser 2002, 32). Moreover, conditions of when to take a job offer changed. The unemployed would now have to accept jobs that paid less than previous jobs, even if they were in a different occupation than what they were trained for (Seeleib-Kaiser 2002, 31). Some programs were cut completely; such as benefits for people that could no longer work in a specific field. Those workers would now have to find a job in a different occupation (Seeleib-Kaiser 2002, 32). However, the other characteristic of the German welfare state, namely family focus, changed in the opposite direction from the late 1980s onwards. Benefits for children were increased, parental leave newly introduced, time spent for child caring contributed to pension funds and more child caring facilities were installed (Seeleib-Kaiser 2002, 32). Such a change has been described by scholars like Seeleib-Kaiser as a “dual transformation” of the German welfare state (Seeleib-Kaiser 2002, 35). Before interpreting current changes and characteristics of the German welfare state there is one more important trait of the relation between Germany and its welfare system. The right of being socially protected by the government has been anchored in the German constitution and therefore lays a basis for its governance (Schulz 2000, 41).
When looking at migration in Germany, one recent background factor is the Syrian refugee crisis which affected German immigration rates drastically. Between 2012 and 2014 the number of Syrian asylum claims was at approximately 61,885 (Ostrand 2015, 269). In 2014 asylum claims from Syrians more than tripled compared to the year prior (Ostrand 2015, 269). By 2015, Germany decided to also accept Syrian refugees that did not comply to the standard EU practice of filing an asylum claim upon arrival in the first EU country, known as the Dublin agreement (Holmes and Castañeda 2016, 14). This arguably led to a new stream of immigrants and helps explaining the fact that in 2015, Germany was the country with the highest number of refugee admissions out of all European countries (Holmes and Castañeda 2016, 15). It should also be noted that during the same time immigrants from various other countries, such as Somalia or Albania arrived in Germany (Holmes and Castañeda 2016, 15).
The last background information needed to interpret the following data relates to Germany’s past trade balance. For the last years, Germany has experienced a continuously growing export surplus with a peak in 2016 (Destatis 2019). Compared to 1990, the export surplus in 2017 has reached a number more than four times higher. In total numbers this refers to a surplus of around 247, 946 billion Euro in 2017 (Destatis 2019). According to the ifo Institute, Germany, for the third time in a row, has the highest trade surplus worldwide in 2018 (Grimme 2018).
Describing Data
Next, the essay is going to look at recent data of globalization and social spending to examine their relation. In order to do so, it will start by looking at trade openness and migration, to get an idea of how globalized or open Germany is. As the graph in figure 1 suggests, there is a trend of trade playing a more and more crucial role in Germany’s economy. Looking at the percentage of trade in Germany’s GDP, one can notice an overall increase from 1990 until 2016. In 1990 trade made up about 46% of Germany’s GDP. This number increased dramatically until 2016, where it made up about 84% of the GDP. In the past 16 years there have been two notable drops. The first one happened between 1991 and 1993, when the percentage of trade in Germany’s GDP declined from approximately 48% to 41% and between 2008 and 2009, when it dropped from 81% to 71%. However, in both instances, the importance of trade increased almost immediately again. In the most recent years from 2011 onwards, there seems to be a plateau since the percentage of trade in Germany’s GDP has stabilized at a value between 84 – 86%. Overall, this shows that during the last 16 years, trade has become significantly more important to Germany’s economy, indicating that the country has become more globalized, as it relies more on trade with other countries. In 1990 this reliance made up less than half of Germany’s GDP, whereas in 2016 it made up more two third of Germany’s total GDP (Figure 1).
On the migration chart (Figure 2), a less consistent trend can be observed. Overall, the rate of both emigration and immigration has increased when comparing it to the year 1990, in which about 1,256,250 immigrants arrived and about 574,378 emigrants left Germany, and 2017, in which 1,550,721 people immigrated into Germany and 1,134,641 people emigrated. However, between those two years there was a great amount of fluctuation. Generally, immigration seems to deal with bigger fluctuations than emigration, which tends to be relatively steady until 2012 when it starts increasing more rapidly. Between 1992 and 2006 especially immigration rates showed a decline. The decline was never steady, since one can see numbers rising slightly in between years. The lowest point of immigration took place in 2006 with a rate of 661,855 people, whereas for emigration the lowest point was in 1990 with 574,378 emigrants. One noteworthy point is between 2008 and 2009 where the number of emigrants overtakes the number of immigrants for the first and only time within the chosen time period. Lastly, it is interesting to look at the time frame from 2006 – 2017. Immigration experiences a steep incline. During the peak in 2015, immigration has approximately doubled compared to 2012. Emigration seems to mirror that trend, however, with a small time lag, since it reaches its peak in 2016 with a number of 1,365,178 people leaving Germany. Both graphs show a steep decline from their peaks onwards, but stay above past numbers. All in all, migration in Germany takes place in both ways. Over the years, both immigration and emigration have increased, even if they fluctuated strongly throughout the years. The lines show, that Germany’s borders are open for people to immigrate into and emigrate out of in large numbers (Fig. 2).
High immigration and emigration numbers signify open borders to other countries, which means globalization taking place. Different cultures will have started to mix in Germany with flows of information and people in and out of the country facilitating the globalization process. The extreme increase of the immigration rate between 2015 and 2016 can be traced back to the Syrian Civil War, and the so-called refugee crisis. As mentioned above Germany has had the highest number of refugees in all of Europe during that time (Holmes and Castañeda 2016, 15). This development also clearly illustrates the impact of globalization. Events that take place in one country (like the Syrian Civil War) affect another country (Germany through immigration). Thus, further demonstrating how Germany is affected by globalization. Both graphs have shown, that Germany can indeed be characterized as a globalizing country, thus making it possible to look at its developments in welfare and drawing conclusions from those developments.
As mentioned above, the essay will focus on four important features of the German welfare system: pension spending, health spending, unemployment spending and family benefits spending. Besides describing and interpreting the developments of those four facets of the German welfare system, it makes sense to begin by looking at Germany’s general social spending over the past 26 years. In 1990 Germany used about 21.4% of its GDP on social expenditures such as welfare programs. Looking at the development overall, an increase of social expenditure can be observed since the German government paid about 25.3% on welfare in 2016. However, this increase has not been continuous. Rather, it has decreased compared to the time frame of 1996 – 2005. The year in which Germany spent the highest percentage of its GDP on social expenditures was in 2009 with around 26.7%. Another noteworthy development can be observed between 2008 and 2011. During those years the only relatively steep incline and decline took place right after each other. It started with 24.2% in 2008 and jumped to 26.7 in the following year. The year after it immediately dropped down to 25%, while eventually settling back at 24.7% in 2011. From 2012 onwards, the share of social spending compared to Germany’s GDP has been rising slowly but steadily (Fig. 3).
Now that a more general idea of Germany’s social spending over the last 26 years has been established, the essay will look more closely at the four sub-categories of German welfare. Due to lack of data for separate welfare factors, the graphs present developments between 1990 and 2013. The only exception is health spending, which has available data between 1993 – 2016. Starting with pension spending, a first observation is that compared to other welfare programs the percentage of pension spending seems to be high, with an average of approximately 10.5% throughout the years. This constitutes almost half of the country’s total percentage of general social spending. Moreover, an overall small increase in the share of Germany’s GDP that goes towards pension spending can be noticed. In 1990 approximately 9.5% of the German GDP went into pension spending, while it rose to 10.11% in 2013. The values have been rising steadily between 1990 and 2003, before finally dropping, even if the drop was almost insignificant from 11.26% to 11.13%. The year in which the share of GDP for pension spending was at its peak was in the same year after which the decline started, namely 2003 with 11.26%. After a few years of decline, the percentage rose again in 2009 before further declining to its level of 10.11% in 2013 (Fig. 7).
With regards to public unemployment spending, the developments vary greatly from pension spending, since the curve shows many fluctuations throughout the years. The year with the lowest percentage of GDP that went into public unemployment spending was in 1990 with 0.82%. In 2013 this value has increased towards approximately 1.03%. Especially between 1990 and 1993 the share of unemployment spending has risen quickly. 1993 and 2005 were the only years in which the percentage of GDP that had been spent on unemployment expenditures climbed above 1.8%. Both years were followed by declines. From 2009 onwards the values have continuously decreased until it reached its lowest percentage since 1991 in 2013 (Fig. 6).
Alternatively, the trend in health spending takes a dissimilar course with a relatively steady line and almost no noteworthy fluctuations. With a more than 3% increase between 1990 and 2017, in the share of Germany’s GDP that goes towards health spending, it has the greatest overall growth, compared to the other three welfare factors. In 1990 Germany spent about 6.01% of its GDP towards health expenditures. In 2017, this value rose towards 9.58%, which constitutes also the peak of the percentage of GDP for the past 26 years. The only other interesting fluctuation is a comparatively steep jump from 2008 to 2009, when health spending made up 7.67% and 9.31% respectively. Other than that, ups and downs are barely noticeable on the graph (Fig. 4).
The last graph that will be described deals with family benefits public spending. Just like with the other graphs, the overall percentage of Germany’s GDP that is being spent on family benefits public spending has increased. In 1990 the German state paid 1.83% of its GDP for family benefits, which rose towards 2.17% in 2013. The year that immediately catches the eye is 2006 in which the percentage declined towards a value of 1.73. This is lower than it was in 1990 and therefore the lowest percentage of German GDP spent on family benefits in the last 26 years. Another striking observation, is the fact that it took a long period of time for the percentage of GDP to reach the same level as it did between 1991 and 1993. Only in 2009/2010 and during the last available years in 2012/2013 does the percentage climb over 2.1% again (Fig. 5).
When looking at all the different welfare graphs it becomes clear that there are no unanimous developments within the different facets of the German welfare system. For instance comparing the percentage of GDP for pension spending with developments in health spending, one can see that while pension has fluctuated dramatically over the years, health spending has experienced a relatively steady increase in share of the German GDP (Fig. 7 and 4). Moreover, while the share of public unemployment spending increased only slightly with approximately 0.4%, health spending made a 3% jump between 1990 and 2017 (Fig. 6 and 4). Additionally, while pension spending, public unemployment spending and family benefits all saw a drop around 2006 or 2008, health spending increased rather drastically in 2008 (Fig. 4,5,6,7). As can be concluded from this section, the trends that run through the various aspects of the German welfare system differ greatly from each other. This makes it seem impossible to draw generalizing conclusions. Furthermore, it shows that looking at social spending of Germany alone is not enough to get an insight into the German welfare system. For instance, even though social spending is relatively steady, there are great variations within public unemployment spending (Fig. 3 and 6). However, there are also clear overlaps like the rise in social spending between 2008 and 2009 that is mirrored in most separate graphs as well (Fig. 3 – 7). Lastly, it can also be said that all parameters have increased when comparing numbers of 1990 with the most recent data (Fig. 3 – 7).