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Introduction: Gender and Employment in Germany

Before German unification in 1990, very different public policies (and social realities) regarding the gender division of labour existed in the two German states. While public policies in East Germany encouraged high levels of employment and long working hours for women (Rosenfeld et al. 2004, p. 107), public policies in West Germany , especially tax and childcare policies, deterred women, especially mothers, from full-time employment . This often led to a short duration of employment followed by an early entry into the status of housewife (Berger et al. 1993, p. 56). After unification , the institutional transformation in East Germany caused important changes in female employment and careers. In the aftermath of unification , the employment rate of working mothers (Bonin and Euwals 2001, Bundesministerium für Familie, Senioren, Frauen und Jugend 2015: 30) and the rate of couples with both partners working full-time decreased significantly (Klenner 2009). At the same time, women in West Germany increased their labour force participation (Simonson et al. 2011), albeit to a considerable extent in part-time and often in the low-paid sector. As Kelle and colleagues (2017), show it is especially women in West Germany who remain in part-time work for a prolonged period of time after the birth of the first child. Participation in low paid and part-time employment in general has consequences for the employment biographies of women beyond the family phase. The literature has shown that part-time employment often implies lower-grade career opportunities and a lower level of income than full-time work (Bardasi and Gornick 2008), which can lead to restricted late careers.

In 2018, the total employment rate for individuals aged 15–64 in Germany was 75.9%, with a marked difference between the employment rate for women (72.1%) and that of their male counterparts (79.6%) (Destatis 2019). These employment rates were the result of a sharp increase in the total employment rate ; over the previous ten years, the total employment rate for this age group rose by 5.9% points with a particularly sharp increase of 7.9% points for women and a slower yet significant increase of 3.9% points for men (Destatis 2019). Over the same period of time, the employment rate for those aged between 60 and 64 rose significantly, from 35.0% in 2008 to 60.4% in 2018. At the same time, the gender employment gap in this age group narrowed. In 2008, 43% of men and 27.2% of women in this age group were employed, leading to a gender gap of 15.8% points. In 2018, in the same age group the employment rates were 65.5% for men and 55.6% for women, resulting in a gender gap of 9.9% (Destatis 2019). Despite these increases, the employment rates for older workers aged 60+ remain significantly lower than those of younger individuals. In this chapter, we review recent public policies aiming at prolonging working life in Germany with a special focus on the gender and health implications of such policies.

Pension Policies

Following a Bismarckian tradition, the German pension system relies on individual contributions to pension insurance , which are based on individual labour market participation . Since 1986, care credits exist to account for gendered working lives, namely for the fact that a considerable number of women interrupt their working lives as a result of care responsibilities (Frericks et al. 2008).

Over the last few decades, the German public pension system has undergone a long process of ongoing reforms. A strong motivation for these reforms was the rapid ageing of the German population: while the percentage of individuals aged 65 and older was 15.7% in 1996, it increased to 21.2% in 2016 (Gerostat 2018). In the 1990s, the pension reforms of 1992 and 1999 restricted existing early retirement options, which had been introduced in the 1970s to open up the opportunity of retiring before the statutory pension age of 65 (Berkel and Börsch–Supan 2004). This change affected women, unemployed individuals, and people with health problems disproportionately as they previously had the opportunity to retire at 60. In addition, long-term insured individuals (for whom retirement had been previously available from 63 years onwards) were strongly affected (Berkel and Börsch-Supan 2004). At the same time, these reforms introduced a reduction of pension levels of 0.3% per month for early pension entry for individuals making use of early retirement options and an increase of pension level of 0.5% for each month for those who postponed their retirement entry (Bonin 2009).

In the 2000s, further reforms, which aimed to offset shortfalls in public pensions , changed the German statutory pension scheme considerably (Bonin 2009; Honekamp and Schwarze 2010). The so-called Riester reforms of 2001, in particular, marked a ‘paradigm shift’ (Mierzejewski 2015: 696) as they introduced ‘a kind of privatisation’ (Berner 2006: 499). More specifically, these reforms introduced supplementary pension pillars , which are not mandatory but publicly subsidised, either by tax deferral or deduction or direct subsidies to individual and occupational pension schemes. In addition, they reduced the amount of state pensions by about 4% (Rüb and Lamping 2010). Grounded in divergent life expectancies, the contracts initially provided different conditions for women and men . Since 2005, contracts and pension levels do not distinguish between women and men (Hagen and Kleinlein 2011). Effecting a partial marketisation of the pension system (Hagen and Kleinlein 2011), this reform has been hailed as introducing ‘fundamental changes which have overhauled basic policy ideas’ (Rüb and Lamping 2010: 144). Over the following years, further changes were introduced to indexation, care credits , legislated pensionable age, pension options for self-employed and those with a long history of contributions to pension insurance (Brussig et al. 2016; Frericks et al. 2008; Natali 2018). Most importantly, in 2007, the legislated pensionable age was raised progressively from 65 to 67 years by 2032 and a penalty free option to retire at 65 was introduced for the long-term insured (Brussig et al. 2016). In 2014, care credits , which had been introduced in 1986 to account for the social value of care work as well as labour market implications resulting from caring for young children, were extended (crediting of an additional year for children born before 1992) (Brussig et al. 2016).

Given divergent employment rates and patterns and the existence of a gender pay gap in combination with a strong reliance of pensions on (previous) earnings, it comes as no surprise that a significant gender pension gap exists, which is remarkably bigger in Western than in Eastern Germany. In fact, the German overall gender pension gap 46% remains one of the highest in Europe (OECD 2019) . While the introduction and extension of care entitlements may have a significant impact on women, caring responsibilities may lead to longer interruptions and part-time employment , so that the existing care credits cannot be expected to fully close the gender pension gap (Möhring 2014). In addition to entitlements deriving from contributions, pensioners receiving low or no pension are eligible to receive social aid through a means-tested scheme. More women than men receive social aid from age 65 onwards (3.3% vs. 3.0% in 2017) (Kaltenborn 2019). No relevant reforms affected social aid.

Actors Intervening in the Pension Reforms Debate

Traditionally, pension policy making in Germany has used a ‘Grand Coalition’ strategy (Busemeyer 2006), which was based in consensual policy making in which the two big parties (the Christian Democratic Union (CDU) respectively the Christian Social Union in Bavaria (CSU) as well as the Social democratic Party (SPD)) built a broad consensus to pass major pension reforms . While this relied on the major parties, other actors were part of the ‘policy network of pension politics’ (Busemeyer 2006: 412), namely policy experts from the Association of German Pension Providers (VDR), the Federal Agency for the Social Insurance of Employees (BfA) and the social partners (Busemeyer 2006).

Since then, the ‘Grand Coalition’ strategy was increasingly disregarded, first by the CDU in 1997 and then by the SPD reforms in 2000 (Ante 2008). For instance, in the pension reform of 2001, the SPD government looked for the support of the trade unions after having failed to create a consensus between CDU/CSU and SPD. As a result, this reform passed with the exclusion of the opposition parties. In comparison, the ‘Sustainability of Pensions’ law of 2004, which was adopted under a government formed by the SPD and the Green Party, was a more unilateral strategy from the government (Busemeyer 2006).

According to Trampusch (2005) the role of social partners has become less relevant in pension policy -making since the beginning of the 2000s. According to Ante (2008), the red-green coalition led to a more active government and a party system acting more autonomously from social partners . Furthermore, new actors have gain relevance in pension policy like new think tanks, ‘party politicians’, the finance minister, and the finance industry and media coverage, making the decision process more complex (Ante 2008).

Low Paid Employment

One of the major developments in the labour market in Germany over the past 20 years was the significant growth of the low pay sector. Between 1995 and 2013, the proportion of low paid workers, defined as those receiving less than two thirds of the median hourly wage (calculated based on real working times) among dependent employees increased sharply from 18.8% to 24.4% (Kalina and Weinkopf 2015). In the following years, the proportion of employees earning low wages remained at a similar level with 22.7% in 2016 (Kalina and Weinkopf 2018). Important regional differences between East and West Germany persist, both in terms of the level and the development of low paid work . In 2016, low paid workers accounted for about 35% of the workforce in East Germany . The share of low paid workers was significantly lower in West Germany (20.3% in the same year) (Kalina and Weinkopf 2018). Also the development over time differed strongly. While the share of low paid workers in East Germany remained rather stable between 1995 (37.9%) and 2013 (38.5%) and decreased in the following years, it increased significantly in West Germany (from 14.6% in 1995 to 20.3% in 2013) (Kalina and Weinkopf 2015, 2018). The risk of being in low paid employment is above the population mean particularly for younger but also for older individuals. In 2016, 58.6% for individuals aged up to 24 years of age were in low paid. While the risk for employees aged 55 and older is lower (25.1% in 2016) than for those under the age of 24, it is still above the population mean. Low paid employment is furthermore gendered. In 2016, 29.2% of female but only the 16.6% of male workers were low paid workers (Kalina and Weinkopf 2018). With women disproportionately involved in the growth of the low paid sector in recent decades and pension levels bound to contributions from employment , the growing involvement of women in low paid work means these women are only able to earn low pension rights.

One particularly important feature of the growth of a low paid sector in Germany are ‘mini-jobs’ (geringfügige Beschäftigung), jobs which generate an income of up to €450 per month or employment that is limited to up to 70 working days/year (Bachmann et al. 2016). Mini-jobbers do not contribute to all parts of the social security system. As for the low paid sector in general, employees working in mini jobs are predominantly female ; in 2015 about two thirds of those who only held a mini job were women (Bachmann et al. 2016). Two important changes affected their situation over the last few years, first, their inclusion in the pension insurance system and second, the introduction of a minimum wage. While individuals could opt into pension insurance up to 2013, since then, mini-jobs are automatically subject to pension insurance if the individual does not opt out. If an employee decides to opt out, the employer still has to pay contributions to pension insurance (Bachmann 2016: 14). Another policy change in particular had important implications for employees working in low paying jobs. In 2015, a statutory minimum wage of €8.50 per hour was introduced. This generated considerable wage increases for people in low paying jobs in general (Pusch and Schulten 2017), and for those working in mini-jobs in particular (Bachman et al. 2016).

Disability Pensions

As the German pension system relies on contributions made over the lifecourse generated mainly through employment, health issues that affect an individual’s labour market participation will negatively impact their pension entitlements. Until 2001, two different disability pensions existed. If an individual was not able to carry on regular employment, they received the full old age pension benefits in the form of a disability pension (Erwerbsunfähigkeitsrente, ‘inability to work pension’). If an individual could no longer work in their former or similar employment due to disability, which required a similar degree of qualification, they received a different pension (Berufsunfähigkeitsrente, ‘occupational disability pension ’). Benefits resulting from the occupational disability pension were lower than those generated by the inability to work pension because the individual was still considered able to perform a job below their qualification to earn additional income. While these rules were broadly interpreted in the 1970s and early 1980s (Berkel and Börsch-Supan 2004), in 2001, the twofold system of disability pensions was abolished and both disability pensions were replaced by a unified disability pension (Erwerbsminderungsrente). The newly created disability pension no longer considers the qualification of the individual as it solely focuses on the number of hours an individual is still able to work (six or three hours a day). In addition, disability pensions today require a work history of at least five years of contribution in total and at least three years of contributions during the last five years. The proportion of individuals who are actively insured that receive a disability pension has decreased significantly over the last 20 years, from 8.9% in 1996 to only 4.6% in 2017 (4.5% for men and 5.0% for women) (Deutsche Rentenversicherung 2018). Over the past few decades, the underlying health problems that resulted in individuals receiving disability pensions changed. While in 1996 the most important diagnoses were musculoskeletal diseases (27.5%), in 2017, mental health problems were the most common health problems among disability pensioners (43%) (OECD 2018) .

In 2014, pension reforms introduced changes to the provision of rehabilitation services that aimed to maintain or restore the capacity to work from pension insurance funds (Leistungen zur Teilhabe der Träger der Rentenversicherung). Following the general principle ‘rehabilitation before pension’, this program’s primary aim is to try to avoid early exit from the labour market due to health problems by providing medical care and vocational integration measures. If rehabilitation is not possible, individuals who cannot work due to health issues can opt for a disability pathway (OECD 2018) . A further pension reform in 2017 addressed health issues focusing on prevention and rehabilitation and introduced voluntary check-ups from the age of 45, which are financed by the statutory pension scheme (OECD 2018) .

Balancing Professional and Family Responsibilities

Like other Western countries, Germany is experiencing an ageing demographic . In addition to care responsibilities for (small) children, this has led to increased needs for care for older people . Care for older people is mainly provided at home. About three quarters of people with care needs are cared for by family members (Destatis 2017), particularly women (Nowossadeck et al. 2016). As a response to the gendered nature of caregiving (and its implications for employment), public policies aim to ensure that women remain active in the labour market by easing this double burden for women of working age (or triple burden if they care for both small children and older people) .

In addition to parental leave regulations focusing on care for children, two recent reforms aimed to improve the reconciliation of care responsibilities and paid work . The Home Care Leave Act (Gesetz über die Pflegezeit) of 2008 facilitated the reduction of working time for caregivers. The opportunities and conditions for temporarily switching from full-time to part-time employment or taking specific leave when caring for older parents were improved (OECD 2018) . In 2015, the law for the better reconciliation of family, care and work (Gesetz zur besseren Vereinbarkeit von Familie, Pflege und Beruf) introduced the right to take a specific care leave for a period of up to 24 months. Furthermore, it is now possible to claim caring benefits (Pflegeunterstützungsgeld) for a period of up to one year if the carer needs to take extra leave. Carers can also get an interest free loan to compensate for up to half of the income lost due to care leave (OECD 2018) .

Employment Policies to Extend Working Life

Over the last few decades, pension policies that restricted early retirement and delayed the legal retirement age were the main instruments introduced to prolong working lives. Other policies accompanying these pension policies aimed to increase the labour market participation of older workers and postpone retirement (OECD 2018) . Measures to combat age discrimination in the labour market include the 2006 General Equal Treatment Act (Allgemeines Gleichbehandlungsgesetz – AGG), which aims to eliminate discrimination on the grounds of race or ethnic origin, gender, religion or beliefs, disability, age, or sexual orientation and sets sanctions in case of violation. An independent Anti-Discrimination Agency to support the legislative effort was set up at the Federal Ministry for Family Affairs, Senior Citizens, Women and Youth (BMFSFJ). In addition to working against age discrimination , more emphasis was given to training of older workers . One example of this approach is the program WeGebAU (Weiterbildung Geringqualifizierter und beschäftigter älterer Arbeitnehmer im Unternehmen), which was introduced in 2006. In order to improve employability , this program promoted further training in companies for low skilled workers and for workers aged 45 and above. At the same time, policies aimed to facilitate and promote lifelong learning . The law on the promotion of further training and social security in the unemployment insurance system (Arbeitslosenversicherungsschutz-und Weiterbildungsstärkungsgesetz), which was adopted in 2016, aimed to offer basic skill training courses (reading, writing, computer skills) and further training measures to individuals who are in employment but do not hold a vocational qualification. Furthermore, good practice in managing an age diverse workforce has been encouraged in collective agreements and individual employers and programs were developed to enhance job quality for older workers , like the ‘Decreasing Work-Related Diseases Programme’ funded by the German Federal Ministry of Labour and Social Affairs (BMAS) that ran from 2006 until 2010. This programme aimed to design measures to promote health and employability of older workers (OECD 2018) .

Conclusion

Over the last few decades, public policies affected significant changes to the German pension system. Particularly since the 1990s, reforms raised the statutory pension age, limited access to early retirement , and introduced a partial marketisation of pensions, which took the form of subsidised supplementary pension schemes . At the same time, the German labour market has undergone significant changes. Whereas female labour market integration in Western Germany has increased considerably over the last few decades, this increase was to a considerable degree based on part-time and low paid employment . While labour market developments resulted in an increased risk of low pension entitlements and insufficient future pension income , particularly for women, public policy reforms increased rather than decreased the risk of experiencing poverty in later life. Due to a combination of a high prevalence of career breaks, the predominance of (at least temporary) part-time work in female careers and the increased likelihood of working in low paid employment coupled with a pension system that relies on contributions generated through employment, the higher employment participation of women in West Germany has not led to considerable pension improvement for women (Simonson et al. 2012). In East Germany , women’s pensions are negatively affected by increased part-time and low paid employment . Care credits , which were introduced and extended since the 1980s, were not sufficient to improve female pensions as the German pension system still relies heavily on contributions made over the lifecourse and public policies on reconciliation of work and family responsibilities rely on a decreasing attachment to the labour market (by enabling career breaks and part-time employment) . As a result, care credits remain but ‘additions and adjustments to a deeply gendered system’ (Frericks et al. 2008: 116), leaving gendered working lives a source for a significant gender pension gap .

Important changes to the pension system also changed the face of disability pensions . Recent reforms unified two different pensions schemes under one common scheme, whereby abolishing the previously important distinction between inability to work at all or to work in one’s job or a job that requires a similar qualification. At the same time, public policies placed more importance on prevention and rehabilitation in order to avoid early labour market exit and promote the reintegration of individuals into the labour market. These measures could prove effective in retaining women (and men ) in the labour market. However, while rehabilitation and reintegration are valuable aims, individuals with serious health problems may not be able to work longer. To date, the impact of these measures remains to be seen.

In Germany, pension policies played an important part in extending working life as changes in financial incentives over the last decades encouraged a progressive delay of retirement (Berkel and Börsch-Supan 2004). Yet, these reforms only take limited account of individuals who are not able to work until the statutory pension age and (at least partially) fail to consider the biographical perspective. They also take only limited account of individuals who have a long history of precarious employment and are not able to work longer due to health problems. Pension reforms that increase the legal retirement age without taking their situation into account will only worsen their financial situation. Labour market policies which aim to ensure stable and high quality employment at earlier stages of the employment careers are strongly needed. Finally, even if rehabilitation has redirected the focus to disability pensions , more attention needs to be afforded to prevention , especially in the case of mental health problems that have become the most common health problem among disability pensioners .