Welfare State Commission Report: A Signal for a New Start Despite Major Obstacles
CommentZEW Economist Holger Stichnoth on the Welfare State Commission Report
The German Commission on Welfare State Reform has presented its final report. Professor Holger Stichnoth, head of the Research Group “Inequality and Public Policy” at ZEW Mannheim, has commented on this matter:
The proposals made by the commission are a step in the right direction. It makes sense to combine benefits and focus more on internal differentiation in order to do justice to the different logics – on the one hand, securing livelihood while helping people get back on their feet financially; on the other hand, providing financial support in certain circumstances. At present, authorities have to invest a considerable amount of time in clarifying responsibilities and – if another body later turns out to be responsible – to recover money that has been paid in excess. The introduction of a more detailed differentiation of supplementary income rules is also to be welcomed, as well as the increased focus on full-time jobs that provide a living wage. Small additional earnings are to be made less attractive, while the expansion of gainful employment is to be promoted more strongly.
Prospects for implementation
Some of the proposals can be implemented quickly. Other proposals are tough nuts to crack, such as the consolidation of services, the development of a new IT infrastructure for social administration or the introduction of a digital social portal as a central access point for citizens. As experience with basic child allowance and state digitalisation projects shows, much fine-tuning still needs to be done in this area. Nevertheless, the commission’s report is an important signal for a new start.
Experimental policies and higher quality of data
The report does not address methodological questions of policy design. In view of the many billions of euros that are moved through the social system every year, we should systematically implement experimental policies to analyse the effects of reforms. This is common practice in other countries. The quality of the data is just as important. There are gaps in the data available for the assessment of needs – a central element in social and tax law – for example the needs of children and single and separated parents. Better data could be obtained comparatively cheaply. Both issues, i.e. experimental policies and data quality, belong in the context of the digitalisation and modernisation of the state. To achieve improvements, it is essential to measure the effect of policies.
