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German Social Policy 4

Edited and introduced by


Lutz Leisering
German Social Policy
Edited and introduced by Lutz Leisering

The 5-volume series German Social Policy presents a unique multidisciplinary


approach to the history of German social policy and is written by the doyens of their
respective disciplines. The volumes expound the contribution of the German
tradition to the rise of social policy in the Western world in the 19th and 20th
centuries. Germany pioneered modern social policy in the 19th century when
Bismarck introduced social insurance. After the Second World War, Germanys
Social Market Economy became a model of social integration. The volumes cover
the history of ideas (volume 1), the legal and political history before and after 1945
(volumes 2 and 3), the German Democratic Republic (19491990) and the impact of
German reunification (1990) (volume 4). Volume 5 embeds the German case in a
major comparative study of European welfare states, complemented by a study of
the USA and the Soviet Union. The volumes also yield insights into general
theoretical issues of social policy beyond the empirical case of Germany. Each
volume has an introduction by the editor who summarizes the contribution made by
the volumes and looks into the future of German social policy.

Volume 1:
F.-X. Kaufmann: Thinking About Social
Policy The German Tradition
2013. ISBN 978-3-642-19500-6
Volume 2:
M. Stolleis: Origins of the German Welfare
State Social Policy in Germany to 1945
2013. ISBN 978-3-642-22521-5
Volume 3:
H.F. Zacher: Social Policy in the Federal
Republic of Germany The Constitution
of the Social
2013. ISBN 978-3-642-22524-6
Volume 4:
M.G. Schmidt and G.A. Ritter: The Rise and
Fall of a Socialist Welfare State - The
German Democratic Republic (1949 1990)
and German Unification (1989 1994)
2013. ISBN 978-3-642-22527-7
Volume 5:
F.-X. Kaufmann: Variations of the Welfare
State Great Britain, Sweden, France and
Germany Between Capitalism and Socialism
2013. ISBN 978-3-642-22548-2
Manfred G. Schmidt l Gerhard A. Ritter

The Rise and Fall


of a Socialist
Welfare State
The German Democratic Republic
(19491990)
and German Unification
(19891994)
Translated from the German
by David R. Antal and Ben Veghte
Prof. Dr. Manfred G. Schmidt Prof. em. Dr. Dres. h.c. Gerhard A. Ritter
Ruprecht-Karls-Universitat Windscheidstrae 41
Heidelberg 10627 Berlin
Institut fur Politische Germany
Wissenschaft
Bergheimer Strae 58
69115 Heidelberg
Germany

Operative editors: Gunter H. Ast, Lutz Leisering

Published with the financial support of:

Parts of this volume have been published previously in German in the following publications:
Bundesministerium fur Arbeit und Sozialordnung [Federal Ministry of Labour and Social
Order] and Bundesarchiv [Federal Archive] (eds.): Geschichte der Sozialpolitik in
Deutschland seit 1945, vol. 1 (of 11 volumes published 20012008): Grundlagen der
Sozialpolitik, Baden-Baden, Nomos, 2001. ISBN 3-7890-7314-8

Manfred G. Schmidt: Sozialpolitik der DDR, Wiesbaden, VS-Verlag, 2004. ISBN 978-
3810041081
Gerhard A. Ritter: Wir sind das Volk! Wir sind ein Volk! Geschichte der deutschen Einigung,
Munchen, Verlag C.H. Beck, 2009. ISBN 978-3406592089

ISBN 978-3-642-22527-7 ISBN 978-3-642-22528-4 (eBook)


DOI 10.1007/978-3-642-22528-4
Springer Heidelberg New York Dordrecht London
Library of Congress Control Number: 2012933376

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Preface to the Book Series
German Social Policy

The welfare state originated as a project of nation states, with roots in the nineteenth
century. This book is part of a book series about the German tradition of social
policy, which is one of the three paradigmatical European traditions of social policy
besides the British and the Swedish traditions. The book series covers modern
social policy in Germany from its beginnings under the early modern state to its
breakthrough in the nineteenth century to the present day, ranging from poor relief
to Bismarckian social insurance to the post World War II social market economy
and the current crisis. The series provides even more: it also locates Germany in the
wider context of a comparative study of European welfare traditions, complemented
by a study of the USA and the Soviet Union proposed to be non-welfare states
(volume 5). Furthermore, volume 4 contrasts a democratic welfare state with a
communist welfare state, namely the Federal Republic of Germany with the
German Democratic Republic which resided side by side 19491990, followed by
an analysis of the transition to the new unified Germany in 1990.
Beyond the empirical case of Germany, the work yields insights into general
issues of social policy which have been addressed in German discourses in-depth
and at an early stage. This includes the distinction state versus society which is
essential for a theoretical understanding of the welfare state; the meaning of the
social and the social question; the identification of what a welfare state is
compared to non-welfare states; and social policy issues arising during the transi-
tion from communism to democratic capitalism.
The unique quality of the book series derives from its authors. The grand old
men of German scholarship on social policy, coming from diverse disciplines, have
rendered their legacy to the scientific community and to politics: Franz-Xaver
Kaufmann (sociology) writes on the history of the idea of social policy in German
politics since the nineteenth century (vol. 1); Michael Stolleis (legal history)
presents an overview of social policy in Germany from the middle ages to 1945,
with an emphasis on the years after 1871 (vol. 2); Hans F. Zacher (constitutional law)
investigates the history of the German post-war welfare state and its normative

v
vi Preface to the Book Series German Social Policy

foundations (vol. 3); Manfred G. Schmidt (political science) analyses communist


East Germany, the German Democratic Republic (GDR, 19491990), followed by
Gerhard A. Ritters study of German unification (19891994) (vol. 4); and Franz-
Xaver Kaufmann provides an international comparison of welfare states (and some
non-welfare states) (vol. 5). All authors take a distinctly historical approach to their
subject, elaborating the formative forces of social policy in Germany.
The book series is a translated, revised and up-dated version of the first of the 11
large volumes of the History of Social Policy in Germany Since 1945.1 While two
contributions of the first volume have been left out, a study of German unification
by Ritter (based on his award-winning study of the subject) has been added to the
English version. The 11 volumes of the German work add up to the most ambitious
and comprehensive study of the history of German social policy ever published.
The work not just displays the state of the art but includes original studies which
draw on historical sources that have not been accessible before. Especially for this
work the government lifted confidentiality from many documents. Volume 1, which
underlies this book series, provides a general framework for the more specific
volumes 211 that cover 17 fields of West and East German social policy chrono-
logically. The work was initiated by Chancellor Kohl in 1994. The idea was to take
stock of the German social policy tradition at a historical moment: the Iron Curtain
over East Europe had fallen, the Treaty of Maastricht had created the European
Union (1992/1993) and German politics had eventually realized that the golden
years of the post war welfare state had come to a close. At the same time, the new
challenges of globalization and demographic change had become apparent. In the
early 1990s, German politics was only just beginning to face up to these challenges
while the authors of volume 1 of the German work were already sensible of the
inherent tensions and uncertainties of the advanced post war welfare state.
Translating, revising and extending the original German History of Social
Policy in Germany Since 1945 was not an easy task. It required a joint and
protracted endeavour of a number of persons and a considerable sum of money.
I am indebted to Richard Hauser for bringing up the idea of a translation (and
joining, with Werner Abelshauser, my application for funding with the Volkswagen
Foundation); to Franz-Xaver Kaufmann for continuously supporting the project
in many ways and with verve; to Thomas Dunlap, David Antal and Ben Veghte
who translated the demanding texts with admirable skill and care; to Gunter H. Ast
formerly Federal Ministry of Labour and Social Affairs, who acted as operative
editor of the texts with unceasing commitment and patience; to Werner A. Muller,
Katharina Wetzel-Vandai and Irene Barrios-Kezic from Springer publishers who
supported the project with diligence; and, last but not least, to the authors for their
support and patience.

1
Geschichte der Sozialpolitik in Deutschland seit 1945. Edited by the Federal Ministry for Labour
and Social Affairs (Bundesministerium fur Arbeit und Soziales) and the Federal Archive (Bun-
desarchiv). 11 volumes, Nomos publishers, Baden-Baden. 20012008. The book series is based on
a translation of the first volume, Grundlagen der Sozialpolitik. (See footnote on p. 137 or 276).
Preface to the Book Series German Social Policy vii

I thank the Volkswagen Foundation, Hannover/Germany, for generously fund-


ing the translation under their scheme Deutsch plus A Program for Multilin-
gualism in Teaching and Research (Az. II/83 610). I equally am indebted to the
Federal Ministry of Labour and Social Affairs, Berlin/Bonn which co-funded the
project, approved by the minister, Ursula von der Leyen, and processed by Thomas
Biewer. I also thank the Ministry and the Federal Archive, Nomos publishers,
Suhrkamp, C.H. Beck and VS publishers for granting permission to translate the
German work. Sage gave permission to adopt passages for the introduction from an
earlier article I wrote.2 Finally, I am most indebted to my wife Maria who gave me
time to finish this undertaking.
Lutz Leisering

2
Lutz Leisering (2003) Nation State and Welfare State. An Intellectual and Political History.
In: Journal of European Social Policy 13, pp. 175185.
.
Contents

Nation State and Social Policy: An Ideational and Political History


Introduction to the Book Series German Social Policy . . . . . . . . . . . . . . . . . . . 1
Lutz Leisering
1 The Distinction State Versus Society . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2 The Social . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3 Variations of Modern Society: Distinguishing
Welfare States and Non-Welfare States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4 Variations of the Welfare State: The Idiosyncrasy
of National State Traditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5 Post-War German Social Policy in Retrospect:
The Genesis of a Welfare State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6 What Future for the Social? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Social Policy in the German Democratic Republic . . . . . . . . . . . . . . . . . . . . . . . . . 23


Manfred G. Schmidt
1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
1.1 Political and Economic Structures of the German
Democratic Republic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
1.2 Social Policy GDR Style . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
1.3 Research Questions, Data Base, and Theoretical Frame
of Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
1.4 Structure of this Chapter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2 Socialist Social Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.1 Integrative Functions of Social Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.2 Politico-Ideological Aversions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.3 The Upgrading of Social Policy as of the 1960s . . . . . . . . . . . . . . . . . . . . . . . 31

ix
x Contents

2.4 Social Policy and the Work Society . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32


2.5 Socialist Social Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.6 Social Policys Contribution to the Class Struggle . . . . . . . . . . . . . . . . . . . . 35
2.7 Great Expectations of Social Policy: Recruiting Followers,
Attracting Confederates, and Conferring Legitimacy . . . . . . . . . . . . . . . . . . 36
2.8 Constitutional Foundations of East German Social Policy . . . . . . . . . . . . 38
3 The Institutions of Social Policy in the GDR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.1 The First Ring: The Right to Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.2 The Second Ring: Social Insurance of Workers and Salaried
Employees and Social Insurance with the GDRs State Insurance . . . . 43
3.3 The Third Ring: Social Policy for the Sphere of Reproduction
Subsidies for Basic Goods and Services, Support for Families,
Working Mothers, and Single Mothers, and Housing Policy . . . . . . . . . . 45
3.4 The Fourth Ring: The Company-Based Welfare State . . . . . . . . . . . . . . . . . 47
3.5 The Fifth Ring: Supplementary Old-Age Pension Systems,
Special Pension Schemes, and Honorary Pensions . . . . . . . . . . . . . . . . . . 50
4 The Politics of Social Policy Under the Socialist Regime . . . . . . . . . . . . . . . . . . 53
4.1 Great Latitude of the Political Leadership and High Levels
of Politico-Administrative Fragmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
4.2 Segmentation of the East German Welfare State . . . . . . . . . . . . . . . . . . . . . . 55
4.3 Authoritarian Corporatism in the GDR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
4.4 The Politburo: Hub of the Decision-Making Process . . . . . . . . . . . . . . . . . . 59
4.5 Restrictions: Foreign Control and the Enduring Repercussions
of 17 June 1953 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
5 The Welfare State as a Political Process: From Ulbricht to Honecker
to German Unification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
5.1 Disequilibrium Between Economic Performance
and Social Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
5.2 Social Policy After the Change in Power from Ulbricht
to Honecker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
5.3 The East German Welfare State in the 1980s . . . . . . . . . . . . . . . . . . . . . . . . . . 71
5.4 Social Policy in the Final Year of the GDR . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
6 Outcomes of Social Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
6.1 Areas of Social Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
6.2 The Impact of Social Policy on Social Structure . . . . . . . . . . . . . . . . . . . . . . 94
6.3 Legitimating and Delegitimating Functions of Social Policy
in the Honecker Era . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
6.4 The Lost Unity of Economic and Social Policy . . . . . . . . . . . . . . . . . . . . 106
6.5 Political Causes of the Trade-Off Between Social Protection
and Economic Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
7 The GDR in Comparative Perspective: A Socialist Work
and Welfare State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
7.1 Social Policy in East and West and Across the Eastern
European Nations: Commonalities and Differences . . . . . . . . . . . . . . . . . . 117
Contents xi

7.2 Social Policy in the GDR in an Expanded Comparison


of Welfare State Regimes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
8 Continuity and Discontinuity in East Germanys Social Policy . . . . . . . . . . . 132
8.1 The First and Second Reorganization of Social Policy
on East German Territory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
8.2 Regime Shift and Continuity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137

The Politics of German Unification. Social, Economic, Financial,


Constitutional and International Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
Gerhard A. Ritter
1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
2 The International Context of German Unification . . . . . . . . . . . . . . . . . . . . . . . . . 168
2.1 The Collapse of SED Rule in the GDR and Chancellor Kohls
Unification Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169
2.2 The Path to Unification Is Paved. The Offer of Monetary Union
and the Concept of the Two Plus Four Talks . . . . . . . . . . . . . . . . . . . . . . . . . 177
2.3 German Unification Is Completed. From the Volkskammer
Election of March 1990 to the GDRs Accession to
the Federal Republic on 3 October 1990 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183
2.4 German and European Unification: An Assessment . . . . . . . . . . . . . . . . . . 192
3 Social Policy in the Process of Unification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200
3.1 The Positions of the Germanys Main Political and
Social Actors on Social Policy During Unification . . . . . . . . . . . . . . . . . . . 203
3.2 The System of Social Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205
3.3 The Health Care System, Introduction of Long-Term Care
Insurance, and Family and Womens Policy . . . . . . . . . . . . . . . . . . . . . . . . . . 215
3.4 Labor Law, Labor Relations and Labor Market Policy . . . . . . . . . . . . . . . 223
3.5 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234
3.6 The German Welfare State in Comparative Context . . . . . . . . . . . . . . . . . . 239
4 The Economic, Financial and Constitutional Problems of Unification . . . . 242
4.1 German Unification as a Constitutional Problem and Subject
of Political Conflict, 19491989 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242
4.2 The Economic Demise of the GDR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245
4.3 The State Treaty of 18 May 1990 as a Decisive Step
Toward Monetary, Economic and Social Union . . . . . . . . . . . . . . . . . . . . . . 248
4.4 Financial and Constitutional Questions in the Unification Treaty
of 31 August 1990 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 256
4.5 The Consequences of Unification for the Economy and State
of the Federal Republic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265
4.6 The Effects of Unification on the People in Germanys East . . . . . . . . . 270
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276

Index of Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289


Subject Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295
.
List of Abbreviations

ACDP Archiv fur Christlich-Demokratische Politik der Konrad-


Adenauer-Stiftung
AdsD Archiv der sozialen Demokratie der Friedrich-Ebert-Stiftung
AIDS Acquired Immune Deficiency Syndrome
AG Aktiengesellschaft (public limited company)
BGBl. Bundesgesetzblatt (Official Statute Register of the Federal
Republic of Germany)
BMA Bundesministerium fur Arbeit und Sozialordnung, see note on
page 137 or 276
BMF Bundesministerium der Finanzen (Federal Ministry of Finance)
BRD Bundesrepublik Deutschland (Federal Republic of Germany)
BTDrs. Bundestagsdrucksachen (parliamentary papers and documents,
including bills). Published by Deutscher Bundestag
(German Federal Parliament). Example: BTDrs. 12/7560: The
first number denotes the electoral period of parliament, the
second number is the number of the document. Available online
since the 8th electoral period (beginning 14 December 1976),
see Deutscher Bundestag/Drucksachen and Plenarprotokolle
online) Bundestag/Drucksachen and Plenarprotokolle
online)
CDU Christlich-Demokratische Union (Christian Democratic Union)
COMECON Council for Mutual Economic Assistance (Rat fur gegenseitige
Wirtschaftshilfe, RGW)
CSCE Konferenz uber Sicherheit und Zusammenarbeit in Europa
(KSZE) (Conference on Security and Cooperation in Europe)
CSSR Tschechoslowakische Sozialistische Republik (Czechoslovak
Socialist Republic)
CSU Christlich-Soziale Union (Christian Social Union)
DDR Deutsche Demokratische Republik (German Democratic
Republic)

xiii
xiv List of Abbreviations

DA Demokratischer Aufbruch (Party Democratic Rising)


DAG Deutsche Angestelltengewerkschaft (German white-collar
union)
DBD Demokratische Bauernpartei Deutschlands (German Democratic
Agrarian Party)
DGB Deutscher Gewerkschaftsbund (German Federation of Trade
Unions, FRG)
DM Deutsche Mark (German Mark)
DSU Deutsche Soziale Union (German social union)
DVA Deutsche Versicherungsanstalt (German Insurance Agency,
GDR)
EC Europaische Gemeinschaft (European Community)
ECU European Currency Unit
et al. et alii (and others)
e.V. seingetragener Verein (registered society)
EU Europaische Union (European Union)
FDGB Freier Deutscher Gewerkschaftsbund (Free German Trade
Union Federation, GRD)
FDP Freie Demokratische Partei (Free Democratic Party)
FRG Federal Republic of Germany
GBl. Gesetzblatt der Deutschen Demokratischen Republik (Official
Statute Register of the German Democratic Republic)
GDR German Democratic Republic
GDP Gross Domestic Product
GG Grundgesetz (Basic Law)
IG Industriegewerkschaft (Industrial trade union)
ILO International Labour Organization
KPD Kommunistische Partei Deutschlands (Communist Party of
Germany)
KPdSU Kommunistische Partei der Sowjetunion (Communist Party of
the Soviet Union)
LDPD Liberal-Demokratische Partei Deutschlands (Liberal-
democratic Party of Germany)
NATO North Atlantic Treaty Organization
NDPD National-Demokratische Partei Deutschlands (National
Democratic Party of Germany)
NRW Nordrhein-Westfalen (North-Rhine-Westphalia)
NVA Nationale Volksarmee (National Peoples Army, GDR)
OECD Organization for Economic Cooperation and Development
PDA Pressedienst der Deutschen Arbeitgeberverbande (German
Employers Associations press service)
PDS Partei des Demokratischen Sozialismus (Party of Democratic
Socialism)
List of Abbreviations xv

MFS Ministerium fur Staatssicherheit (Ministry of National Security,


GDR)
MS Manuskript (mimeo)
NS Nationalsozialismus (National Socialism)
SAPMO-BArch Stiftung Achiv der Parteien und Massenorganisationen der
ehemaligen DDR im Bundesarchiv (Foundation Archives of the
Parties and Mass Organisations of the GDR in the Federal
German Archive)
SBZ Sowjetische Besatzungszone (Soviet occupation zone)
SDP Sozialdemokratische Partei (Social Democratic Party, GRD)
SED Soziallistische Einheitspartei Deutschlands (Socialist Unity
Party of Germany, GDR)
SPD Sozialdemokratische Partei Deutschlands (Social Democratic
Party of Germany)
SMAD Sowjetische Militaradministration in Deutschland
(Soviet Military Administration in Germany)
SVAA Sozialversicherung der Arbeiter und Angestellten
(Social Insurance of Workers and Salaried Employees, GDR)
Tab. Tabelle (Table)
UdSSR Union der sozialistischen Sowjetrepubliken (Union of Soviet
Socialist Republics)
UN United Nations
U.S./US United States of America
VAT Value Added Tax (Mehrwertsteuer)
VEB Volkseigener Betrieb (Peoples Own Enterprise, GDR)
VME Verband der Metall- und Elektroindustrie (Association of Metal
and Electrical Industries)
ZeS Zentrum fur Sozialpolitik der Universitat Bremen (Centre for
Social Policy Research at the University of Bremen)
.
Nation State and Social Policy: An Ideational
and Political History
Introduction to the Book Series German Social Policy

Lutz Leisering

Advances in social policy were often related to processes of nation-building, like


the introduction of social insurance by Chancellor Bismarck during the years
18831889 which contributed to the social integration of the new German Empire.
The Empire had been created through the unification of the numerous German
states in 1871. Critical periods in a countrys history that went along with a renewal
of the national spirit also propelled social reform, like the New Deal during the
Great Depression in the 1930s and the creation of the British welfare state in the
immediate aftermath of World War II. Today, the golden age of the welfare state,
the decades after WW II, has passed. Domestic problems combine with the impact
of globalisation. Some authors assume that globalisation makes nation states
increasingly irrelevant. What, then, is a history of a national welfare state as
presented in this book series good for in the contemporary debate?
Western welfare states have proved to be resilient amidst domestic and global
crises. While welfare states are undergoing far-reaching change there is no sign that
welfare statism is disappearing. To the contrary, the social and social policy have
been spreading to the global South since the 1990s to become a key issue of global
politics socialization of global politics (Deacon 1997). Looking into the intel-
lectual and political history of one of the great traditions of social policy, indeed the
pioneer of modern social policy, Germany, may then shed light on key issues of
social policy that continue to underlie political debates and conflicts. Stolleis
(in volume 2 of the work) argues that the past is still present in current policies
and institutions, like layers that have piled up in the course of history, including pre-
Bismarckian social policies.
The analysis of the last 130 years of German social policy (plus earlier periods)
as presented in this work uncovers key issues of social policy which are relevant
beyond the German case: the disjunction state versus society to which social
policy is seen as a response in the German intellectual tradition; the meaning of the
social, the social question and social policy; the meaning of welfare state as
compared to non-welfare states; and social policy in different societal settings like
monarchy, national socialism, communism, democracy and affluent society and
during periods of transition.

M.G. Schmidt and G.A. Ritter, The Rise and Fall of a Socialist Welfare State, 1
German Social Policy 4, DOI 10.1007/978-3-642-22528-4_1,
# Springer-Verlag Berlin Heidelberg 2013
2 Nation State and Social Policy: An Ideational and Political History

1 The Distinction State Versus Society

The history of social policy has been riddled with debates about individualism
versus collectivism, about state versus market and related dichotomies. In current
controversies about globalisation, free marketeers quarrel with advocates of
social and ecological regulation of global markets. While these are world-wide
issues, Germany, more than any other country, has developed an intense political
discourse on the state and on the distinction between state and society that
goes back to the early nineteenth century and is worth looking at.
Franz-Xaver Kaufmanns Thinking About Social Policy (volume 1 of the book
series) traces the political history of the concept of social policy. Social policy as
a political and scholarly concept originated in Germany in the second half of the
nineteenth century, to become more prominent only after World War II. In Britain,
France and other countries it gained ascendance only in the 1970s. Kaufmann
argues that social policy has emerged as a response to problems of societal
integration which, from the point of view of Hegelian philosophy, arose from a
disjunction between state and society.
Kaufmanns point which sets the theme for the whole book series is that the
history of social policy is the history of the changing relationship between state and
society and of the ensuing problems of social integration. The German Philosopher
Hegel (17701831), after first allusions by Montesquieu, diagnosed the disintegration
of the ancient and early modern idea of a unitary, politically integrated society the
Lockean political society into two heterogeneous spheres, state versus society
or public versus private. It was here [in Hegels philosophy L.L.] that the
political and the social appeared for the first time as two separate spheres dominated by
different legal principles, and the relationships between them subsequently
became the fundamental issue of social policy (Kaufmann, volume 1, p. 29). The
problem, as the Hegelians saw it, was that society, mainly the economy,
was a source of uncontrollable dynamics and social problems.
The diagnosis of separate spheres was further developed in the twentieth century
by the sociologists Talcott Parsons and Niklas Luhmann under the name struc-
tural or functional differentiation of society (Luhmann 1982). In their view,
too, functional differentiation generated a problem, namely the necessity of
enabling persons to participate in functional systems. Drawing on T.H. Marshall
they referred to this requirement as the problem of inclusion.
While Marx (18181883), who was a Hegelian, proposed communism as
a solution, that is, a fusion of the Societal and the Political, his contemporary
Lorenz von Stein (18151890), also a Hegelian, proposed a compromise solution
(which today could be termed social-liberal) which he called social-policy.
Social-policy was to link the Societal and the Political (through social administra-
tion) while preserving a basic autonomy of the Societal (in modern terms: to
intervene in the economy, family etc. in a non-totalitarian way). Lorenz von Stein,
a lawyer and economist, was the intellectual father of the welfare state, precisely
100 years before Beveridge (von Stein 1842) and two years before Marx published
2 The Social 3

his first concept of communism (not yet termed as such; see Marx 1978, first
published in 1844) based on the same diagnosis of class conflict in industrial society
as von Steins. The distinction between state and society and the analysis of
their precarious relationship has shaped the German tradition of thinking about the
state and social policy ever since (Luhmann 1987).
Germany was a latecomer to industrialization and to nation-building but the
pioneer of state welfare. Bismarcks social insurance was a means of integrating the
new nation state and securing support by the laboring classes. German liberalism
was weak and the Manchester theory had eventually fallen in disrepute after the
economic crisis of 1873, as Stolleis points out in his Origins of the German Welfare
State Social Policy in Germany to 1945 (volume 2 of the book series, p. 52).
During those years the term social policy started its career in politics. Social policy
set out as a comprehensive workers policy (Arbeiterpolitik) in a society divided
by class. During the nineteenth and twentieth centuries the concept of social
policy changed its meaning several times, mirroring new challenges of societal
integration and new ideas of the social.
After World War II, social policy expanded in an unprecedented way, connected
to two new formulas designed to denote the place of social policy in post-war
society. The first formula, Social Market Economy, aimed to integrate the
economic and the social. The second formula, social state, the German version
of welfare state, was contained in the post-war constitution of the new Federal
Republic of Germany 1949, the Grundgesetz (1949). (The year before, 1948, had
witnessed the creation of the British welfare state.) The year 1949 marked
a double state building (Christoph Klessmann) which reflected the link between
social policy and nation building. While the German Constitution of 1919 had
already included articles on social welfare regulations, the West German Constitu-
tion of 1949 was the first to establish the social state as constitutive principle of
the German polity, not to be changed even by a majority in Parliament. In the same
year, the German Democratic Republic (GDR) was founded in East Germany under
the influence of the Soviet Union. The GDR opted for socialism, presented as an
alternative to the West German social state (see below). The meaning of Social
Market Economy and social state was indeterminate and contested. Political
controversies during the 1950s generated some clarification but the two formulas
continued to indicate the openness of the idea of the social in the development of
the Federal Republic of Germany.

2 The Social

Out of the three components of democratic welfare capitalism the hyphenated


society (Marshall 1981) the component welfare (state) has remained more
contested than the other two, democracy and market. This hints at problems of
identifying the social. . . . the systemic character of social policy is not nearly as
evident as that of the market economy. What the social means in distinction to the
4 Nation State and Social Policy: An Ideational and Political History

economic and the political . . . to this day no clarity has emerged on this question
(Kaufmann, volume 1, p. 97f.). Nullmeier, in his political theory of the welfare
state (2000, chapter VI, p. 2), points at the inferior legitimacy of social rights as
compared to civil and political rights.
Like the distinction between state and society, the term (the) social is part of
the German tradition. Hans F. Zacher, in his Social Policy in the Federal Republic
of Germany (volume 3 of the book series): The social is in a very special way part
of Germanys national identity (pp. 315). Germans call their welfare state a social
state. In France, the term solidarity has played a comparable role from the
nineteenth century and still shapes present-day debates on social policy. The term
social emanated in the 1830s in Germany, with influences from France, and soon
fed into the term social policy and other nineteenth century semantics like the
social question. Unlike British and French usage, the word social assumed
a strongly normative and critical connotation in the German language: the word was
contrasted to the individualistic to denote something that was seen to be absent
from civil society (b urgerliche Gesellschaft; Kaufmann, volume 1, p. 32). After
World War II, the social became a common element of the political and scholarly
language in Germany. In the British community of social policy researchers, the
term the social figures less though increasingly. Remarkably, the term has
recently even reached the global level, as indicated by novel semantics of global
social policy like social pensions, social cash transfers, corporate social
responsibility and social sustainability.
. . . social has something to do with equality and inequality. Social negates
a certain measure of inequality or more precisely: certain constellations of
inequality. . . . social is a mandate to distinguish unreasonable inequalities from
reasonable or at least tolerable ones (or less important ones), and to eliminate,
compensate for, or at least diminish the unreasonable ones (Zacher, volume 3,
p. 24). This implies that the meaning of the social may change, and that it varies
across time and between social groups. In politics, the semantic field of the social
encompasses ideas like social justice, individual social rights, protection and
security. In the British debate, the social is often defined with reference to need
but need is an equally fluid concept. Despite or rather just because of its vagueness,
reference to the social may exert considerable political pressure on policy-
makers. What appears to be a deficiency is in Zachers view the very essence of
the social. He sees the openness and changeability of the social as an intrinsic
feature of a welfare state in a free and democratic society, a feature that was
lacking, e.g., in the German Democratic Republic.
The difficulty to pin down the meaning of social policy and the social indicates
the compromise character and the historical changeability of social policy: From
the point of view of the great political doctrines of liberalism, socialism and
conservatism, social policy has evolved as a seemingly heterogeneous sequence
of inconsistent compromises. By contrast, this analysis rests on the assumption that
the history of social policy in Germany reflects an independent reformist strand
which developed against the backdrop of the three great ideologies but has
independent roots and points of view. The social-democratic, Christian-social,
2 The Social 5

and social-liberal position appear not only as a more or less consistent compromise
between liberal, socialist, and conservative ideas, but in many cases also as a
productive synthesis with far-reaching positions of its own (Kaufmann, volume
1, p. 26; for Christian Democracy and the welfare state see van Kersbergen 1995).
Therefore, remarkably, unlike British textbooks on social policy, Kaufmann in his
Thinking About Social Policy (volume 1) pays scant attention to liberal, socialist
and conservative thought when tracing the history of the idea of social policy.
The great ideologies do not tell us a lot about questions of social development
and institutional design in a complex and changing society. Esping-Andersen has
used these ideologies to label two of his three welfare regime types, the liberal and
the conservative regime. Kaufmanns alternative approach to comparative welfare
state analysis (see below) shows that these labels are inadequate to distinguish
between welfare states. In line with Kaufmanns interpretation of social policy as an
ideological compromise, Schmidts (2005) and Obinger and Wagschals (1998)
empirical analyses of the impact of political parties have shown that the German
welfare state is more accurately characterised as centrist rather than conserva-
tive (see below).
In the post-war period, the social has been strongly associated with state welfare
and the idea of the welfare state. In Germany, the term social state is preferred to
welfare state, the latter sounding egalitarian or even totalitarian to German ears,
and makes some people think e.g. of Sweden.1 Zacher (volume 3) challenges the
social democratic orthodoxy of equating the social with social intervention by the
government. Rather, Zacher defines the social by a basic formula which posits
work and family as the primary sources of providing for human needs, with the law
enabling, securing and compensating the operation of work and family. Only the
state and society together can adequately bring about the social (Zacher, volume 3,
p. 46). Zacher (volume 3, p. 43) also speaks of a constant intermingling of private,
societal-public, and state activities. In Zachers view the actual ability of the welfare
state to impact on the welfare of individuals is mostly overrated, by advocates and
critics of the welfare state alike.
The doyen of German post-war social policy thinking, Hans Achinger (1979, first
published 1958) also objected to equating the social with the welfare state. In his
view, social policy cannot lay claim to representing unique social values. Achinger
challenged the claim that the social constitutes an independent normative province:
the idea of an autonomous normative sphere of social policy is a delusion. Social
policy relies on ideas of order stemming from other social spheres (Achinger 1979,
p. 7; transl. L.L.). In the British debate, Robert Pinker, in his critique of the Titmussian
orthodoxy (Pinker 1971, 1979), similarly rejected the notion of a moral superiority

1
In addition, social state is a term of German constitutional law denoting the social obligation
of the state. Therefore, Kaufmann and Zacher (volumes 1, 3 and 5) use the term social state
rather than welfare state when they refer to Germany. The other authors of the series mostly use
the Anglo-Saxon term welfare state, which is also used as a theoretical term by German scholars.
See Ritter (volume 4, footnote 64) for further explications of the terms.
6 Nation State and Social Policy: An Ideational and Political History

of the social market (Titmuss) over the economic market. Rather, the social,
welfare and social policy are pluralistic concepts. Welfare state always means
welfare state in a free society (liberal welfare state; freiheitlicher
Wohlfahrtsstaat; Zacher, volume 3, p. 45), that is, a state in a mixed society in
which the social is not primarily promoted by the government. State provision is part
of a wider welfare mix, and in Germany even state often means intermediary
agencies like social insurance, which in Germany are non-state agencies with separate
budgets, or voluntary welfare associations.

3 Variations of Modern Society: Distinguishing Welfare States


and Non-Welfare States

Studies of the welfare state normally assume that every Western society is a welfare
state. Franz-Xaver Kaufmanns Variations of the Welfare State (volume 5 of
the series) questions that assumption. Cross-national comparisons which use the
typological method, most prominently Esping-Andersens work, often cannot dis-
tinguish between welfare states and non-welfare states. In Kaufmanns view, the
instability of the classification of countries (noted by many commentators espe-
cially with regard to Esping-Andersens original classification of 1990) indicates
that the dimensions of comparison have been insufficiently worked out in theoreti-
cal terms. Esping-Andersen, from a political economy point of view, defines
welfare statism by decommodification but his decommodification index has no
cut off point that could distinguish between welfare states and non-welfare states.
Other authors define welfare state in descriptive institutional terms, by a list of
social services (common in the Anglo-Saxon literature), but then any country with
a range of social services may appear as a welfare state.
By contrast, Kaufmann emphasizes the normative and cultural dimension of the
welfare state by distinguishing two sides of the welfare state: the welfare sector
as a range of social services and administrations and welfare politics as political
action revolving around social issues. We can speak of a welfare state if and
only if social services are linked to normative orientations: if political actors
assume a collective responsibility for the well-being of the entire population
(Kaufmann, volume 5, p. 35). Kaufmann subscribes to the definition by Harry
Girvetz (1968, p. 512) which emphasizes law and normative orientations: The
welfare state is the institutional outcome of the assumption by a society of legal and
therefore formal and explicit responsibility for the basic well-being of all of its
members. Such a state emerges when a society or its decision-making groups
become convinced that the welfare of the individual [. . .] is too important to be
left to custom or to informal arrangements and private understandings and is
therefore a concern of government. The core of a welfare state is the commitment
to social rights (inclusion) embedded in a culture of social responsibility.
This ambitious definition of welfare state has methodological consequences.
It implies a new approach to the comparative study of nation states that emphasizes
3 Variations of Modern Society: Distinguishing Welfare States and Non-Welfare States 7

norms, culture and history. Kaufmann elaborates such a socio-cultural approach


(see the next section). It is a holistic and institutionalist approach which yields rich
analyses of the gestalt of a welfare state and, if used comparatively, produces
accounts of the idiosyncrasy (Eigensinn; Kaufmann, volume 5, p. 31) of each
welfare state (Ginsburg 1992 and Castles 1993 are cited as kindred approaches). In
this way, the variety of welfare states is exposed while avoiding a coarse typology.
Moreover, the socio-cultural approach enables Kaufmann to show, based on
meticulous secondary studies of the USA and the former Soviet Union, that not all
modern nation states are welfare states. Some are just capitalism the USA ,
some are socialism the former Soviet Union , and others, especially countries
of the global South, may muster some social services for privileged groups mostly
related to government or the military but lack a normative concern that defines
a welfare state.
In this light, the (essentially West European) welfare state appears as a third way
between capitalism and socialism. Anglo-Saxon researchers easily classify the
USA as welfare state or welfare capitalism. The USA has not ratified the Interna-
tional Covenant on Economic, Social and Cultural Rights of 1966. During the war
on poverty in the 1960s there arose perhaps the only time in US history
a political and public majority opinion that believed in the potential of social policy
to shape society (Kaufmann, volume 5, p. 84). The departure of the 1960s was
triggered by a moral and civil crisis, not by an economic crisis as in the case of the
New Deal of the 1930s.
In the burgeoning literature on welfare regimes and typologies Kaufmanns
comparative approach that highlights the idiosyncrasy of welfare states offers
a stimulating new perspective. By including and identifying non-welfare states
Kaufmann also contributes to the more general debate on the varieties of capital-
ism opened up by David Soskice and others (for an overview see Hall and Soskice
2001). The varieties of capitalism debate concentrates on the economy, on
industrial relations and the labor market while Kaufmann adds the fields of social
security and personal social services and discusses them in conjunction with the
economic fields.
Manfred G. Schmidts Social Policy in the German Democratic Republic (GDR,
communist East Germany; in volume 4 of the series) helps to put the distinction
between welfare states and non-welfare states to the test. The welfare of the people
was a major promise and source of legitimacy of the GDR. All power serves the
good of the people (Constitution, article 4). We are guaranteed social security
and safety, full employment, equal educational opportunities for all children of
the people (Honecker in 1986, quoted by Schmidt, volume 4, p. 27). The right to
work was seen as the showpiece of the GDR. The status of the GDR as an
independent nation state beside the West German Federal Republic was always
contested. Social rights and social security were meant to underpin the claim of the
GDR to be a genuine socialist nation and the better alternative to West Germany.
Again, social policy and nation building were closely linked. Schmidts contri-
bution aims to test the claim of the GDR to be superior in social terms.
8 Nation State and Social Policy: An Ideational and Political History

Social policy was not seen as an original field of politics in the GDR till 1961.
This was true to the original doctrine of communism, because social policy
assumes a distinction between state and society while communism means
a fusion of both spheres. The East German leaders opted for Marx, not for Lorenz
von Stein. 19611971 under Ulbricht, the concept socialist social policy emerged
though the social remained subordinated to the economic. The year 1961 when
the Berlin Wall was erected was the true founding date of the GDR. Honecker
(19711989) made the unity of economic policy and social policy a key formula
of social development. The strategy was to increase consumption, to raise the
motivation of the workers and to boost birth rates.
Social spending was low by international standards (around 15% of gross
domestic product (GDP), measured by the International Labour Organization
(ILO)) and social services offered not more than bare minimum standards or even
less. However, if we take into account the cost of subsidies to basic consumption
goods and the cost of securing full employment through unproductive work, social
spending figures easily double. But the economy was too weak to sustain that
degree of security and safety. Schmidts key thesis is that there was a grave, in
fact excessive imbalance between the moderate economic performance and the
high degree of social protection in the GDR. The sociologist M. Rainer Lepsius
once remarked that the GDR in 1989 became the first welfare state to collapse
under the burden of its social services.
But was it really a welfare state? Did the GDR positively grant social rights?
Schmidts answer is negative. The GDR was far removed from all Western
welfare regimes (Schmidt, volume 4, p. 131). The right to work, to education, to
housing and to protection in case of illness, incapacity and old age was proclaimed
but it was substantially qualified in its realisation (and subject to societal
requirements even in the Constitution, article 24). The gap between the rights
and the actual services was wide: the level of services was low (with an estimated
40% of pensioners living in poverty, measured by the 50% income threshold),
benefits were increased irregularly by way of political discretion and the rights
could not be claimed in court. The GDR was not a welfare state as defined by
Kaufmann because the social was dominated by the political and the economic.
Political considerations were paramount, with substantial legal privileges for state
elites, e.g. with regard to old-age pensions, and discrimination of children from
bourgeois or religious backgrounds in the educational system. In addition, social
security was used for economic purpose. The GDR was more of a workfare state
than the USA.
The GDR was neither a welfare state as defined by Zacher. A closed, static
notion of social needs prevailed: the level of benefits met pre-war standards and
provisions were not responsive to changing aspirations in an individualistic society
that emerged in the 1980s even in the GDR. This was not an open and pluralistic
concept of the social stipulated by Zacher as the core of a welfare state in a free
society. The implicit formula of the GDR social rights without civil and political
rights did not work out because social rights interlock with civil freedom and
political participation. But central planning, not freedom, was the overriding
4 Variations of the Welfare State: The Idiosyncrasy of National State Traditions 9

concept of society. It thus seemed possible even to plan individual and social
consumption (Schmidt, volume 4, p. 30). Work was not seen as a social but as
a mere economic issue that had been resolved the Ministry of Labour was
dismantled in 1958, the labor exchanges even earlier (Kahlenberg and Hoffmann
2001, p. 181). Even family policy was reduced to boosting birth rates; the tradi-
tional gender arrangement was only half changed, with more women in employ-
ment but still doing the house work. This was not a welfare state. It was an
authoritarian, paternalistic work and welfare state (Schmidt, volume 4, p. 131).
Gerhard A. Ritters The Politics of German Unification. Social, Economic,
Financial, Constitutional and International Issues (in volume 4 of the series)
analyses the years from the eve of unification of West and East Germany in 1989
to the aftermath of unification (till 1994). The transition from communism to a new
post-communist order in East European countries has been widely studied. East
Germany was special since it had a Western counterpart. In this case transition
meant merger with the Federal Republic of Germany. In some respects this made
things easier compared to other Eastern countries that were left to fend for them-
selves even if international agencies offered some support. In other respects the
transition was more difficult due to problems of making two worlds meet and of
integrating a less modernized region into the Federal Republic of Germany.
German unification made the link between nation building and social policy
explicit again. The Social Union, that is, the integration of the two Germanys in
social policy terms, turned out to be a critical strand of unification. The Social
Union was initially contested. When planning for unification, three alternative
strategies were considered: delaying the Social Union, that is, not (fully) transfer-
ring the generous West German social services and rights to the East in order to
facilitate economic growth; transferring the West German system topped up by
alleged or real social achievements of the GDR to be retained; and transferring
the West German system without topping up. The latter solution prevailed as a
compromise, turning the GDR into a modern welfare state in one day, at least
legally. Failure to achieve a viable Social Union might have put the entire process at
risk: . . . in light of the economic problems and constellation of political forces,
there was ultimately no alternative to extending the West German welfare state to
the East. This is not to deny several grave errors in the social policy of unification
(Ritter, volume 4, p. 204).

4 Variations of the Welfare State: The Idiosyncrasy of National


State Traditions

With his holistic cultural approach Kaufmanns Variations of the Welfare State
(volume 5) analyses Britain, Sweden, France and Germany (besides the USA and
the Soviet Union as non-welfare states). Each country is portrayed as a singular case
with an autonomous cosmology (Kaufmann, volume 5, p. 33) rooted in history
10 Nation State and Social Policy: An Ideational and Political History

and culture. While this may sound rather vague and soft, Kaufmanns analyses
yield ample new and fascinating insights into the cultural and institutional diversity
of a continent (Europe) which is moving towards political unity. Kaufmann also
provides analytical categories that can be used by students of comparative politics
to move beyond the standard ways of comparing welfare states. All country studies
follow the same pattern (which is also applied in the analyses of the non-welfare
states), with a focus on three themes:
1. The relationship between state and society in a country, that is, the historical
state tradition (see also Dyson 1980) with regard to institutional patterns
(government, public administration, courts; federal vs. unitary systems, central-
local government relationships etc.) and ideas (about the proper scope of govern-
ment, about ways and means of intervening or not intervening in the economy,
family and private life). Germany, e.g., as explicated earlier, is imbued by the
distinction between state and society. Stolleis specifies the influence of the
German state tradition in the historical situation of German unification after 1871.
In the face of a weak liberal tradition, the legacy of the autocratic state and of the
corporatist or intermediary structures of early modernity produced a mixture
of half-authoritarian and autonomous structures (Stolleis, volume 2, p. 59)
typical of German social policy ever since.
2. The problem definition prevalent in social politics: . . . how the social question
is posed [in a country L.L.], that is, how the guiding problem of the respective
social policy was articulated at the beginning of its development, will be
postulated as a revealing key for understanding national developments of the
welfare state (Kaufmann, volume 5, p. 32f.). The guiding problem (Bezugs-
problem, problem of reference) is assumed to influence both discourse and
institutional practice even at much later stages in the development of social
policy. The original social question, the problem that has propelled social
politics in Germany, was the workers question, that is, the social risks and
needs of the industrial worker to which Bismarcks social insurance was
a response. The workers question was the key issue of social integration in
the new German Empire founded in 1871: National and social questions came
together in a half-finished state structure and necessitated an intensive linkage of
domestic and foreign policy (Stolleis, volume 2, p. 57). By contrast, British
social policy remained oriented towards the problem of poverty. The social
question which permeates the Swedish system is the issue of inequality, which
gave rise to universal services. In France the concern for family and population
has been at the heart of social policy. These four different problem definitions
(which do not follow a linear order) have left their traces in the institutional
design of each welfare state. They define national welfare paths.
3. The sectoral structure of social services in a country. Kaufmann looks at three
heterogeneous fields of social policy: production (labor law, industrial relations,
labor market policy), (re-)distribution (income maintenance) and reproduction
(personal social services, benefits in kind). The literature is mostly confined to
one or two of these fields or even parts thereof, so balances and imbalances,
4 Variations of the Welfare State: The Idiosyncrasy of National State Traditions 11

similarities and dissimilarities, between the three fields in one country cannot be
identified (Esping-Andersen 1990, e.g., operationalizes decommodification
only on the basis of cash benefits.) The relationship between the fields also
reflects political problem definitions, indicating a national profile of a welfare
state. Alber (1995) and Mayer (1997) also analyse the question of homogeneity
and heterogeneity of social policy fields as a methodological challenge for
welfare state analysis. Kaufmann (2012; chapter first published in German in
1982) earlier developed a theory of socio-political intervention that yields a
distinction of four heterogeneous types of intervention akin to four policy fields.
Similarly, Kasza (2002) diagnoses a disjointed set of welfare policies in most
countries. As a consequence he rejects the concept of welfare regimes alto-
gether and calls for restricting comparative analyses to specific policy areas. But
this conclusion is not necessary. Kaufmann takes differences between policy
fields as part of the profile of a welfare state.
The German welfare state, e.g., is biased towards income maintenance whereas
the British welfare state is stronger on services. Old-age pensions are the sacred
cow in German politics, a role which in Britain is played by the National Health
Service. Labor law is more important in Germany than in Britain. Kaufmann is
interested in tracing incongruent normative patterns in different fields of social policy
in one country, indicating package solutions (Kaufmann, volume 5, p. 32) that have
proved viable as a political compromise. The British welfare state, e.g., combines full
egalitarian health services with a poverty approach to income security in old age. This
is one reason for the difficulty of classifying the British welfare state.
With these three dimensions of welfare states in mind, the profiles of the British,
the Swedish and the French welfare states emerge more clearly. For Britain, the
most basic finding is that the distinction state versus society is not even applicable
because it is rooted in the Roman legal distinction between public and private law
which is not part of British common law. Since the Glorious Revolution and John
Locke, government (not the state!) has been seen as the trustee of civil
society, a term that retained the old meaning of res publica, of a unitary, politically
integrated political society: Thus, the notion of society was not depoliticized and
was not infused with the derogatory aftertaste it acquired so often in continental
political thought as the embodiment of particularist and mostly economic private
interests (Ritter 1964, p. 30, quoted by Kaufmann, volume 5, p. 93). In a paradoxi-
cal way, the weak notion of state enabled Britain to develop a system of government
with powers that are constitutionally less restricted than in Germany. The British
state tradition also includes a late professionalization and bureaucratization of the
civil service and a liberal-utilitarian justification of state intervention that follows
the logic of Benthamite rational collectivism. British utilitarianism and German
Hegelianism have consistently ignored each other. The British labor movement was
much more concerned with the idea of self-help than the German labor movement,
and it produced a political (Labour) party much later (1900; Germany: 1863/1869/
1875) even though Germany was industrialised much later than Britain.
12 Nation State and Social Policy: An Ideational and Political History

The Swedish state-society tradition represents a third, peculiar type. In Sweden,


. . . similar to England, the tension between state and society hardly played any
role, though for very different reasons (Kaufmann, volume 5, p. 117): While
Britain was a latecomer to modern state bureaucracy, Sweden (together with
France) was a pioneer, even preceding Prussia, the dominant German state before
German unification in 1871. But the evolving civil society in Sweden never really
confronted the state as in Germany. On this basis, a modern interventionist state
could develop which never became detached from society for a number of
reasons, such as extensive participation of societal interests through associations
and political parties, an efficient public administration with relative independence
of government, strong local government, pragmatic rationalism, ethnic homogene-
ity and the tradition of a unitary state church.
France represents yet another singular type. The relationship between state and
society is ambivalent. There is a tradition of a strong central state and public
administration but the unity of the country is projected onto society as a whole,
e.g. by the early sociologists Comte and Durkheim. The nation (not the state) as
a cultural entity and the idea of solidarity constitute the social bond in society.
We can conclude that simple distinctions like strong vs. weak state or big vs.
small government do not capture the complexity of the state and its role in a given
society. This complexity needs to be taken into account in order to understand the
diversity of national paths of welfare state development in Europe.

5 Post-War German Social Policy in Retrospect: The Genesis


of a Welfare State

History is subject to continuity and discontinuity, to stability and change, and so is


the history of social policy. National transitions of welfare are path dependent,
that is, departures from institutional structures established during the formative
years require sustained efforts to materialize. Stolleis (volume 2, p. 23, 24f.)
speaks of layers of historical growth, including pre-Bismarckian sources, that
linger in present-day systems of social welfare: All forms of provisioning against
risk and its consequences that we know and practice simultaneously can be assigned
to specific chronological stages: from family and neighbourly help to co-operative
self-help, the formation of foundations as the bearers of charitable institutions, the
emergence of funds that are meant to ensure against conventional risks all the way
to the modern protection systems that encompass nearly the entire population.
Some of these institutions go back to the early Middle Ages . . .. Others can be
assigned to the period of the emerging cities, to the beginnings of trade, and the
formation of the first large fortunes in the fifteenth and sixteenth centuries, such as
urban hospitals, charitable foundations, or social housing projects like the
Fuggerei in Augsburg. Others are the products of the society-shaping powers
of the churches in the early modern period and especially of the early-modern
5 Post-War German Social Policy in Retrospect: The Genesis of a Welfare State 13

territorial state, which implemented a new notion of work, combated idleness,


and created penitentiaries and workhouses. At the same time, the future of the
historically grown institutional structure is uncertain. Twentieth century advanced
Western societies with their extended systems of social protection remain
a historical experiment, in the same way that other cultures of world history
have been experiments (Stolleis, volume 2, p. 151).
Most authors agree that in the German welfare state change is difficult to
achieve, due to the veto players in the political system, to the high degree of
juridification and due to mentalities grounded in the strong state tradition. There
have indeed been few path-breaking reforms in post-war Germany. Even under
National Socialism (19331945), the institutional structure of public welfare had
remained largely intact (Stolleis, volume 2, p. 155: ruptures and continuity). Still,
there has been change after World War II, but largely in an evolutionary manner
reformless change (Czada 1999). The change was obscured by old semantics like
social insurance, social state and social market economy which were retained
in public discourse despite substantial changes in institutional realities. These terms
have become semantics of continuity (Leisering 2000a).
If we take stock of the changes in social policy during the post-war decades until
the crisis of the welfare state was widely acknowledged in the 1990s, the change has
been considerable. It was during that period that social policy fully turned into
a welfare state (Kaufmann, volume 1), and German society became a mixed
society, as indicated in T. H. Marshalls (1981) term democratic welfare capital-
ism. Public welfare expanded dramatically in terms of spending, benefit schemes,
levels of benefits, coverage of schemes and legal and bureaucratic apparatuses.
New institutions were created which demarcated the sphere of social policy, like
a consolidated Statute Book for social legislation (Sozialgesetzbuch, from 1976),
specialized labor courts (established as independent branch of justice since 1953)
and social courts (created in 1954) and mushrooming social reporting since the
1960s. Politically, social policy issues moved to centre stage, turning social policy
into the main source of legitimacy of the state. Elections could be won and lost on
social policy issues. The institutional structure also changed gradually but mark-
edly. While the Bismarckian core, contribution-based financing of social security,
remained, the segmentation of social provisioning typical for conservative welfare
states was reduced. Separate institutions of social security were coordinated,
integrated or even fused (such as the Statutory Pension Insurances for blue and
white collar workers in 2005), and extensions to the core schemes rounded off the
architecture of public welfare, resulting in a structured quasi-universalism of
benefit systems (Leisering 2009).
The welfare sector grew, going along with the rise of social professions and
semi-professions, of a new labor market sector for public welfare employees and of
welfare industries, that is, commercial providers which deliver services to public
agencies or provide services themselves. The character of social policy changed.
Social policy turned from workers policy into a growing, though less ambitious
redistributive policy for the whole population. The focus of societal integration
shifted (Kaufmann, volume 1, pp. 106113): class politics gave way to politics
14 Nation State and Social Policy: An Ideational and Political History

geared to individual social rights and social security, a term which came to define
the welfare state (Kaufmann 2001). Old age insurance, for instance, turned into a
question of relations between generations, not classes, and the delivery and imple-
mentation of social services became a prime focus of social policy beyond ideolog-
ical controversies over the orientation of social policy. From the 1970s the
emphasis of German social policy on cash transfers began to be gradually
supplemented by expanding personal social services.
Regarding outcomes, welfare policies came to shape the every day life of most
citizens, advancing the standard of living and promoting socio-cultural individuali-
zation but also juridifying and bureaucratizing life. Zacher (volume 3, p. 376)
diagnoses a move to more equality, a process by which inequalities have proliferated:
ever new inequalities were discovered to be addressed by welfare policies. This refers
to labor law, to inequalities of gender and between white collar and blue collar workers,
to protective rights e.g. for tenants and consumers, and to allowances for various
exigencies regarding family, housing, education and special needs. As a result, welfare
state generations emerged whose lives have been shaped by the experience of
extensive social services (Leisering 2000b). Much of the change just described could
as well be observed in other Western countries. However, while numerous studies
compare social spending or policies and policy outcomes cross-nationally, there is little
comparative work on the institutional, social and cultural aspects of the post-war
welfare state.

6 What Future for the Social?

Is the German welfare state facing up to the new challenges and crises since the
1990s? Is the welfare state changing? While Germany shares some of the
challenges faced by other countries, some problems are specific to Germany.
Globalization exerts particular pressures on the competitiveness of the German
economy since Germany is one of the worlds biggest export economies. Financing
social benefits mostly by contributions rather than taxes makes the German benefit
systems particularly vulnerable to crises in employment and to competition by
low-wage countries because half of the contributions are paid by the employers as
part of labor costs. Similarly, the design of social insurance as pay-as-you-go-
systems rather than capital funding, in conjunction with high (if falling) replace-
ment rates, exposes the system more directly to the effects of the ageing of the
population, especially in the context of one of the worlds lowest birth rates. Above
all, German unification in 1990 exacerbated decisively the latent crisis of the
German welfare state (Ritter, volume 4, p. 204): East Germany had a run-down
economy with low productivity; unification generated a need for massive redistri-
bution to the East; the cost of unification were largely passed on to the social
insurance system (rather than to the tax system which would have spread the cost
more widely; see Ritter, in volume 4); and the regional division East-west became
a new social cleavage. In the early years after unification, social spending in the
6 What Future for the Social? 15

East temporarily soared to two thirds of the Eastern gross domestic product,
unprecedented in any country.
Regarding domestic problems, the 1990s confronted the Germans with a new
or newly perceived world of social heterogeneity and social cleavage. This
created new demands on social policy in view of integrating the nation state.
First, there is the East/West divide since unification in 1990. Unemployment in
the East is still higher than in the West, and economic growth is too slow. More than
20 years after unification, divisive resentments between East and West linger. Some
Eastern regions are depopulated and racism has spread. Second, there is a problem
of immigration and ethnic conflict. Germany has one of the highest proportions of
immigrants in Europe but politicians have been slow in facing up to this fact.
Between 1988 and 1996, 2.3 million settlers from Eastern Europe and the former
Soviet Union (recognized as ethnic Germans) and c. two million asylum seekers
came to Germany. The poverty rate among migrants is twice that of native citizens,
just as the unemployment rate; some of the settlers are becoming marginalized.
Some third generation immigrants are less integrated than their parents, and reli-
gious fundamentalism has grown, especially among persons of Turkish origin who
are the biggest ethnic minority. For decades, Germany has facilitated the immigra-
tion of unskilled workers, without reaching out to highly qualified professionals
as other countries have done. Third, a new low pay sector of the economy
has produced a group of working poor, a problem hitherto unfamiliar to Germans.
Fourth, both higher education and pre-school education are wanting, with a new
problem referred to as educational poverty (Bildungsarmut).
To ascertain if the German welfare state has changed, we need to become clear
what the German welfare state is. We discuss three conceptions of the welfare state
in view of identifying the German welfare state and its recent changes: concepts
from political economy (Esping-Andersen), from political science (M. G. Schmidt)
and from sociology (as found in this book series, especially in Kaufmann, volumes 1
and 5, and in the related legal approach by Zacher, volume 3).
Following Esping-Andersen (1990), Germany is the epitomy of the conservative
welfare regime: achieving a medium degree of decommodification (of enabling
people to live independently of the market) by regulating labor markets and
containing labor market participation; basing entitlements on occupational and
social status, producing structured inequality; and upholding a conservative concept
of society emphasizing family, traditional gender roles and intermediate social
bodies such as churches, voluntary welfare associations and status groups. The
conservative welfare regime contrasts with the Anglo-Saxon liberal regime and
the Scandinavian social democratic regime. Studies agree that conservative or
Bismarckian welfare regimes Austria, France, the Netherlands, Luxembourg,
Italy, Spain, Belgium, The Czech Republic, Poland, Slovakia and Hungary also
come near this ideal-type (Palier 2010, p. 24) are changing but they do not agree
in which way (see Palier and Martin 2007; Palier 2010). Bismarckian regimes have
adopted some of the new policies also found in other regimes, such as activating
policies, deregulating labor markets and raising labor market participation (reduc-
ing labor shedding), cuts in benefits and social services, and marketization.
16 Nation State and Social Policy: An Ideational and Political History

This brings Bismarckian welfare states closer to liberal regimes. In Germany,


corporatism in industrial relations and closed arrangements of collective bargaining
under the Statutory Health Insurance have opened up to a degree. By contrast, some
authors diagnose a deepening of the divisions of Bismarckian regimes. Seeleib-
Kaiser (2002) differentiates between policy areas, diagnosing a dualization of
the German welfare state, that is, the traditional objective of status maintenance
through insurance benefits weakens while family benefits and services are
expanded. Models of gender and the family relations are being modernized. This
brings Germany closer to a social democratic regime. Lessenich (2003) argued that
the German welfare state has a hybrid, not just conservative character which allows
flexible adaptation to new situations, even if in a gradual way. He depicted the
opening of regional collective wage agreements and the creation of a statutory
Long-Term Care Insurance in 1994/1995 the fifth branch of social insurance,
111 years after Bismarck introduced the first branch as cases in point.
Schmidt (e.g. 2005, 2010) also rejects the notion of a merely conservative
German welfare state but in a different way and with more scepticism about the
ability of the German welfare state to adapt than Lessenich. From a political science
point of view, Schmidt argues that the German regime is centrist rather than
conservative, shaped by a reformist centre/centre-right party (the Christian
Democrats) in conjunction with a pragmatic, strong social democratic party (though
mostly in opposition; the Social Democrats): the policy of the middle way
(Schmidt 2010). Re-analysing Esping-Andersens data, Obinger and Wagschal
(1998) found that his conservative type actually falls into two types, a centrist
European social insurance state (including Germany) and a type which really
meets Esping-Andersens criteria of conservatism (found in France, Italy and
Austria). The policy of the middle way goes along with a pronounced consensus
which underpinned the German welfare state well into the 1990s. Germany was and
still is a country with two big welfare state parties.
However, the pressure to reach consensus has also acted as a check to major
reforms. Centrist implied the aim of achieving high economic growth and
generous social benefits (Schmidt 2010). Schmidt argues that the centrist model
is still in operation but with increasing cost and side-effects. In fact, the perfor-
mance of the German welfare state has diminished over the last 10 years, with more
poverty and more inequality, even if this only means that among countries of the
Organisation for Economic Co-operation and Development (OECD). Germany fell
from a position better than average to an average position. At the same time,
Germany is the biggest spender among Western welfare states, only topped by
France and small countries like Sweden medium performance at highest cost. At
the beginning of the 2010s, Germany is caught between the old political middle
ground (the carrier of the welfare state consensus) which acknowledges the need for
change but shies away from distinct reforms, a new market liberalism which tends
to break away from the welfare state consensus but is equally at a loss, and a new
social populism.
Authors of this book series characterize the German welfare state in a more
sociological way (than the authors just mentioned), conceiving of German social
6 What Future for the Social? 17

policy as the outcome of the idea of a precarious disjunction between state and
society. This idea has given rise to a strong concept of state and para-state
institutions that mediate between state and society, tied to a strong notion of
the social that permeates policies, law and mentalities. Has the German welfare
state recently been changing with regard to these defining characteristics? The
volumes in this series suggest a positive answer, though with qualifications.
The relationship between state and society has been changing since the
1990s. There are indications in labor market policy and social assistance, in old-
age security and (least) in education that Germany is restructuring the state-
society relationship, with more reliance on society and with new instruments of
intervening in society. We maintain that Germany is moving from a provider
state to an enabling state (Gilbert and Gilbert 1989; Gilbert 2002; Kaufmann
2012 [chapter first published in German in 1994]),2 or from direct to indirect social
policy. The new policies include:
enabling persons to participate in non-state welfare production this facet of the
enabling state figures in the literature since the 1990s as activating social
policy, especially in labor market policy and social assistance
enabling non-state welfare systems like markets, voluntary organizations and
families to operate this facet is addressed by the more recent literature on the
regulatory state in social security (see Leisering 2011a).
Furthermore, the concept social investment policies could also be grouped
under enabling state since these policies, especially education and family
policies, aim to enable individuals to provide for themselves in the long run.
Activating social policy in social assistance started in Germany well before the
Hartz IV reforms of 2005, undertaken by the municipalities since the mid 1990s
(Leisering 2001). Regulatory policies became more important with the new Long-
Term Care Insurance (1994/1995) which opened care markets to private providers,
and with the major pension reforms of 2001 (the Riester reform) and 2004 which
boosted occupational and personal pension plans as part of a new multi pillar
model. In a way, this reversed Adenauers reform of 1957 which had turned the
Bismarckian pension insurance into a quasi mono pillar model. The regulation of
private providers by the state also extends to other fields, e.g. job centres rely on
private temporary employment agencies. In this way, new links between state and
society and new intermediate forms public-private hybrids like the new Riester
pension have emerged. Moves towards social investment policies are weaker,
contrary to the rhetorics from all political parties, with departures in family benefits
and services but less in education.
However, the diagnosis of a move towards enabling policies needs qualification.
First, enabling is not new. Historically, the German tradition already harboured

2
In 1994, Kaufmann devised the concept of Steuerungsstaat independently of the concept
enabling state which Gilbert and Gilbert had introduced 5 years earlier. The two concepts are
akin.
18 Nation State and Social Policy: An Ideational and Political History

a potential for change in the state-society relationship since state in social state
primarily refers to the social responsibility of the state while the institutional
realization of this responsibility, the welfare sector, need not be state but is
mostly in the hands of intermediary agencies like social insurance with separate
budgets or voluntary welfare associations. Thus, there is a tradition of the state
reaching out to society and regulating non-state welfare production rather than
providing welfare by itself. But the intermediary agencies often had a symbiotic
relationship with the state, operating in closed quasi-corporatist circles. This made
the overall arrangement rigid and inert. Still, the tradition of old regulation may
have eased the rise of the new regulatory state (Leisering 2011a). Second, in
contrast to Gilbert, Kaufmann conceives of the move towards an enabling state
(Steuerungsstaat) as a change in the discourse on the state, not as institutional or
policy change, although the discursive change may reflect or spur real changes. In
a state-oriented country like Germany, the new regulatory state indicates the (re-)
discovery of society in social policy (using a phrase coined by Polanyi) by
exposing the dependence of the provider state on societal forces (Leisering
2011b). Any complex policy intervention is of a regulatory nature. The notion of
the provider state was a fiction cherished during the golden age of the welfare state.
The advent of the new regulatory state helps to expose fictions underlying the
provider state during its heyday like the notion of a neat separation of public and
private and of the capability of the state to steer societal processes (Berner 2009)
the heroic state (Rub 2003).
The changes in the relationship between state and society entail changes in the
social. In a study of recent changes in old-age security in Europe I suggested that
the social is undergoing three kinds of transformation: rationalization, that is, an
increasing emphasis on rational models and expert knowledge; civilization, that
is, blending social rights and civil rights; and internationalization, that is, an
increased influence of international law and global forces on national social law.
In the process, the social takes on new sides socio-technological, civil and
international. This transformation pertains to both public and publicly regulated
welfare production. While elements of the three transformations can be traced in
several Bismarckian or even some other welfare states, all three are particularly
momentous in the German context.
Rationalization: The social in European welfare states has historically been
framed by ideologies or social Weltanschauungen like social democracy, social
liberalism, conservatism or Christian social thought. By contrast, in the Anglo-
Saxon tradition, especially in the USA, the social is often related to rationalized
models of producing welfare goods based on science and social technologies
(Janowitz 1976), such as New Public Management in the administration of social
services or Disease Management Programmes (DMP) and Diagnosis-Related
Groups (DRG) in medical services. The rationalist approach implies a redefinition
of the social. Efficiency, quality of services and choice hitherto associated
with private provision become criteria of social policy-making. While social
policy in Germany has been strongly framed in terms of ideologies, combined
with a romantic distrust or even ignorance of scientific and technological
6 What Future for the Social? 19

approaches to the social, the pressure to restructure the welfare state has eventually
led Germany to develop a more rationalist approach, often with imports from
Anglo-Saxon countries. A managerial state has entered the social policy arena
(Rub 2003).
Civilization: Enabling policies activation, regulation and social investment
aim to influence access, processes and procedures in social welfare rather than
welfare outcomes. Rights of access to public and private social services, consumer
rights and, e.g., financial capability in private pension markets become new
objectives of policy. Organization-related norms include transparency of providers,
procedural security, accountability and participation. In terms of rights, conven-
tional social rights give way to civil rights set in a social context. Is this still a
social state? The consequences of the civilization of the social are ambivalent:
The substance of the social is attenuated as compared to the golden age of the
welfare state, since the social refers only indirectly to welfare outcomes and
redistribution. At the same time, the province of the social is extended beyond
conventional domains of public welfare, to markets and civil society. Markets
become socially regulated welfare markets. For Germany, with its history of
distrust in civil society, the new civil interpretation of the social is difficult
to swallow.
Internationalization: While social policy originated as a project of nation
states, social policy is increasingly embedded in international social policy
contexts: regional associations like the European Union (EU), international
organisations like the United Nations (UN), the World Bank and the ILO, global
non-governmental organizations (NGOs) and international legal conventions and
treaties have emerged as increasingly social regimes. Although ultimately based
in nation states, these regimes have turned into a world sui generis, developing
independent social ideas. In Zachers view (volume 3), the internationalization of
social policy generates new social ideas, in line with the openness of the concept of
the social. For example, in global discourses, the social and the ecological are
often linked in semantics like social and economic sustainability. This link has
not been made in national welfare states. Being a large country with a distinct
national tradition of social policy, Germany has been inward-looking and reserved
about external influences. It was the European Court of Justice of the EU which had,
e.g., to force gender equality on German labor law and social security law. But as
a country situated in the centre of Europe, Germany is liable to migration and
external influences. The social state of the Federal Republic of Germany was never
simply a nation state (Zacher, volume 3, p. 315).
The message of the book series is that the social is a continuous subject of
public deliberation and political struggle. It is constantly changing, it comes in
many varieties, and its change is not linear. Some of the recent changes in German
social policy in a way lead back to Bismarck, especially the increased emphasis on
private provision by markets and families. Bismarck had conceived of social
insurance benefits only as a supplement to other sources of income. In some
ways, the current German welfare state even goes back to the time before Bismarck.
20 Nation State and Social Policy: An Ideational and Political History

Bismarcks legislation established a distinction between policy for workers


(Arbeiterpolitik), above all social insurance, and policy for the poor (Armenpolitik),
above all the poor law. The new German job seekers allowance created in 2005
(Hartz IV) has blurred the distinction between the two policies by merging the
former Unemployment Aid (the lower echelon of unemployment benefit) with
social assistance. In this and other instances, Germany is making a step from an
insurance state towards a social assistance state. In the wake of Hartz IV, more than
10% of the population are in receipt of social assistance, up from 1.2% in 1970.
Lockwood (1964) distinguished social integration and system integration.
From the onset, modern social policy was not only a response to problems of social
integration in the process of nation building but also to problems of system
integration, above all to problems of economic development. Without positive
effects on the economy, the historical rise of social would have been inconceivable.
But with the expansion of the welfare state, positive effects cannot be taken for
granted. Imbalances between social concerns and economic development may even
contribute to the breakdown of a society as experienced by Communist East
Germany. The German distrust in society makes it difficult for Germans to
acknowledge the societal functions of the entrepreneur. . . . the political form of
the state that guarantees rights of liberty and rights of participation acquires its
social quality only on the basis of an efficient economic system. The greatest
possible synergy of economic and social policy is therefore the prerequisite for
the success of the policies of the welfare state (Kaufmann, volume 1, p. 125).
Against the backdrop of economic globalization, the need to adjust the social and
the economic has assumed a new quality. Still, the volumes of this book series
testify to the resilience of national welfare states, sustained by institutional and
ideational traditions. Nation states continue to be societal communities (Talcott
Parsons). The future of the welfare state depends on the future of the nation state, on
new synergies between state, economy and civil society and on the availability of
cultural ideas that mobilize people towards the social. We are 130 years away
from Bismarcks creation of social insurance. The next 130 years may bring less
national and more trans-national social ideas and institutions but the social does
not appear to be in retreat.

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Social Policy in the German Democratic
Republic

Manfred G. Schmidt

1 Introduction

This chapter describes, explains, and evaluates the social policy of the German
Democratic Republic (GDR) from the creation of that state on 7 October 1949 to the
accession of its Lander (states) to the Federal Republic of Germany on 3 October
1990. What effects did the GDRs social policy have? How did it influence the social
situation of the population and the stratification of the society in East Germany?
How and how much did dictatorship and socialist statism mark social policy? What
shape did social policy assume in the final year of East Germanys socialist state
particularly after the fall of Erich Honecker1 in October 1989 and that of his
successor, Egon Krenz?2 What did social policy of the GDR have in common with
the critical junctures of social policy in pre-1945 Germany? At what point did it
abandon old paths? Lastly, what distinguished the social policy of the GDR from that
in other socialist states and from the welfare state in the Federal Republic of
Germany prior to 1990? These questions guide the following analysis of the main
features of social policy in former East Germany.

1
Honecker (19121994) was a member of the Politburo of the Central Committee of the Socialist
Unity Party of Germany (SED) from 1958 to 1989 and General Secretary of the Central Committee of
the SED from 1971 to 1989. As First Secretary of the Central Committee of the SED, he succeeded
Walter Ulbricht in 1971. From 1976 to 1989, he chaired the State Council of the GDR. He resigned
from all posts on 18 October 1989 and was expelled from the SED on 3 December of that year.
2
Krenz was born in 1937 and was a member of the Politburo of the Central Committee of the SED
from 1983 to 1989. He succeeded Honecker as General Secretary of the Central Committee of the
SED from 18 October to 3 December 1989 and as Chairman of the State Council of the GDR from
24 October to 6 December 1989. On 21 January 1990 Krenz was expelled from the SED, which
was eventually renamed the Party of Democratic Socialism (PDS).

M.G. Schmidt and G.A. Ritter, The Rise and Fall of a Socialist Welfare State, 23
German Social Policy 4, DOI 10.1007/978-3-642-22528-4_2,
# Springer-Verlag Berlin Heidelberg 2013
24 Social Policy in the German Democratic Republic

1.1 Political and Economic Structures of the German


Democratic Republic

The GDR saw itself as the state of the Arbeiter- und Bauern-Macht, that is, as a
state manifesting the power of workers and peasants, as a dictatorship of the
proletariat,3 or, in the official terminology, as a socialist democracy (Gesetzblatt
der DDR, part 1, p. 4324; see also Mampel 1997; Roggemann 1989). But in contrast
to a constitutional democracy of western European and North American origins,
democracy in socialist East Germany meant unconstrained leadership of the Social-
ist Unity Party of Germany (SED). It was no idle claim but rather stark constitu-
tional reality that the society, the economy, and policy-making in the GDR bore the
indelible stamp of SED supremacy and socialist statism until the end of the
Honecker era (Glaener 1988).5
Outwardly, a system of bloc parties characterized the political landscape of the
GDR.6 But the bloc-party system was controlled by the SED, the state party of

3
Programm der Sozialistischen Einheitspartei Deutschlands vom 22. Mai 1976 (1982, p. 75). The
concept comes from the doctrine of Karl Marx (18901891/1970b), who referred to the transition
period between capitalist and communist society as a revolutionare Diktatur des Proletariats
(revolutionary dictatorship of the proletariat) (p. 24). To Engels (1891/1970, p. 453), the classic
example of the dictatorship of the proletariat was the Commune of Paris (March to May 1871),
the revolutionary regime set up in Paris after the insurrection by socialists and communists the
Communards in the context of the armistice in the Franco-Prussian war. Marx celebrated the
Commune in his Political Writings (e.g., Marx, 18901891/1970b). He saw its historical merit in
its contribution to shattering the ancien regimes class rule and in the Communes effort to replace
the old regime with the supremacy of a government of the working class based on a direct
democratic order and to striving for a new social order (Marx 1891/1970a, p. 490). Absolute
supremacy of the political typified the GDR regime as well. But unlike the government of the
working class as advocated by Marx, the political leadership in the GDR set store by socialist
democracy, meaning first and foremost political hegemony of the SED.
4
Article 17 of the East German constitution of 6 April 1968, as amended on 27 September 1974 in
the Official Statute Register of the German Democratic Republic (hereafter referred to as GBl. der
DDR, part 1, p. 432), see Mampel (1997), Roggemann (1989).
5
On the change after Honecker, see Sect. 5.4. Unless otherwise expressly stated, the character-
izations of the GDR in this chapter refer to the East German state from the time it was founded to
the end of the SED regime in December 1989 and early 1990.
6
A system of bloc parties was the norm in the socialist countries of central and eastern Europe
from the 1950s to the late 1980s, except for the Soviet Union, where the Communist Party of the
Soviet Union remained the only party until the second half of the 1980s. Until the regime shift in
the GDR in 19891990, the bloc known as the National Front consisted of the SED in coalition
with the East German Christian Democratic Union (CDU), the Liberal Democratic Party (LDPD),
the National Democratic Party (NDPD), the Democratic Agraian Party (DBD), and the mass
organizations The Free German Trade Union Federation (FDGB), the Free German Youth (FDJ),
the Cultural Alliance of the GDR (Kulturbund der DDR, KB), the Democratic League of Women
(Demokratischer Frauenbund, DFD), and the Association for Peasants Mutual Aid (Vereinigung
fur gegenseitige Bauernhilfe, VgB). With the main rule being subordination to the SED, however,
the scope that all other bloc parties had for action was extremely small. The number of seats that
the bloc parties and the associations had in parliament was stipulated before elections. Of the 500
1 Introduction 25

East Germanys socialism (Henkel 1994; Suckut and Su 1997), and the bloc
parties submitted to the SEDs claim to leadership. The SED was beholden to the
tradition of a Marxist-Leninist combat party.7 It conceived of itself as a class-
conscious vanguard of the working class (see Herbst et al. 1997). It roots reached
from the ideology, platform, and practice of the German Communist Party of the
Weimar Republic (19191933) to the ideas basic to the left-wing socialist currents
in the interwar period and stretched deep into Soviet Marxist theory and practice,
especially Leninism and Stalinism.
The degree of pluralism that the GDR permitted in interest articulation and
interest aggregation was slight, even by the standards of the other socialist countries
in central and eastern Europe. At the same time, the degree of the countrys partisan
politicization was unusually intense. Both conditions of political life have justifi-
ably received a good deal of attention from scholars examining the GDR. These
researchers have varied in their focus and their assessment of the nature of East
Germanys socialism, however. One group, for the most part those observers versed
in theories of totalitarianism, has stressed totalitarian facets (e.g., Jesse 1999; Seidel
and Jenkner 1976). Others have seen the determinants of the GDRs structures to lie
in the pervasive control of society (Kocka 1995), omnipresent and almost omnipo-
tent political power (Schroeder 1998, pp. 633, 642, as opposed to Kocka 1995), or
the limits of politicization, notably in idiosyncratic social developments (Huinink
et al. 1995). These characterizations are not mutually exclusive. The GDR had them
all. It definitely had inherent totalitarian traits (Schroeder 1998). Nonetheless,
totalitarianism was not the only feature of East German socialism. Rule in the
GDR rested on hierarchical control, command, and repression, but it also
encompassed more convoluted interconnections to which both the rulers and the
ruled contributed. The complex relations between master and servant included
consultation and efforts by the rulers to legitimate themselves, except when they were
obsessed with ruining people subject to them. Such forces of destruction, too, existed
in East German socialism, one of them being politically motivated punitive judica-
ture.8 But that blight never determined structures as much in the GDR as it had in the
National Socialist state. Granted, the subjects of the GDR exhibited pronounced
submissiveness (Niethammer 1997, pp. 314; see Niethammer et al. 1991) and an
orientation to the collective, but there was individual willfulness, too (see Huinink
et al. 1995). And willfulness sets limits even on dictatorial rule. Moreover, institutions

seats in the Peoples Chamber in September 1989 (i.e., before the regime shift), the SED held 127;
the CDU, LDPD, NDPD, and DBD, 52 each; the FDGB, 61; the FDJ, 37; the DFD, 32; the KB, 21;
and the VgB, 14.
7
The SED saw itself as the party of the working class and the entire working population and at the
same time as a Marxist-Leninist combat party (Protokoll 1963, p. 299; see Herbst et al. 1997).
8
Between 1949 and 1989, an estimated 200,000 to 250,000 people were imprisoned in the GDR for
political reasons. From 1945 to 1981, East German trial courts resorted to capital punishment as an
instrument of politicized criminal law. In that period they handed down 372 death sentences (136
cases relating to charges of Nazi crimes), of which 206 were carried out (Deutscher Bundestag 1999k,
p. 173). On politicized judicial power in the GDR, see Fricke (2000), for example.
26 Social Policy in the German Democratic Republic

changed considerably in the course of the GDRs history politically, socially, and
economically. Overlying the totalitarian elements of the GDR, above all in the post-
Stalinist phase, was a tightly organized, ever watchful authoritarian state with con-
sultative authoritarianism in some areas (Ludz 1970, pp. 3536, 9899, 324325).9
The unusually extensive party politicization of East Germany enveloped the
entire political, social, and economic machinery and infused it with a Marxist-
Leninist ideology. In this respect, as noted by Kocka (1995), the SED completely
subjugated the state, sucked it dry as it were, and took its place (p. 596). One may
therefore justifiably classify the GDR as a developed party-state. And because of
the SEDs claim to leadership as well as the partys de facto supremacy, it is fully
warranted to typify the GDR as an SED state10 though not all of its political and
social structures are captured by that term.
As regards political power and political stability, the foundation of the SED state
derived from the protection afforded by the Soviet Union and the Red Army troops
stationed in the country, whereas the socioeconomic foundation of the SED state
resided in the compulsory transition to a centrally managed socialist economy
based primarily on state ownership, with ownership by collectives and production
cooperatives playing a complementary role.

1.2 Social Policy GDR Style

The upheaval of the political, social, and economic order in the GDR, as in the
Soviet zone of occupation that preceded it from 1945 through most of 1949, added
yet another momentous regime change to the turbulent political history Germany
had experienced in the nineteenth and twentieth centuries. The consequences of that
shift are probed in this chapter through the prism of social policy.
According to the philosophy of the government and its politically hegemonic
party, the SED, the rise of socialism in East Germany was a blessing for the vast
majority of the population. From the outset, the countrys political leadership
prided itself on great social achievements, many of which, in its view, had been
accomplished by the nearly total suppression of private businesses and
organizations and the development of a planned economy. Reinforced by this
transformation, the East German political elite held the conviction, fed by Marxism-
Leninism, that the socialist mode of production itself was the superior economy and
society. The institutionalization of the right to work in the constitution of the GDR
ranked as a further historical achievement. The leadership also usually extolled

9
See Schroeder (1998, p. 648), to whom the political history of the GDR illustrates a shift from a
violent totalitarian system to a repressive late-totalitarian welfare state.
10
Schroeder (1998), see also von Beyme and Zimmermann (1984), Deutscher Bundestag (1999a,
b, c, d, e, f, g, k), Fulbrook (1995), Kaelble et al. (1994), Malycha and Winters (2009), Pirker et al.
(1995), Richter (2009), Ritter (1998, 2002), Stolleis (2009a), Weber (1999, 2000).
1 Introduction 27

the comprehensive price subsidies it maintained for basic goods and services,
including passenger transport and deliveries of electricity, gas, and water. These
subsidies were, in a sense, the GDRs equivalent of the politics of price stability
(Busch 1995) popular in the western part of Germany.
These persuasions and accomplishments and all the other aspects of social policy
were regarded by the political leadership as the explicit manifestation of the
aspiration to serve the good of the people. This aspiration was anchored in East
Germanys constitution of 1968 and in the constitution of 1974, in which the first
sentence of Article 4 reads: All power serves the good of the people.11 Prevailing
opinion in the GDR was said to leave no doubt that the SED state had met that
claim. As Honecker reported at the Eleventh Party Congress of the SED (Berlin
1986), for instance, We are guaranteed social security and safety, full employ-
ment, equal educational opportunities for all children of the people (as quoted in
Winkler 1989, p. 232). His words were a blend of description, palliation, and
propaganda. But they expressed a view that much of the East German population
shared. To this day, not a few citizens of the Federal Republic of Germanys new
Lander regard the social policy of the former GDR, particularly job security, as its
best aspect and as a beacon for policy in the united Germany (see BISS 1990;
Grundmann 1993; Hanke 1995; Sch oppner 1997).

1.3 Research Questions, Data Base, and Theoretical Frame


of Reference

Is the positive assessment of the GDRs social policy appropriate? Or does it come
from the transfiguring retrospective that makes yesterdays daily concerns look rosy
compared to todays? Does the praise of social policy in East German socialism
hold up under scientific scrutiny? And what remains of its glorification when its
shortcomings as well as its merits are taken into account along with trade-offs
between social protection and other goals such as economic performance (Okun
1975)? The purpose of this chapter is to delineate the principles of social policy in
the GDR and to assess them for their strengths and weaknesses as far as the tools of
research permit. The intention is to provide an overview, not a detailed description
of sociopolitical developments in individual policy fields and phases of East
German history.
This treatment is based chiefly on analyses of published documents and the
literature on social policy and its societal and political setting in the GDR.
A historical and international comparative perspective on the social policy of the
GDR is taken where these sources allow it. The point of departure and academic

11
The phrase definitely meant in the sense of class struggle applied to social policy as well,
notably under Honecker (see Trumpler et al. 1980, 1986).
28 Social Policy in the German Democratic Republic

lens for inspecting the facts, analyzing the documents, and consulting the studies by
other specialists is the empirical analytical school of comparative public policy
research that has developed mostly in political science and is basically receptive to
sociology, macroeconomic theory, and social law (see Schmidt 1993b, 2005a, b, c, d,
1997). This study is empirical in nature, but it also draws on hypotheses and
theoretical components for the analysis and interpretation of the data. The work is
guided by the expanded political-institutionalist approach,12 which has proven to be
especially powerful and compatible with observations and theories from other
schools of thought in cross-national public policy research.

1.4 Structure of this Chapter

This chapter is divided into seven sections. The first section presents the concept-
ualization of East German social policy. The most important institutions of the
East German welfare state are depicted in the second section. The features
characterizing the discourse and decision-making process underlying that social
policy are discussed in the third section. The fourth section explores social policy as
a political process by going into selected stages and developments, including social
policy in the GDRs final year, the period after what Glaener (1988) calls the
Honecker era. The fifth section takes stock of the structure and the impacts of the
socialist welfare state in East Germany and discusses the influence that social policy
had on the East German population. Both topics are addressed with developments
mainly through late 1989 and early 1990 in mind. This section also raises the
question of whether and to what extent social policy accomplished the mission
of bestowing legitimacy and instilling the motivation to work. The sixth section
brings a comparative perspective to East German social policy during the years
from 1949 to 19891990, that is, up to the crucial choices that led to Germanys
unification. The final section outlines the continuity and discontinuity of social
policy in the Soviet zone of occupation, the GDR, and the new L ander after the
constitutional unification of Germany in 1990.

12
It directs attention particularly to the relationship between policy output on one hand and policy
input and its context on the other. Policy output includes social policy decisions, their results, and
their sediments in the form of institutions of the social safety net. Policy input and its context refer
mainly to the political process, the constitutional structures of the state, the distribution of power
between social groupings and political forces, political culture, socioeconomic constraints of
policy-making, and the impact of international and transnational factors (see Schmidt 2005d).
2 Socialist Social Policy 29

2 Socialist Social Policy

2.1 Integrative Functions of Social Policy

Social policy was understood in a very broad sense in the GDR, as in the other
socialist states of central and eastern Europe (von Beyme 1975, pp. 233284;
Hoffmann and Schwartz 2005; Leenen 1985). It had functions of system integration
and social integration.13 To promote system integration, social policy in the GDR
strove to flank, shield, and stabilize the socialist social and economic order and its
political sub- and superstructure. Another purpose was to raise the labor productiv-
ity of the Werkt atigen, that is, the working population by intensifying its
motivation. As for social integration, the primary intent behind social policy was
to protect the countrys population against impoverishment, to provide insurance
against typical risks posed by an industrial society, and to supply emergency aid
against war-induced burdens (Klemann 2003, p. 77). Protection was extended first
to the working population, the priority being on those in the socialist enterprises and
the quasi-socialist cooperative associations and production cooperatives. Specifi-
cally, it included coverage against risks of losing income as a result of age, disability,
illness, maternity, or death of the breadwinner. Social policy in the GDR also aimed
at reducing social inequality, particularly that between social classes and status
groups. Minimum support sufficient for a livelihood at a meager level was part of
the social policy goals. It included consumer-oriented social policy, notably the
states subsidization of basic goods and services.
Social policy expanded above all in the 1970s (see Klemann 2006). The main
additions included accelerated housing construction and a pronatalist policy
designed to boost the birthrate by making maternity, child-rearing, and gainful
employment mutually compatible. The government thereby sought to attain
objectives of employment policy and population policy in one stroke. The status
of company-based social policies and of social policy focusing on leisure time and
recreation was upgraded, too. In the 1970s and 1980s, the price subsidies for basic
goods and services, including rents, local public transport, and utilities (gas,
electricity, and water), also gained importance and provided protection against
material impoverishment especially for low-income groups (see Boyer et al.
2008; Steiner 2006, 2008; Winkler 1989).

13
System integration focuses on the integration of orderly or conflicting relations between
subsystems, whereas social integration emphasizes the integration of individuals or collective
actors (Lockwood 1971).
30 Social Policy in the German Democratic Republic

2.2 Politico-Ideological Aversions

The degree to which the far-reaching scope of social policy was taken for granted in
East Germany in the 1970s and 1980s belies the fact that the term social policy had
been suspect until the mid-1960s. Up to that point, one of the peculiarities of East
German social policy was an incongruity between official party ideology and what
the government actually did. Social policy had long played a role, but the term
social policy remained peripheral in official party terminology in the 1950s and
early 1960s (Winkler 1988, p. 21). That mismatch was odd, particularly because the
SED had explicitly championed social policy in the Soviet zone of occupation (see
Wengst 2001). For example, a key document on the planning of government
responsibilities the Social Policy Guidelines adopted by the SED on 30
December 1946 (Dokumente der Sozialistischen Einheitspartei Deutschlands
1948, pp. 131135) still called a spade a spade. In the 1950s and early 1960s,
however, the SED and its sympathizers were inclined to disregard the concept of
social policy.
Several things were responsible for this turn. In the SED and the state apparatus,
the conviction was prevalent that the combination of a planned economy and full
employment would essentially meet the populations material and cultural needs.
This stance appeared justified because planning also applied to wages and, together
with job security, was intended to guarantee an income that ensured a basic
livelihood. It thus seemed possible even to plan individual and social consumption.
A separate, independent social policy would be unnecessary. Indeed, the planning
experts feared that it might only interfere, especially because its imponderable risks
eluded the precise accounting that went with a planned economy (Dr. P. Hubner,
Center for Research on Contemporary History, Potsdam).14
Moreover, there was uncertainty about the correct ideological status of social
policy. Not a few members of the SED associated social policy with the class
adversary. In the 1950s, SED cadres with extraordinarily strict ideological leanings
still thought of social policy for the most part as a hospital ward for the victims of
capitalism (Ritter 1998, p. 162). To dogmatic SED members, the term social policy
carried the tabooed connotation of social democracy or social reformism. It
seemed advisable to many economists to downplay social policy rather than push
for it, for it might otherwise undermine the priority of capital investment (or
socialist accumulation as the term was known in the official vocabulary of the
GDR) and thereby hamper the envisioned development and expansion of socialism.
Another issue enveloping the term social policy was the aversion to harassing
fire from the class enemy. Was not social policy part of the old social question of
the split between the proletariat and the bourgeoisie? Was social policy not an
instrument with which the rulers sought to paper over class division within society
and to co-opt the labor force? Should it be continued in the GDR, the very place

14
Personal communication, 4 April 2000.
2 Socialist Social Policy 31

where received doctrine held that socialism had been built up and that the social
question had thereby been eliminated? Had not the grounds for old-style social
policy all but vanished according to this ideology?
Ideology and practice are two different things, however, and East German social
policy was no exception. Despite the SEDs official vocabulary, the term social
policy had been current among the administrators of social services in the 1950s,
especially in general health policy, occupational health and safety, provisions for
old age, and company based social policies (Boldorf 1998; Hubner 1995). And
anyone who wished could see from the nomenclature used in the Peoples Chamber
that the expression social policy was not disapproved of in principle. When the
Peoples Chamber Committee for Labour and Health was divided into two separate
bodies on 18 January 1957, the newly created one was named the Peoples Chamber
Committee for Labour and Social Policy.

2.3 The Upgrading of Social Policy as of the 1960s

The reservations about the ideologically proper standing of social policy waned
only little by little. The value attached to the concept and application of social
policy did appreciate during the 1960s, before power passed from Walter Ulbricht15
to Erich Honecker (see Kaiser 1997a; Klemann 2006; Ulbricht 1965). Among
doctrinaire members of the SED, capitalisms bequest of imperfections and social
weaknesses that arise independently from the mode of production may have been
the overriding justification for social policys gradual ascendance. From this per-
spective it was plausible to interpret the expansion of social policy as an unprece-
dented social achievement, as one of the envisioned showcase projects in the
competition with the western capitalist world. It was also recognized that typical
problems with which social policy dealt the risks accompanying old age, disabil-
ity, illness, and maternity to name a few did not stop at socialisms door. Ever
greater administrative professionalization in the social services likewise sharpened
the sense that the changes typical in the socialist countries were seeding new social
tensions that called for a collective solution. The idea of nonantagonistic
contradictions was an ideologically admissible phrase for these transformations.
They encompassed, for instance, conflicts between the interest in preserving the
status quo and adaptation to side-effects of economic trends such as technologically
caused labor displacement, technologically caused redefinitions of jobs, and
tensions between needs and ways to meet them (Lampert and Schubert 1982).

15
Walter Ulbricht (18931973) was Deputy Chairman of the SED (19461950), General Secre-
tary (19501953), and First Secretary of the Central Committee of the SED (19541971). As head
of state, he chaired both the State Council (19601971) and the National Defense Council of the
GDR. He was replaced as leader of the SED by Erich Honecker in 1971.
32 Social Policy in the German Democratic Republic

Social policys upgrade resulted from bottlenecks in the supply of consumer


goods as well, like those from 1961 to 1963, and from plans for economic reform in
the 1960s. Reform-minded SED leaders and planning experts hoped that these
reforms would foster intelligent control of production and consumption and would
enhance economic efficiency. They wanted to bring personal material interests to
bear, by which they also meant that social policy was to make an independent
contribution to productivity. The GDR leadership expected this approach to make
substantial progress toward realizing the incessantly implored increase in the
material and cultural living standard of the working class and all working people,
to quote a standard propaganda formula of East German socialism. Economic shifts,
too, had their impact on social policy in the 1960s, with new home-made uncertainty
being spawned by technologys elimination of jobs, by wage readjustment, and by
anxiety about whether the GDRs scanty retirement pensions would be enough to
live on in old age. Lastly, social policy benefited from the realization that it stood the
best chance of pacifying a restive labor force and preventing a situation like that in
Poland, where protests against hikes in food prices had escalated on 12 December
1970 and eventually toppled the head of the Polish Communist Party (see Klemann
2006, pp. 6061). Succeeding Vadysav Gomuka as party boss, Edward Gierek,
unlike his predecessor, made social policy concessions to the population.

2.4 Social Policy and the Work Society

An astute observer once described the GDR as a state in which the human being is
apprehended as a laborer (Richert 1966, p. 47). Without expressly drawing on this
view, sociologists and historians later classified the GDR as an Arbeitsge-
sellschaft, a work society, as a society that puts priority on work and den
Werkt atigen, the working person the paragon of the citizen as both an agent of
production and an owner of the means of production and possesses in work the
pivotal mode of structuring interests and institutions and of forming identity
(Hoffmann and Schwartz 2004; Kohli 1994, p. 38; Thaa 1989). Of course, the GDR
was more than just a work society. Nevertheless, the term is instructive for a better
understanding of the GDR as a whole and for the exploration of social policy in
particular, for East German social policy revolved around work and helped consol-
idate the countrys character as a work society. Social policy was not tailored
primarily to the citizen of the state but rather to the Arbeitsb urger (Gotting
1998, p. 61), the working citizen, and was designed to mobilize as many people
as possible for work activity. Many different aspects were concealed behind this
concept, including a tenet from the philosophy of history according to which
salvation lay in gainful employment and the development of productive forces.
Another aspect was an anthropologic vision that stressed the sociality of man
(Lampert 1990, p. 15). Scarcely less central was the sheer lack of choice in the matter.
The prevailing opinion was that the GDR, which working people had fled in droves
until the Wall was built in August 1961, had to mobilize all its labor reserves male,
2 Socialist Social Policy 33

female, young, and old if it was to make any economic progress (see Hoffmann and
Schwartz 2004).
Yet the social policy of the GDR did not focus predominantly on work and the
well-being of the individual worker. The commitment was quite openly to collec-
tive well-being instead. The constitutional responsibility and motto of the SEDs
social policy, especially as of the 1970s, was to serve the good of the people.
Doing so could come at the expense of segments of the population, such as
applicants for an exit permit to West Germany and others who were regarded as
politically wayward types.

2.5 Socialist Social Policy

The political leadership of the GDR explicitly strove to create a socialist social
policy16 fundamentally different from bourgeois social policy in form, process,
and substance.17 It succeeded spectacularly in that effort. The state monopoly on
social policy was only the most obvious piece of the ample evidence demonstrating
the aspiration for a genuinely socialist welfare state. Unlike private welfare
associations in western Germany, those in East Germany played only a small
part. Another distinction between the two approaches was the GDRs centralized
organization of social policy, which was supplemented in the social insurance
institutions through the incorporation of the Free German Trade Union Federation
(Freier Deutscher Gewerkschaftsbund, FDGB). A closely related third difference
was the profound abuse of social policy in East Germany, particularly its utilization
for politically motivated state or party repression, exclusion, and inclusion.
The politico-economic objective was no less telling. In contrast to social policy
in western countries, socialist social policy was not intended to protect against
market forces or to constitute markets but rather to advance the economic plan and
ensure the most ambitious implementation of the plan. Formally, the GDRs use of
social policy to further national trade and industry was akin to western concepts that
recommended social policy mainly as a vehicle for buttressing state power or laying
the domestic foundations of an expansive foreign trade policy (as in Japan; see
Seeleib-Kaiser 2001). Moreover, the disintegration of pluralist discourse and

16
An example is }274, par. 1 of the East German Labour Code, in which social insurance is
specifically called an important part of socialist social policy (Gesetzblatt der DDR, 1977, part 1,
pp. 175177)
17
The bourgeois attributes of this social policy had to do with its social function, which was
generally seen in doctrinaire terms to be the stabilization of capitalist conditions. For example,
Gunther Thude (1965), director of the Social Insurance Administration from 1967 to 1989, wrote
that the substance of the social policy of the West German monopoly and the Bonn state is to
secure, promote, and exalt the work capacity and exploitability of working people, to tie them
tightly to the enterprise and to the entire capitalist system, to bury their class consciousness and
prevent class struggles, to obscure vested interests and power relations, to atomize the working
class, and to erect a bulwark against the influence of socialism and peace (p. 48).
34 Social Policy in the German Democratic Republic

decision-making was also a testimony to the antibourgeois conceptualization of


social policy in the GDR. The fact that law ranked third behind politics and social
conciliation is worth noting as well (Lohmann 1996). For all the many legal
guarantees and possibilities for protecting rights, there was a major gap in protec-
tion under East German social and labor law: the absence of a Constitutional Court
and genuine administrative courts (Lohmann 1988).
The economic function of East German social policy was paramount. Western
scholars describe it essentially as orientation to economic production, productivity,
growth, and full employment (Lampert 1985; Leenen 1977; Lohmann 1996,
pp. 125126). According to this view, the highest responsibilities of social policy
were to protect workers against work-related risks and to equip and mobilize the
working-age population for economic activity. This thrust brought about biograph-
ical trajectories in which gainful employment figured prominently (Leibfried and
Leisering 1995, pp. 239244). Social policy in the GDR was thus to aid the develop-
ment of the productive forces of the economy another remarkable contrast to
western social policy, which is often understood as protection against market
forces, as a counterbalance to economic policy, or as a device for utilizing the
economy for noneconomic purposes.
The interpretation of the economic function of social policy was not much
different in the official canon of political economics espoused by the party and
the state in East Germany. However, that doctrine did anchor the economic function
in the objective economic laws of socialism (Programm der SED 1976, adopted
version, section A). The economic laws of socialism did not mean immutable
laws but rather, above all, obligations, goals, and motives geared to strengthen
socialism. One of these laws was the so-called Hauptaufgabe, or principal task,
the main long-term program for steering the society as a whole. The meaning and
specific substance of that program differed from era to era. Stalin (1942/1952) had
initially prescribed the principal task as the guarantee of maximal satisfaction of
the constantly growing material and cultural needs of society as a whole through
unceasing growth and continuous culmination of socialist production on the basis of
cutting-edge technology (p. 41). In emulation of the Soviet Union, the main long-
term program under Ulbricht was defined in even more ambitious terms, becoming
associated with the goal of catching up with and even overtaking the West.18 The
focus at that time was still on the economy, not on social policy. Under Honecker,
though, the major long-term program was seen more and more to mean striving for
economic and social policy equally.

18
As late as the Fifth Party Congress (1958), the SED defined the principal task mostly as catching
up with and overtaking the West, specifically West Germany. In Ulbrichts own words at the
congress: The principal economic task consists in developing the economy within a few years in a
way that fully proves the superiority of the socialist social order vis-a-vis capitalist rule. That is
why the working populations per capita consumption must surpass that of West Germanys total
population for all important foods and consumer goods (Protokoll des V. Parteitages der SED
1958, p. 1357, as quoted in Thomas 1974, p. 57).
2 Socialist Social Policy 35

The idea of linking the economic function of social policy to the Hauptaufgabe
sprang from the hope that social policy and labor productivity were mutually
remunerative. The expectation was that economic policy and social policy served
each other and that together they functioned as a driving force of economic and
social progress (Winkler 1985, p. 11; see also Lohmann 1996, p. 72). In this vein, it
was hoped that social policy could provide a motivation program (Weinert 1995a,
p. 298). It was supposed to rouse workers to increased work discipline and perfor-
mance and thereby lift labor productivity. This effect would then benefit the
funding of social policy. In 1971, after Honecker had taken over from Ulbricht,
this concept found favor in the policy of the SED and state leadership. In 1976, the
SED made it official when it promulgated the Einheit von Wirtschafts- und
Sozialpolitik, that is, the Unity of Economic and Social Policy,19 never touching
it again until the demise of the GDR (see Sect. 5).

2.6 Social Policys Contribution to the Class Struggle

Warding off need, protecting against risks, and performing economic functions
were not the only responsibilities of socialist social policy. It was also calculated to
help spearhead class struggle (see, for instance, Fiedler et al. 1984; Winkler
1989).20 Politically, that dimension was crucial, for in taking on the project of
building socialism in East Germany the SED had embarked on a long, unrelenting
struggle (Meuschel 1992, p. 19). In the official interpretation, social policy was
designed to champion the party line in this struggle, to be serviceable to the SED
and beneficial to the interests of the ruling working class and its allies (Manz and
Winkler 1979, p. 26), that is, of the peasants in a cooperative society, the intelli-
gentsia, and the other working strata (p. 26). It condoned the use of social policy
against the class adversary. As long as employer-paid social contributions and the
right to strike could be used as weapons in the fight against the remaining private
enterprises, the SED state could easily live with both. The official interpretation was
that the right to strike did become superfluous even damaging at the point those
enterprises went under as socialism emerged. After all, why should the members of
the working population strike against something they co-owned?
Guarding the flank of the regime change toward socialism likewise counted as
one of social policys functions bearing on class struggle. Social policy was to abet
the imposed convulsion of ownership structure, society, and politics in some

19
This formulation, first coined in 1975, appeared as the heading that introduced the details of
economic policy laid out by the SEDs program in the version adopted at the Ninth Party Congress
of the SED (1976). For the GDRs point of view, see Miethe and Milke (1976) and Winkler (1989,
pp. 153155). From the perspective of research in West Germany, see Hertle (1996, p. 33).
20
The class linkage or class character of social policy was emphasized in nearly every respect,
as in Ulbricht (1965). As commonly assumed at that time: a social policy indifferent to class does
not exist (Manz and Winkler 1979, p. 26).
36 Social Policy in the German Democratic Republic

domains and to cushion it in others. This radical overturn was to be supported by the
centralization and standardization of social insurance. Nationalizing health care and
undercutting or eliminating the property rights of physicians, dentists, and
pharmacists went in the same direction. Such action included the dissolution of
traditional ways in which the medical profession represented its interests, and it
meant the integration of physicians and dentists into the FDGB, the East German
trade union.
The task of coping with the heavy costs of class struggle also fell to social policy.
Consequences of seismic change that were inimical to East German socialism, such
as mass migration of specialists to western Germany, were to be prevented, or at
least curbed, by promises and actions sanctioned by social policy (Ernst 1997;
Hohmann 1997). Favoritism and discrimination lay within that scope. Members of
the supplementary and special provisionary systems were among the beneficiaries
(see Sect. 3.5). Workers who stood by the SED and the SED state enjoyed
comparatively great protection and assistance. Less went to those not belonging
to the SED and the proletarian nobility. And whoever opposed the SED and could
not qualify as a worker might go empty handed (Lohmann 1996, p. 124).
Leading the class struggle also meant instrumentalizing social policy for the
purposes of shaping attitudes and convictions. The prime examples occurred in
the 1950s, when national-socialist activists were disqualified from all support
systems, including social welfare (Lohmann 1996, p. 125). In addition, university
scholarships went first to students and doctoral candidates whose political attitudes
and class affiliation were acceptable to the party, and substantial retirement bonuses
were allotted to the members of the Combat Groups of the Working Class
(p. 125). But the 1950s were not the only decade in which social policy was
selectively wielded to punish or reward. In the 1960s, 1970s, and 1980s, for instance,
East German citizens applying for permission to emigrate to the Federal Republic of
Germany were penalized on orders from above through covert circumvention of
their right to work (von Maydell et al. 1996, pp. 8, 73). In most cases, such retaliation
meant ruin, for whoever lost the right to work plummeted a long way.
These examples reveal a general pattern illustrating that social policy in the
GDR was enlisted on a scale hitherto practiced in Germany only by the Nazi
state to disadvantage political opponents and favor ones own supporters,
whether as reward for past conduct or as incentive for future conformity (Lohmann
1996, p. 125).

2.7 Great Expectations of Social Policy: Recruiting Followers,


Attracting Confederates, and Conferring Legitimacy

Like the political elites of other countries, the leaders of the GDR also sought to use
social policy for their own ends, such as those of recruiting adherents, winning over
confederates, and legitimating their rule. Given the weak legitimacy of the SED
state, these objectives were critical. The SED state and its leadership lacked
2 Socialist Social Policy 37

commendable processes for office-seeking, voting political leaders into and out of
office, and exercising power and control. To that extent, they did not have much
basis for the legal type of legitimate authority postulated by Max Weber (1922/
1978).21 Nor did they have any traditional and charismatic legitimacy. The GDR
and its leaders thus possessed none of the classic resources that bequeath legiti-
macy. Furthermore, the goal of catching up with and overtaking the West economi-
cally, an Ulbricht-era guideline imitating megalomanic projects pursued in Soviet
economic policy under Khrushchev, became ever more remote with each passing
year (see Sect. 6.4). It deepened the stain of being a laggard and underscored the
economic inefficiency of East German socialism, chronically starving it of the
output legitimacy that comes from strong economic performance and visible
improvement in well-being. Social policy was supposed to countervail this defect,
too.
The import of social policy functions differed over time. According to a periodi-
zation common in East German social policy research in the 1980s (Winkler 1989),
social policys function as a vanguard of class struggle played an outstanding role
during Soviet occupation from 1945 to 1949 the time officially christened as the
antifascist democratic upheaval (p. 21) and during the creation of socialisms
foundations from 1949 to 1960 (p. 70). This aspect of social policy was much less
salient in the 1960s and after 1971, the era of shaping the developed socialist
society (p. 153), though the dimension of class struggle never did disappear in the
latter two intervals. The economic functions of social policy were conspicuous
throughout the history of the GDR. Even so, certain periods are distinguishable. For
instance, the orientation to production rather than consumption received more
attention before power passed from Ulbricht to Honecker in 1971 than it did
afterward. The significance of social consumption, including price subsidies,
grew perceptibly after 1971, as did funding for housing construction, family
assistance, and support for gainfully employed single mothers. The latter two
programs were decidedly pronatalistic on the whole and were expanded particularly
in the 1980s.
Kaufmann (1994) has characterized the welfare state as the institutional result
of the abiding political aspiration to provide through legislative means the
foundations for the individual well-being of all members of a nationally defined
society (p. 357). That summation superbly captures the fundamental nature of the
developed democratic welfare states. To grasp the case of social policy in the GDR,
however, one has to adapt the concept of the welfare state. The East German
welfare state was the institutional result of the abiding political aspiration to
provide through legislative means but also through nonformalized authority,

21
The legal type of legitimate authority rests on the legitimacy bestowed by commendable
procedures of the exercise of political power as opposed to legitimation through charisma (the
imputation of extraordinary qualities to the leader) and legitimation through tradition (Weber
1922/1978, pp. 124148, 611612).
38 Social Policy in the German Democratic Republic

through power in Max Webers terms,22 and, if necessary, through the exclusion of
wayward types the foundations for the collective well-being of a people as
defined by criteria of class struggle. East German social policy was not
programmed only for employment, social security and social services, and aid. It
was also highly politicized and policy-oriented, to quote from Ulrich
Lohmanns review of the GDRs social law (Lohmann 1986, 1996). This fact was
true in three ways, first, as a location compatible with the SED; second, in
connection with linking social policy to class struggle; and third, in terms of the
educational and disciplinary functions of social policy. Social policy was also
expected to promote a certain model of the good life (Lohmann 1996, p. 125),
the socialist way of life. Occasionally, though, the essence of the model was defined
quite prosaically as conscientious, honest, socially useful work (Autorenkollektiv
1977, p. 9)23 and sometimes simply only as diligent, disciplined work and good
political conduct (Lohmann 1996, p. 125).

2.8 Constitutional Foundations of East German Social Policy

Constitutionally, social policy in the GDR rested broadly on a bedrock of basic


social rights. They included the right to work (Art. 24, par. 1 of the East German
constitution of 1968 as amended in 1974). The right to work was regarded as a
foundation (G otting 1998, p. 62) of the socialist welfare state and was the show-
piece of social achievements on which the SED state prided itself. However, like
the other basic social rights formulated in the East German constitution, the right to
work had the status of a pledge of protection and a self-commitment by the state
(Gotting 1998, p. 59), not that of an actionable legal entitlement (Hachtmann 1998,
p. 40). The GDRs constitution of 1949, too, had contained passages about the right
to work. But it was qualified by the proviso that the citizen would be provided for
in his necessary livelihood in the event that an appropriate opportunity to work
cannot be shown to exist for that person (Art. 24, par. 2, sentence 2 of the East
German constitution of 1949; see Mampel 1997, pp. 657675). The Constitution of
1968 and that of 1974 set forth the right to work more precisely as the right to, and
free choice of, a job. Two constraints existed, though, in that the freedom of choice
was to be commensurate with societal requirements and personal qualification

22
Weber (1922/1978) defines power as the probability that one actor within a social relationship
will be in a position to carry out his own will despite resistance, regardless of the basis on which
this probability rests (die Chance, innerhalb einer sozialen Beziehung den eigenen Willen auch
gegen uber Widerstreben durchzusetzen, gleichviel, worauf diese Chance beruht) (p. 53).
23
A later version of this definition added that the socialist way of life was also characterized by
relations of comradely cooperation and mutual aid, equal rights, freedom, social security, and the
increasingly active participation of all citizens in the management and planning of social responsi-
bilities in all areas of life (Autorenkollektiv 1977, p. 9).
2 Socialist Social Policy 39

(Art. 24, par. 2, sentence 2 of the East German constitution of 1968 as amended in
1974). This limitation was susceptible to political intervention, for personal
qualification could be defined as good political conduct, and societal
requirements were ultimately defined by the states ruling party, the SED. More-
over, the pledge to protect the right to work was tied to the honor-bound duty to
work (Lohmann 1987a, p. 17): Article 24 promised every East German citizen the
right to work but in the same breath held that individual to the obligation to work.
In the GDR this simultaneous fostering and demanding repeatedly surfaced in the
tie between special social benefits and politically correct conduct. For example,
particularly attractive training scholarships went to candidates who toed the party
line especially well (Lohmann 1996; von Maydell et al. 1996), and new apartments
or houses were preferentially allocated for outstanding accomplishments that
strengthened, consolidated, and protected the GDR. It was mostly the functionaries
who profited from these practices (Schildt 1998, p. 180).
The right to work was not the only basic social right granted by the GDRs
constitution. Every East German citizen had the right to the protection of his
health and capacity to work, a provision that was anchored in Article 35,
paragraph 1, of the GDR constitution of 1968 as amended in 1974. The same
article also guaranteed material security, free medical assistance, pharmaceutical
preparations, and other medical services in kind based on a system of social
insurance . . . in cases of illness and accidents. Article 36, paragraph 1, of that
document gave each East German citizen the right to societys care in advanced
age and in the case of disability. According to Article 38, paragraph 1, Mar-
riage, family, and maternity stood under the special protection of the state.
Paragraph 3 of the article encompassed the social protection of mother and child
by affording maternity leave, special medical care, material and financial support
for births, and a child benefit.
Additional basic social rights were the right that every East German citizen had
to an education (Article 25) and the right to leisure time and recreation (Article 34).
Article 37, paragraph 1, endowed every citizen and his family with the right to
living space . . . commensurate with the nations economic capacities and local
conditions and with the states obligation to uphold [this right] by funding
housing construction, maintaining the value of existing housing, and publicly
supervising the fair distribution of living space.
The constitutional parameters of social policy were spelled out in legal statutes,
of which the key ones had their normative basis in numerous ordinances, directives,
and implementing regulations (see Mampel 1966; Lohmann 1987a, b, 1996;
Thiel 1997).
Like the constitutions of the other socialist countries of central and eastern
Europe, the East German constitution and the legal statutes bearing on social policy
promised the guarantee of a comprehensive social safety net (Gotting 1998, p. 58).
Uppermost in the minds of its framers was comprehensive security for the working
population and, hence, for all working citizens (p. 61). However, exceptionally high
rates of labor force participation in the socialist countries and the extension of social
protection to persons on retirement pensions, dependents of social insurance clients,
40 Social Policy in the German Democratic Republic

and survivors brought about coverage akin to national insurance, largely bridging
the gaps of a welfare state conceived only for workers.
The preceding explanations of the constitutional foundation of East German
social policy are subject to two qualifications. First, constitutional reality in the
GDR widely diverged from the countrys constitution in many respects. Second,
basic social rights in the GDR had a major loophole they were tailored to
paternalistic state assurances of protection. The constitution excluded liberal
basic rights, above all the right to unhindered articulation, aggregation, and organi-
zation of interests in free associations and political parties.

3 The Institutions of Social Policy in the GDR

The GDR was founded as a state on 7 October 1949. However, an exploration of the
mark that socialist economic governance and the political structures of the SED
state left on the GDRs social policy institutions must go back to the time before
1949. Just as the political and economic order in Germanys western zones had been
extraconstitutionally predetermined during the years of occupation before 1949, the
institutions in the Soviet zone of occupation had been subject to a similar process. It
was shaped by the Soviet occupation power and its coalition partners within East
German society, especially the SED (Hoffmann 1996; Wengst 2001). The course
was set albeit not yet irrevocably for a fundamental regime shift leading from a
private to a planned economy, and from the dictatorship imposed in the Soviet
occupation zone to the SED state (Hoffmann and Wentker 2000; Malycha 2000).
At the GDRs birth in October 1949, the institutions of social policy in East
Germany likewise bore the stamp of the regime shift wrought by rulings of the
Soviet occupation power for the purpose of completely revamping the structure of
social insurance and other social policy programs in its zone (Frerich and Frey
1993a, b). These decisions were generally backed by its partners, especially the
reregistered political parties. The road for this process had been paved on 10 June
1945, when Order No. 2 of the Soviet Military Administration in Germany (SMAD)
authorized the union organizations to form social insurance funds. Immediately
after the East German states trade union, the FDGB, was created in February 1946,
it endorsed the introduction of a unified social insurance system. SMAD Order No.
28 of 28 January 1947 then laid down the principles for a unified structure of social
insurance.
In addition to the critical junctures in the emergence of social policy up to
October 1949, the profound changes in the years after the GDR was founded
deepened, radicalized, and consolidated the conversions that had taken place
from 1945 through 1949. They gave rise to five partly overlapping and partly
complementary rings of social policy (Hoffmann and Schwartz 2004; Klemann
2006; Boyer et al. 2008). The first of them created a new foundation for social
policy the right to work and the translation of that right into de facto job security
that, judging from the claim, was coupled with remuneration guaranteeing a basic
3 The Institutions of Social Policy in the GDR 41

livelihood. The second ring resulted from a fundamental reorganization of social


insurance (Hoffmann 1996). Nationalization supplanted the combination of public
social policy of central government and self-government, centralization replaced
the decentralized systems of social security, and unified insurance (under FDGB
aegis for the most part) superceded the differentiated insurance systems. This
reorganization also substituted sole administration by the FDGB for self-adminis-
tration based on parity between the representatives of capital and labor in social
insurance. The third ring of social policy after 1949 resulted from the redesign of
existing institutions and the introduction of new ones. For instance, support for
families, working women, and single mothers was inaugurated and expanded, the
main purpose initially being to mobilize labor; later, to promote a higher birth rate.
Other innovations were the subsidization of goods and services for the population
and, as of 1971 in particular, housing policy. The fourth ring, the company-based
welfare state, was generated by the wholesale expansion of occupational fringe
benefits. The fifth and final ring of social policy in the GDR comprised the
supplementary and special provisionary systems for politically eminent groups in
the state and party apparatus and in the so-called mass organizations of the GDR.
Contravening the otherwise preferred policy of equalization, this layer of social
policy forged a new stratification pattern, one of the regimes own making.

3.1 The First Ring: The Right to Work

The first ring of social policy in the GDR consisted of the right to work and the
implementation of policies designed by the government and the enterprises of the
East German economy to fulfill this promise of protection (Hubner 2008). The right
to work was brought about by means of job security for the bulk of the working-age
population, that is, through the guarantee of a job and an earned income that,
flanked by minimum-wage regulations (and possibly other sources of social
income), prevented the worker from plunging into poverty. The right to work was
intended as the basis of all other components of the socialist welfare state in East
Germany. For some time, the GDR leadership had conceived of the right to work as
the very centerpiece of social policy. It was supposed to shelter the members of the
working-age population (and indirectly their dependents) from the risk of unem-
ployment and to be a reliable shield against the loss of income and the existential
threat that accompanied joblessness. That protection alone was seen as a historic
social feat. The provision of a wage that ensured a livelihood was claimed as a
second safeguard of the working populations existence. Purportedly, full employ-
ment and wages that guaranteed at least a minimum level of living rendered many
other social benefits unnecessary or less costly and therefore kept the economic
burden of social responsibilities within limits.
Indeed, the GDR went to great lengths and spared few costs to employ as many
people of working age as possible. Full employment policy seriously benefited from
the decline in the size of East Germanys population from 19.1 million in 1950 to
42 Social Policy in the German Democratic Republic

16.6 million in 1989 according to estimates (Fischer Chronik Deutschland 1999, p.


623) that resulted mainly because many East German citizens of working-age
migrated to the West. Authoritarian labor management initially also played a
role, though not a dominant one, in the effort to mobilize labor and reach full
employment (Thiel 1997; Vollmer 1999b, p. 341). The tacit pressure to earn ones
living by working was more important, as were the wage- and social-policy
incentives to take a job. Monetary support and the time that working mothers
gained from the help they received from day-care centers, all-day preschools, and
other facilities added incentives to improve ways of combining paid employment
and family obligations.
By achieving the right to work and an unusually high labor force participation
rate among men, East German social policy had fulfilled an old goal of the workers
movement. By doing the same for women, it had also met an objective of the
socialist womens movement.24 The leadership of the GDR saw these results as an
especially pioneering social accomplishment and in this respect could count on
broad popular consensus, a rarity in East Germany (Grunert 1997; Niethammer
1993, p. 145).25
The responsibility for putting the right to work into actual practice fell chiefly to
the socialist enterprises (where it increasingly came to mean the guarantee of a job,
not the job). Economic planning targets and the workers extensive protection from
dismissal obliged the enterprises to cooperate on employing all job-seekers. The
Labour Code of 1977 stipulated that an employment contract could be dissolved only
by a contract of annulment, that is, by agreement between the working person and the
enterprise or by a transfer of that person to a different enterprise by mutual assent.
This regulation reinforced the legal job protection granted to employees. Before an
employment contract could be annulled, the enterprise had to have offered the
employee a different job that he or she could reasonably be expected to perform,
and the employee had to have refused the offer. Dismissal was permitted with
2 months notice only if no annulment contract had been settled on and if certain
other requirements had been met. Even then, dismissal depended on concurrence
of the union representatives in the enterprise. In addition, the employee in question
had the right to appeal to the enterprises conflict committee or to the Chamber of
Labour Law.

24
According to the Statistical Office of the GDR (Statistisches Amt der DDR 1990, pp. 130, 390),
the employment rate for women (i.e., gainfully employed women as a percentage of the female
population between 15 and 60 years of age) stood at 82.3% on 30 September 1989. This level
surpassed that in the other socialist countries and was about equal to or slightly lower than that in
Sweden, depending on the basis of calculation (International Labour Organization 1989, 1991;
Schmidt 1993a).
25
The employees were not the only ones interested in job security. The management of an
enterprise, too, had systemic reasons to hang onto regular workforces and hoard labor (see G otting
1998, pp. 6567). Moreover, many managers were receptive to the idea of social equalization and
guaranteed employment (see Gr unert 1998, p. 18).
3 The Institutions of Social Policy in the GDR 43

The right to work in the GDR was out of kilter, however. Job security carried a
high price, such as overstaffing and the paternalistic treatment of the workforce,
whose members were denied autonomous representation of their interests
(Materialien zur deutschen Einheit 1997, p. 87; Vogler-Ludwig 1990). It eventually
led to the slacking that full employment evidently abetted (see, for example,
Mertens 1990; Niethammer et al. 1991, pp. 403405), and the policy of job security
at any cost sapped the national economys productivity (Vollmer 1999a, pp. 279280).
The almost absolute protection against dismissal vastly inflated operating costs. But
socialist enterprises were largely sheltered from competition and pressure to adapt.
This immunity was the only way they could perform their assigned employment
tasks largely regardless of the real costs that the right to work involved.26

3.2 The Second Ring: Social Insurance of Workers and Salaried


Employees and Social Insurance with the GDRs State
Insurance

When the reorganization of social insurance had been completed, the GDR had
centralized, unified social insurance schemes for old age, disability, and health for
nearly all working people and their dependents. One of its main organs was the
Social Insurance of Workers and Salaried Employees (SVAA). When the Govern-
ment Ordinance of 2 March 1956 named the FDGB as the sole carrier of the SVAA,
it simultaneously established a second organization, the German Insurance Agency
(DVA), to cover self-employed persons, the farmers, and the artisans, for they were
not members of the FDGB. Members of these groups were later covered by the
Social Insurance with the GDRs State Insurance (branch of the GDRs State
Insurance). Additionally, there was the special case of the enterprises belonging to
the Soviet-German joint-stock company, WISMUT, which was responsible for
mining uranium ore and which employed more than 40,000 people. Like a state
within a state (Niethammer et al. 1991, p. 58), WISMUT had its own program of
social insurance and health care, which was funded directly from the state budgets
of the GDR and the Soviet Union.
The largest social insurance institution of the GDR was the SVAA. It was
administered by the FDGB and run by that organizations national management
board, by regional and district management boards, and by the heads of the trade
union at the enterprise level. The primary members of the SVAA were workers and

26
When asked from which pot the new social policy measures adopted at the Eleventh Party Congress
of the SED were funded, the director of Zeiss Jena at that time responded as follows: There were few
adequate statistics on the costs of social policy carried out by the enterprises. It just all came out of and
ultimately went back into one big pot . . . We did not calculate it at all; it simply accrued (Schmahl
1992a, p. 33). See also Pirker et al. (1995) and Kopstein (1997, pp. 131153, 197), whose term
campaign economy (Kampagnen-Okonomie) drew attention to the unusually great degree to which
the SED politicized economic activity, especially through local party cadres.
44 Social Policy in the German Democratic Republic

salaried employees the working class, as they were officially known in the
GDR. But physicians, dentists, and veterinarians with private practices were also
insured through the SVAA along with artists and others engaged in the cultural
sector. In 1989, the SVAA covered approximately 90% of the resident population.
That figure represented 10.3 million persons on compulsory social insurance, of
which 7.9 million alone were workers and salaried employees and 2.2 million were
persons on full retirement. The organization covered 4.4 million dependents as well
(Frerich and Frey 1993a, Table 49, p. 271; this source also shows the data for 1949
through 1989).
The reorganization of social insurance coincided with the establishment of near-
universal insurance and the reduction of differences in social security between
occupational status groups. Both changes were the outcome of exclusion and
inclusion that had serious consequences. Even before the founding of the GDR,
civil-servant status had succumbed to the policy of class struggle pursued by
SMAD and the SED. Social insurance was extended to former civil servants
under the terms of the SVAA. Some groups were not covered. Clergy and members
of religious orders were not required to have social insurance. Former members of
the NSDAP, the Nazi party, were disqualified if there was evidence of their having
perpetrated Nazi crimes.
Self-employed persons with more than five employees were also denied public
social insurance. They had voluntary insurance, however, as first foreseen in the years
from 1947 to 1949. In 1956 the DVA became responsible for the social insurance
of the members of cooperatives and collectives as well as the self-employed, who were
all released from the compulsory insurance for workers and salaried employees in
the SVAA. The DVA was later renamed the Social Insurance with the State Insurance
of the GDR (SV-StV). At the end of the 1980s, it covered 1.1 million compulsory
members and 400,000 dependents, about 9% of the resident population (Frerich and
Frey 1993a, Table 51, p. 285; von Maydell et al. 1996, p. 186).
At first, most of the fiscal resources of the social insurance funds came from
contributions paid equally by the insured worker or salaried employee and the
enterprises. However, the door to ever greater reliance on government money was
opened when the budgets of the social insurance organizations were integrated into
the state budget. Ultimately, expenditures for social insurance were financed
through a pay-as-you-go system, with payroll tax contributions from covered
workers and salaried employees as well as employers on the one hand and state
subsidy on the other. By 1989, the state subsidy had increased to the point that it
equaled 47% of the expenditures reported by each of the two social insurance
institutions (calculations based on the figures in Mrotzeck and Puschel 1997).
The social insurance contribution had two components after the reforms of 1968
and 1971, which introduced voluntary supplementary pension insurance. The first
component consisted of compulsory insurance up to an assessable income ceiling of
600 Eastmarks and, initially, a contribution rate of 10% for employed persons and
10% for employers. As of 1 January 1978, the employers had to cover 12.5%. Free-
lancers and self-employed persons paid a compulsory contribution rate of 20%. The
second pillar of social insurance as of 1968 was the voluntary supplementary
3 The Institutions of Social Policy in the GDR 45

pension insurance beyond the assessable income ceiling of 600 Eastmarks up to


1,200 Eastmarks a month or up to ones entire monthly income from wages or
salary. The basis was a contribution rate of 10% for workers and salaried employees
and 20% for freelancers and the self-employed, with optional ceilings of up to 2,400
Eastmarks a month. A free-lancers maximum contribution was thus 480 Eastmarks
a month (20% of 2,400 Eastmarks).
Social insurance afforded an array of benefits, especially for old age, illness,
maternity, preschool child care, care of sick children, occupational accidents and
occupational diseases, disability, death of the breadwinner, and burial (for details
on the benefits in April 1990 see Hoffmann 2008; Lohmann 1996, appendix). The
major benefits were pensions for disability, old age, or surviving dependents if
the policy holder was prematurely incapacitated or had reached retirement age, or in
the case of death of the breadwinner. Out- and in-patient treatment, dental treat-
ment, medication, therapies, adjuvants, and dentures were among the health
benefits. The catalogue contained cures and rehabilitation measures as well. Sick
pay and indemnities were paid in cases of illness, accident-related temporary
disabilities, job-related health damage, and quarantine. Mothers were entitled to a
maternity and postnatal allowance and to care of sick children or of spouses who
were not gainfully employed.

3.3 The Third Ring: Social Policy for the Sphere of


ReproductionSubsidies for Basic Goods and Services,
Support for Families, Working Mothers, and
Single Mothers, and Housing Policy

Most of the basic services that a mature western-style welfare state provides were
included in the GDRs social policy. However, the latter did have a typically
different set of focal points and discontinuities that were largely due to the nature
of its political regime and the lower level of productivity of the East German
economy. That divergence manifested itself in the East German governments
previously mentioned commitment to job security at any cost. A second element
of the difference was family policy, the specifics of which were conceived partly to
bring additional people into the labor force, primarily women of working age
(Helwig and Hille 2006, 2008). Simultaneously, family assistance in the GDR,
like French social policy, was intended to encourage population growth and thereby
help relieve a serious issue in East German society its labor shortage. In fact, the
population of the GDR was shrinking, mainly from the emigration of young East
Germans to West Germany but also from a birth rate usually below that in other
socialist countries. Together, these two trends had bequeathed the East German
population early on with a comparatively high proportion of senior citizens
(Reimann 1975). By 1980, their share as a percentage of the total population had
risen to 17.9% (Statistisches Amt der DDR 1990, p. 356), which was very high for a
country like the GDR, whose level of economic development was relatively
46 Social Policy in the German Democratic Republic

modest. A third regime-specific difference between the social policy of East


Germany and that of western countries was that unemployment insurance played
no notable role in the GDR for most of that states existence. Indeed, its vestiges
were eliminated altogether in 1977, and no unemployment insurance was reinstated
until 1990 (Kinitz 1997).
Social compensation, including indemnification, and social policy relating to
displaced persons, refugees, and expellees, posed a problem in the GDR (see
Schwartz and Goschler 2008), except for persons who were politically accorded
special honor, such as those persecuted under National Socialism. Any idea of
establishing an independent pension to look after victims of the war evaporated in
East Germany after SMAD said No once and for all. And matters unimportant to
growth either in production and employment or in the population like the needs of
the infirm or of people with disabilities went mostly unmet by social policy in the
GDR (Boldorf 2008a, b; Kohnert 1999).
However, the GDRs social policy did focus intensely on ensuring basic secu-
rity. Above all, the state subsidized the prices of basic goods and services for the
population (Steiner 2008). The price supports encompassed all state-funded
measures needed to cover the costs of the governments fixed-price policy on the
following consumer goods or services: (a) food; (b) selected industrial goods
important for social policy, like domestic fuel, infant and childrens clothes,
childrens shoes, school articles, textbooks and other teaching materials, and
occupational apparel; (c) fares for local and long-distance public passenger trans-
port; (d) low sales prices for drinking water and low fees for waste-water purifica-
tion; and (e) low prices for selected repairs and craft services rendered for private
households (see Boyer 2001; Manz 1990a, b; Steiner 2008).
The price subsidies for basic goods and services were hefty. It is estimated that
these prices would have had to be raised between 30% and 100% to free them of
subsidization; those for energy, approximately 200%; and those for transport fares,
about 400% (Lampert 1990, pp. 2627). The practice of resorting to price subsidies
on a large scale has been viewed as a trademark of social policy in the GDR (see
Trumpler et al. 1986), though it figured in the consumer-oriented social policies of
other central and eastern European states as well (Lohmann 1991a, b). In any case,
the price subsidies for basic goods and services was the GDRs equivalent of a social
assistance scheme with guarantees against impoverishment, a kind of social welfare
that remained marginal in East Germany (Boldorf 2008b; Wienand et al. 1997).
Minimum wages and minimum pensions were also part of the basic security
package. The enterprises and, indirectly, the state budget were responsible for the
minimum wages; the social insurance contributors and the state budget, for the
minimum pensions.
Lastly, housing policy likewise bore the indelible traces of the regime shift in
East Germany (Buck 2004). One of the fundamental tenets of the GDRs brand of
socialism held that housing must never be treated as a commodity. This conviction
brought about the drastic curtailment of residential property rights and of the
control that the remaining owners could exercise over their dwellings (von
Beyme 1987). The enterprises had jurisdiction over some housing, mainly the
3 The Institutions of Social Policy in the GDR 47

living quarters that belonged to them. But housing policy was largely a state matter
and was pursued with particular urgency under Honecker.

3.4 The Fourth Ring: The Company-Based Welfare State

As the preceding diagnosis has shown, the socialist states of central and eastern
Europe embodied work societies. The enterprises therein were loci of economic and
social life. They performed a crucial function in social policy, too (Gotting 1998,
pp. 6976), particularly in the GDR (H ubner 2004a, 2006a, b, 2008) but also in the
Soviet zone of occupation that preceded it, where SMAD Order No. 234 of 9
October 1947 had prepared the ground for a broad social policy administered
through the enterprises of the socialist economy. The document is regarded as
having inaugurated the East German occupational fringe benefits, the foundation
of what became later a company-based welfare state. Within the context of the
company-based welfare state, the responsibilities of the socialist enterprises were
fourfold. The first and most important one was the economic function; the
second, a social supply unit; the third, an ideological-educational function;
and the fourth, the monitoring of the workers conformance to the state (Deich
and Kohte 1997, p. 126). Accordingly, the aim was not only to seek progressive
efficiency-oriented instrumentalization of the enterprises but also to assign them
additional social responsibilities (Lutz 1995).
The introduction and elaboration of occupational fringe benefits and the rise of
the company-based welfare state occurred mainly in the socialist sector of the
economy, especially in the major enterprises. The social organs within these
organizations were slow to take shape at first, but the GDR leadership stepped up
the pace especially after the uprising of 17 June 1953. By the early 1960s, the
progress was impressive (Deich and Kohte 1997, pp. 1518).
Under Honecker, occupational fringe benefits even became a main pillar of
general social policy (Hubner 1999b, p. 70), sharing responsibility for making the
right to work a reality, including employment for social reasons and care for the
employees after they retire. Occupational fringe benefits also carried powerful
performance incentives. This framework of social policy determined wage-related
perks, especially bonuses and other kinds of extra pay as well as privileges in the
social insurance system, such as voluntary supplementary pension insurance, addi-
tional old age pension plans, and extra pensions for lengthy service in the enter-
prise. The purview of occupational fringe benefits extended even further to what
was officially termed care for the working population and to help with the
incidental and less incidental concerns of everyday life (Autorenkollektiv 1988;
Deich and Kohte 1997; H ubner 1999b). The preeminent fields of this brief related to
support of the workers, development of the intellectual and cultural life of the
workforce, health and social care for the working class, sports activities and
youth services, child care, vacation arrangements and local recreation, and
housing management (Directive of 28 March 1972 on the Funding of Enterprise
48 Social Policy in the German Democratic Republic

Institutions and Measures for the Care of the Workforce Funding of Occupational
Care, Gesetzblatt der DDR, 1972, part 2, no. 19, pp. 225230).
Company-based social policies were a multifaceted, often even indispensable
instrument for eking out ones livelihood, easing practical everyday life, and
facilitating shop-floor management. Politically, their salience stemmed from the
widely held perception that they were means of [building] employees identifica-
tion and measures preventing future crises and unrest (Deich and Kohte 1997, p. 19),
and they were used for these purposes with some success (Hubner 2008). Occupa-
tional fringe benefits were scarcely less important for coping with everyday life.
They expedited the organization of daily affairs, from feeding the employees to
offering what was otherwise something of a rarity in the GDR a wide assortment
of goods27 and services of every kind, including those that in western countries
were provided mainly by local communities, welfare associations, or private
institutions. Among these goods and services were not just social services but
also shoe-making, sewing, and needlework, which had become uncommon since
the decimation of the private economy and the harassment of the independent single
proprietorships (Deich and Kohte 1997, pp. 3940). Occupational fringe benefits
often also involved subsidiary enterprises, such as slaughterhouses and vegetable
farms, maintained for the efficient use of wastes or in the interest of improving supply
(as quoted in Deich and Kohte 1997, p. 25). Special emphasis was placed on the
health-care institutions of the enterprises the polyclinics, out-patient facilities, and
wards for sick children of working mothers.
The ring of occupational fringe benefits did not end there. Its scope usually
extended also to day- or weeklong infant care, long-term boarding of infants and
young children, vacation camps for children, pioneer camps, as well as holiday
and recreation facilities such as weekend lodges and campgrounds. One could
occasionally also rent tents and house trailers through these programs (Deich and
Kohte 1997, pp. 2526).
Occupational fringe benefits had advantages for management, too. They were
systematically used for purposes of personnel policy and business management,
particularly to produce and retain a core workforce, hoard labor, and fill in various
chronic cracks in the planned economy. An enterprises fringe benefits lent them-
selves also to bartering between enterprises or between an enterprise and the local
community. For instance, food for the enterprises kitchen could be swapped for
places at a holiday camp; vacation residences, for work by a team of maintenance or
repairmen; and chances to receive enterprise-sponsored housing, for plots on which
to build ones own home (Deich and Kohte 1997, pp. 6870). An enterprise might
also accord social services to people not on its payroll in exchange for municipal
services preferentially rendered to the enterprise (Hubner 1999b). Such exchange
transactions were nothing out of the ordinary (Deich and Kohte 1997, p. 69).

27
The big socialist companies, the Kombinate, tended to surpass state retail trade in the ability to
obtain the appropriate range of goods and guarantee their timely and efficient sale (Deich and
Kohte 1997, p. 39).
3 The Institutions of Social Policy in the GDR 49

Why did occupational fringe benefits play so great a role in the GDR? Part of the
explanation lies in their vital contribution to meeting the responsibilities mentioned
above. Another part had to do with needs arising from the high percentage of
working women in the countrys labor force. Because they, too, were engaged in
paid work, some aspects of running a household and raising a family could not be
readily tended to, so fringe benefits were supposed to bridge the gaps. Hence the
importance of the cafeterias and the other kinds of backup the enterprises made
available to their personnel. These circumstances also explain the massive efforts
that were undertaken to arrange working hours so that working mothers could
combine job and family as easily as possible. Yet another intention behind occupa-
tional fringe benefits was to instill the working populations sociopolitical commit-
ment and to solicit recognition. The enterprises, in particular the major industrial
ones, were to present themselves to the employees not only as utilitarian institutions
but also as group-forming life worlds (Deich and Kohte 1997, p. 64). Some
enterprises did in fact become a safe haven (H ubner 1994, p. 181) for many people,
occasionally even a surrogate family (Hachtmann 1998, p. 51). Not least, there was
a political motive for promoting occupational fringe benefits: This policy should
enable the state behind the nationalized enterprises to cast itself as one that provides
for and cares about the individual (Deich and Kohte 1997, p. 64).
Occupational fringe benefits in the GDR did not break completely new paths. In
some respects it conserved and continued classical social policy (Deich and Kohte
1997, p. 64) that had been prevalent mostly in Germanys mining sector and heavy
industry before 1945. Unlike the occupational fringe benefits at that time, however,
those in the GDR blended the classical social policy of autonomous enterprises with
a government social policy channeled through them (Hubner 1999b, p. 64).28 For
the most part, in other words, the occupational fringe benefits in the GDR were not
of an autonomous decentralized character; they came under national planning and
state-led governance, as provided for in the East German constitution. The socialist
enterprises were not autonomously operating units. As stated in Article 41 of the
Constitution of the German Democratic Republic of 6 April 1968, as amended on
7 October 1974, they were instead communities acting on their own responsibility
but in the framework of state control and planning (my italics).

28
This mix reinforced socialist societys peculiar preoccupation with enterprises. H
ubner (1999b)
continues, however, by observing that potential for tension nevertheless remained. The differences
between the governments approach to social policy and that of business management resulted
essentially from the macropolitical concern with legitimating and stabilizing the SED regime also
with the help of social policy, whereas the management in the enterprises tended to focus on
offering the employees performance incentives and care (p. 64).
50 Social Policy in the German Democratic Republic

3.5 The Fifth Ring: Supplementary Old-Age Pension Systems,


Special Pension Schemes, and Honorary Pensions

Distinctions between occupational status groups, like those between wage earners
and salary earners or between them and civil servants, were evened out early on in
the Soviet zone of occupation and the GDR. However, such leveling was not the
only result of socialist social policy. It generated new patterns of stratification
typical of the regime, segregating pensions into regime-specific transfer classes
(Lepsius 1979, pp. 179182). These classes emerge when the level of social benefits
and the access to public goods and services differ. The most important lever
bringing these classes about in the GDR was the establishment and expansion of
preferential pension schemes for the members of selected occupational groups.
These privileged arrangements for retirement were known as the supplementary
old-age pension and special pension schemes (see Bundesversicherungsanstalt fur
Angestellte 1997; Hoffmann 2008, pp. 356360; Mutz 1995, 1999). By the time of
the GDRs demise they covered approximately 4% of the resident population (von
Maydell et al. 1996, p. 186), and their full scope was not fully known during the
planning of social policy in anticipation of German unification. Many different
motives played into the creation of the supplementary and special provisionary
systems. One of them was to compensate for excessive wage equalization and to
improve the attractiveness of public service jobs (Mohn 1993, p. 438).29 Even more
important was the endeavor to use the privileged status of participation
in the supplementary and special provisionary systems to bind [the target groups]
more closely to the political system of the GDR (Mohn 1993, p. 438) and
especially to keep them from emigrating to the West.
Preferential entitlement went particularly far in the special pension schemes,
which were introduced to guarantee public employees independent, favored pro-
tection in old age outside the social insurance system. They were meant for figures
crucial to the state apparatus. The first people to enjoy this privilege were the
members of the Ministry for State Security and the Office of National Security, for
whom a special pension scheme was put into place in 1953. The members of the
East German Peoples Police, the fire department, and the correctional system
followed at relatively brief intervals in 1954. In 1957 so did the members of the
National Peoples Army, which was created in 1956. The employees of the customs
administration joined this distinguished circle in 1970 (Mohn 1993, p. 438).

29
The salaries of the highly qualified experts in the GDR only occasionally rose to a modest level.
Bienert (1993) asserts that East German wage policy always disadvantaged that group (p. 350)
and that the salaries of it members were never commensurate to their merits. A master earned less
than the skilled workers he was in charge of. Until well into the 1980s, the starting salary of a
doctor or teacher was less than the wage level of most workers; and even the monthly salary of
3,500 Eastmarks received by university professors as of 1985 can hardly be called excessive
(p. 350).
3 The Institutions of Social Policy in the GDR 51

The special pension schemes were social safety nets having the character of
comprehensive care (Bundesversicherungsanstalt fur Angestellte 1997). The retire-
ment pensions they granted far exceeded those of social insurance, guaranteeing the
beneficiary a fixed percentage of the last earned income, in most cases 90% of the net
pay. Usually, the insured groups of persons had to pay premiums amounting to 10%
of their total remuneration to the corresponding special system. They received their
retirement benefits solely from these schemes. As of 30 June 1990 the beneficiaries of
the special pension schemes numbered about 120,000 (Mohn 1993, p. 438).
Unlike the special pension schemes, the supplementary old-age pension systems
were not intended as independent old-age insurance systems but rather as
complements to the retirement pay received through social insurance. Another
difference between the special pension schemes and the supplementary old-age
pension systems was that the members of the latter also belonged to one of the two
social insurance agencies of the GDR. As with the special pension schemes, the
supplementary types were supposed to guarantee total coverage at a high level. As a
rule, they guaranteed the entitled person a retirement pension based on a fixed
percentage of his or her last earned income. Technically, the wherewithal for this
arrangement came from increases in the social insurance pensions. Generally, the
idea was to make certain that the supplementary benefit and the social insurance
retirement benefit added up to about 90% of the entitled persons last net income.
The terms of both the premium and the coverage differed considerably from one
supplementary old-age pension system to the next. In mid-1990 these systems were
shut down in accordance with the Treaty on the Creation of a Monetary, Economic,
and Social Union between the German Democratic Republic and the Federal
Republic of Germany (hereafter also referred to as the First State Treaty [Vertrag
uber die Schaffung einer Wahrungs-, Wirtschafts- und Sozialunion] 1990, see
Sect. 5). At that point approximately 230,000 people were receiving benefits from
supplementary old-age pension systems (Mohn 1993, p. 439), the number of which
was estimated to be about 60.30 The number of persons with accrued rights to a
supplementary old-age pension was estimated to be approximately one million at
that time (Reimann 1991, p. 282).
The supplementary old-age pension have been likened to company pension
schemes in West Germany, with parallels drawn particularly to the supplementary
pension for public employees (Reimann 1991, p. 282). That comparison falls a bit
short. The diversity of the supplementary old-age pension systems, the privileges
they granted, and their politically selective patterns of exclusion and inclusion
resembled less the Federal Republic of Germanys supplementary pension for
public employees than the practice in many Latin American countries of

30
The lack of clarity owed to the nature of the systems. In the 1950s the supplementary old-age
pension systems were properly named in the Official Statute Register of the German Democratic
Republic, but the government of the GDR strayed from this practice in the following decades:
Some supplementary old-age pensions were based on resolutions of the Council of Ministers;
others were apparently arranged individually (Mutz 1999, p. 510).
52 Social Policy in the German Democratic Republic

concentrating social policy on politically key groups (see Mesa-Lago 1985;


Wachendorfer 1986).
The principal beneficiaries of supplementary old-age pensions were the
countrys intelligentsia, as this circle of highly qualified experts was officially
called. In the 1950s its arc spanned the supplementary retirement pensions of the
technical intelligentsia (introduced in 1950), the retirement pensions of the
intelligentsia at scientific, artistic, educational, and medical institutions (as of
1951),31 and the retirement pensions and voluntary supplementary pension schemes
for physicians, dentists, and veterinarians (1959). With these benefits and others,
such as pay increases, the SED state wooed especially qualified able-bodied
persons most of all, those whom the state was anxious to keep from migrating
to the West. Such preferential treatment vividly shows just how important the co-
optation of the intelligentsia was in East German socialism.
The first wave of supplementary old-age pension systems and the creation of
almost all the special pension schemes were products of the Ulbricht era. A second
wave in the introduction of supplementary old-age pension systems, which took
place chiefly after power shifted to Honecker, lasted until 1976. It, too, was about
patronage, which henceforth extended predominantly to the members of the state
apparatus, the parties, the mass organizations such as the National Front, and the
FDGB. In the third and final phase of expansion from 1986 to 1988 supplemen-
tary pensions were arranged for other special occupational groups, such as artists
and authors, chairmen of the Agricultural Production Cooperatives, and general
managers (Mohn 1993, p. 438).
Politically selective improvements in retirement pensions were also made for
persons who had been persecuted under National Socialism, for the Fighters
against Fascism, and for members of the Combat Groups of the Working
Class, as they were officially called in the GDR. Unlike social policy in the Federal
Republic of Germany, that in East German socialism refrained from according
compensation for wrongs perpetrated under National Socialism. An exception that
East German social policy made to this guideline was that persons persecuted under
the Nazi regime continued getting special benefits they had already begun receiving
immediately after the war. Other extensive improvements came from the Directive
of 5 October 1949, which defined the legal status of victims of Nazi persecution
(Zentralverordnungsblatt 19471949, p. 765). The benefits, however, were tied to
the obligation to support the SED politically. As stipulated in the guidelines of 10
February 1950, benefits went only to those victims of Nazi persecution who had
backed the SED after 1945.
Special political loyalty was rewarded with honorary pensions, which were
introduced by the Ordinance of 28 August 1952 (Gesetzblatt der DDR, 1952, part 1,
no. 122, pp. 823824). They granted substantial privileges (Frerich and Frey

31
Ordinance of 12 July 1951 on the Retirement Pensions of the Intelligentsia at Scientific, Artistic,
Educational, and Medical Institutions of the GDR (Gesetzblatt der DDR, 1951, no. 85,
pp. 675677); see U. Lohmann (1996, pp. 5657).
4 The Politics of Social Policy Under the Socialist Regime 53

1993a, p. 360). The motive behind the honorary pensions was solely political. They
were bestowed for many years of outstanding performance in the struggle for
peace and socialism. Entitled women usually began receiving them at 60 years of
age; men, at 65. The monthly benefit of 600 to 1,500 Eastmarks from the honorary
pensions exceeded the customary retirement pensions by a more or less wide
margin. Later changes in the law further enhanced the social security of those
people receiving honorary pensions and their survivors.32
Political motives lay also behind the bonus allotted to the retirement pension for
members of the Combat Groups of the Working Class and for their survivors.33 For
each working person who had been a member of a combat group for at least
25 years, this rule provided for a monthly payment of 100 Eastmarks over and
above the annuities for old age, disability, and accident. The circle of beneficiaries
receiving preferential treatment was small, though. At the end of 1989, combat
group bonuses were paid for approximately 4,000 pensions (Frerich and Frey
1993a, p. 362).

4 The Politics of Social Policy Under the Socialist Regime

4.1 Great Latitude of the Political Leadership and High Levels


of Politico-Administrative Fragmentation

One of the institutional characteristics of East German social policy was its peculiar
configuration: centralization, unitary governance, and the sole jurisdiction of the
state under SED control. The power at the disposal of the political decision-making
center of the GDR was nearly absolute as long as fundamental interests of the Soviet
Union did not dictate otherwise. There were no noteworthy checks and balances of
the kind known in western constitutional democracies to challenge actions of the
SED leadership. Few limits were set by the legal system or the economy, both of
which were subordinated to politics, or by the separation of powers, which was
completely overshadowed in East Germany by the supremacy of the SED. No veto
positions or veto players were in sight (except, again, for the Soviet Union). There
was neither coalition government nor a federal state, nor were there autonomous
associations or industrial partners authorized to deal with wage and labor issues on
their own. No institutions of self-government and no independent media existed.

32
Examples are the Ordinance of 8 April 1965 on Honorary Pensions for Fighters against Fascism
and for Victims of Fascist Persecution and Their Survivors and the unpublished 1976 Directive by
the GDR Council of Ministers on Honorary Pensions for Fighters against Fascism and for Victims
of Fascist Persecution and Their Survivors (Frerich and Frey 1993a, p. 361).
33
Directive of 17 September 1974 on the Provision of a Bonus to the Pension for Working People
Who were Members of the Combat Groups of the Working Class and to Their Survivors
(Gesetzblatt der DDR, 1974, part 1, pp. 465466).
54 Social Policy in the German Democratic Republic

And there were no supranational organizations with direct influence on member


states as in the European Union today. These voids granted unusually great latitude
to the political leadership, whose decision-making center for both foreign and
domestic policy, including social policy, consisted of the Politburo, the Secretariat
of the Central Committee of the SED, and the SED apparatus (see, for example,
Herbst et al. 1997; Malycha and Jochen 2009; Siebs 1999).
Nevertheless, social policy formation was fragmented in the GDR, though for the
most part horizontally rather than vertically as in a federal state. East German social
policy was restricted politically, too, some of the factors being the strong external pull
of Soviet policy and the ramifications of self-inflicted crises, such as the uprising
in East Berlin and in many other cities in the GDR on 17 June 1953. This politico-
administrative fragmentation of the East German welfare state has not always received
the attention it actually deserves. Scharfs studies have been among the few to inquire
into this aspect, noting a bewildering diversity of administrative arrangements, no
central government ministry for social policy (Scharf 1989, p. 21), no central agency
and consequently, no pool of career professionals with an interest in asserting an
integral approach to social problems (Scharf 1989, p. 22), and a certain amount of
administrative disorder (p. 23) in social policy. Scharf was justifiably surprised by the
lack of administrative resources for the overall planning of social policy.
Oddly, the East German state had no separate central ministry overseeing all facets of
social policy, despite their strategic importance. The competencies relating to that field
were assigned to various institutions not just to the party and the state, as in every other
area of policy, but to a number of entities within the SED and the state apparatus (Hertle
and Stephan 1997b; Lepsius 1995; Scharf 1988; Thomas 1974; on the administrative
dimension of social policys history in the GDR, see Krause and Hoffmann 2001). This
circumstance was astonishing, particularly in view of the countrys predilection for
statist planning, centralization, and concentration of power resources. The phase of
numerous changes in East Germanys politico-administrative structure essentially
ended in the early 1970s, but social policy remained split up across an array of
institutions until the end of the Honecker era (for the changes under de Maiziere, see
Sect. 5.4). After the dissolution of the Ministry of Labour and Vocational Training in
1958, the Ministry of Health was the only ministry with a clear-cut focus on one major
social policy area. At the end of the Honecker era, all other concerns of social policy
were incumbent on undersecretaries and state offices, especially the Undersecretary of
Labour and Wages (as it was called beginning in 1972), the Bureau of Prices, and, albeit
less important, both the Undersecretary of Occupational Training and the Bureau of
Youth Affairs. Major decision-making on social policy lay largely with the General
Secretary of the Central Committee of the SED, Erich Honecker. This preponderance of
authority left a gap filled by neither centralization nor the usually energetic support of
Honeckers social policy by G. Mittag34 in the Politburo. It merely saddled the fractured

34
Gunter Mittag (19261994) was a member of the Politburo of the Central Committee of the SED
(19661989) and Secretary of Economy of the Central Committee of the SED (19761989). In the
latter capacity, he was also the Politburos point man for social policy. Mittag was expelled from
the SED on 23 November 1989.
4 The Politics of Social Policy Under the Socialist Regime 55

decision-making structure with the dynamics associated with the primacy of politics and
the neglect of cost issues (Skyba 2002, pp. 5253, 78; Steiner 1999).
The politico-administrative fragmentation of social policy in East Germanys
state apparatus meant that the perception and treatment of the problems were also
susceptible to segmentation. The big picture, including the cross-sectional obstacles
and serious trade-offs between social protection and other objectives, usually went
unrecognized. The SEDs apparatus, too, unmistakably exhibited this kind of
myopia. The people most accountable for social policy in the SED were the General
Secretary of the Central Committee of the SED and, further down the line, a small
group of Politburo members, notably the person in charge of economic policy.
Various Central Committee departments of the SED were likewise concerned with
social policy (see Sect. 5.4). Remarkably, the Central Committee had no secretariat
for social policy. In the Central Committee secretariat for economic policy, the
department of social policy was actually one of eight departments, whose appar-
ently high degree of mutual compartmentalization sacrificed most of the opportu-
nity for interdepartmental linkages. Moreover, social policy, like other policy fields
in the GDR, was subject to the SEDs claim to universal jurisdiction (Raphael
1998, p. 250). This prerogative overlaid all statist decisions on the merits of a matter
and all personnel decisions. Exceptions were made for politically unsuspicious
facets of social policy. They included technical questions of occupational safety
and health or medical care and microlevel decisions of the kind bearing on the
minutia of running the company-based welfare state (on the last point, see espe-
cially Hubner 1999b). The SED held sway on everything else, even more so under
Honecker than under Ulbricht, for Honecker sought expert counsel less than his
predecessor had (Raphael 1998).

4.2 Segmentation of the East German Welfare State

The SEDs claim to authority over all areas in no way overcame the fragmentation
of social policy and the segmentation rooted in it (Pirker et al. 1995). The strict
hierarchy of the decision-making structures in the SED, the conservative and
stultifying ban on political factions, and the detachment of the SED General
Secretary only exacerbated the problems of fragmentation and segmentation. The
complications were manifested in a number of ways, such as unsatisfactory coordi-
nation between social and economic policy and delayed or complete lack of
reaction to obvious pathologies of social policy. Because Honecker as the General
Secretary additionally tended to see everything ideologically and to tune out
information about impacts and side effects of decisions and about alternatives, a
potentially dangerous mechanism arose. Its existence has been substantiated above
56 Social Policy in the German Democratic Republic

all by the course that the formation of economic policy took under Honecker,35 and
it seems to have determined social policy as well (see, for example, Boyer et al.
2008; Hockerts 1999; Raphael 1998; and the sources cited in this chapter).
According to Hertle and Stephan (1997a),
policy formation in the Politburo was extremely fragmented and personalized. Strictly
ministerial or departmental thinking had priority. The members of the Politburo walled off
their areas of competence from each other, confining their claim to authority to their own
areas. The same thing applied to the apparatus of the Central Committee, with communi-
cation across areas or departments being tacitly prohibited in the absence of instructions to
the contrary. Members of the Central Committee conformed to the military principle by
which each person received only the information absolutely required in order to carry out
his or her duty. This strict departmental demarcation strengthened the role of the General
Secretary . . . Honecker himself practiced the strategy of farming out important task areas to
small work groups of the Politburo. He headed them personally or assigned them to G unter
Mittag[. . .] There were also the so-called tete-a-tetes, most often presumably with G
unter
Mittag and Erich Mielke.36 The Council of Ministers . . . was restricted mainly to the role of
an administrative organ (p. 30; see also the interviews with East German economic
functionaries as reported in Pirker et al. 1995).

Similarly, the Council of Ministers had only a managerial part to play in


economic policy (Pirker et al. 1995, p. 353).
The Central Committee of the SED had even less influence on policy as a whole
than the Council of Ministers did. Under Honecker, it had been demoted to the
status of the Politburos recipient and transmitter of orders from above (Stephan
1997, p. 89). All in all, the role of the Central Committee of the SED in social policy
seems to have suffered an identical fate. As G. Meyer (1991b) states in his study on
the East German leadership, the Central Committee was an advisory and discussion
organ without autonomous discretionary power in matters of policy; it was
dominated by the Politburo and secondarily by the Central Committee apparatus.
The political process, too, was encrusted:
Under Honecker, there was no longer any open discussion in the general assembly of the
Central Committee. The self-concept of the Central Committees members and candidates
was deeply marked by the principles held by a Marxist-Leninist party of a new type. They
owed to the Party everything they had become (Hertle and Stephan 1997a, p. 31).

Open discourse had no place in this context. Other shackles on the open
exchange of ideas were the dictate of maintaining party unity and the fear of
being accused of forming factions and failing to toe the party line. Such
impositions, however, thwarted understanding of issues that went beyond

35
Pirker et al. (1995) and Skyba (2002) are particularly instructive on this point. Kaiser (1997a, b)
holds that the process of shaping economic and social policy under Ulbricht, especially in the
1960s, had been more open to divergent views, clashes of opinions, and advice from experts than it
was under Honecker.
36
Erich Mielke (19072000) was Minister of State Security of the GDR (19571989) and a
member of the Politburo of the Central Committee of the SED (19761989).
4 The Politics of Social Policy Under the Socialist Regime 57

departmental boundaries (Stephan 1997, p. 89). The result was a perpetuation of the
structures based on fragmentation and segmentation.
Autonomous institutions capable of mediating between society and the political
leadership were missing elsewhere, too. Another example was the Peoples Cham-
ber, which, according to the constitution of the GDR, was the states supreme organ
of power and the only constitutional and legislative institution in the country. In
practice, however, things looked different. Until the first free election of the
Peoples Chamber on 18 March 1990, it was an acclamatory body elected in
pseudodemocratic balloting based on a single list of names (a unity list) presented
by the National Front of the GDR under the aegis of the SED. In the Peoples
Chamber, what was true of budgetary policy until the end of the Honecker era was
also true of social policy:
At no time was there ever a controversial debate on the budgetary policy of the East
German government. Throughout the 40-year existence of the GDR, all the state budget
plans that the government submitted to the Peoples Chamber were passed unanimously
(Buck 1999, p. 1015).

4.3 Authoritarian Corporatism in the GDR

What about the FDGB? Did not the East German states trade union represent the
interests of the employees? Did it not act as a driving belt between the SED and
the working class, as taught by official doctrine, steeped as it was in the spirit of
Leninism? Did not the FDGB administer social insurance, a core area of social
policy? And did it not thereby bring about the desired mesh or overlap between the
activities of the state and society (Lohmann 1996, p. 18)? Did not the FDGB have
substantial rights to monitor the area of occupational safety and health? Was not the
organization consulted on matters of wage policy? And was not the union federation a
long-standing co-conceptualizer (Sander 1997, p. 17), sometimes a quasi legisla-
tor (p. 17), and to a major degree a legislative, executive, and judicial organ all in
one (p. 19)? Did the FDGB perhaps embody the crucial intermediary institution?
For the most part there is little basis for affirmative answers to these questions.
The upgrading of the FDGBs importance is nonetheless clearly evident in the
articulation and administration of social policy during the Honecker era. The
change is inferable from the FDGBs increased involvement in public policy after
power passed from Ulbricht to Honecker. Under the latter, there emerged an
authoritarian corporatism tilted heavily toward the party-state. The chairperson of
the FDGB received the standing of a Politburo member. This figure, at that time
Harry Tisch,37 and the deputy chairperson, Johanna Topfer, were also members of

37
Harry Tisch (19271995) was a member of the Politburo of the Central Committee of the SED
(19751989) and chairman of the national management board of the FDGB (19751989). He was
expelled from the SED on 12 December 1989.
58 Social Policy in the German Democratic Republic

the State Council of the GDR until the upheaval in the autumn of 1989. In addition,
a 1972 law committed the East German government to coordinate its policies with
the national management board of the FDGB. The local and regional organs of state
also came under this stipulation the following year (Gill 1991, p. 62). The rise in the
FDGBs status showed in the practice of naming the FDGB leadership as one of the
three institutions primarily responsible for decisions on social policy, the other two
being the Central Committee of the SED and the Council of Ministers of the GDR.
The SEDs dominance in social policy was thereby constantly buttressed by a
peculiar tripartite arrangement consisting of a hegemonic party, the state, and the
union, which issued Joint Resolutions in the names of the Central Committee of
the SED, the GDR Council of Ministers, and the FDGB.38
Prevailing doctrine in the GDR held that one of the FDGBs most important
tasks was to serve as a driving belt between the SED and working class. This
relationship was prescribed by Leninist theory, which was followed in the GDR.
Acting as a driving belt meant representing the interests of the workforces in
homeopathic doses. The FDGB did so partly through its monitoring of occupational
safety and health standards and its administration of the working classs social
insurance. These activities were indisputably an important purview that afforded
the FDGB a degree of latitude in the phase of policy implementation as well as in
the political process of shaping social policy decisions. It was not only about
hierarchical decision-making structures and conflict but also about conflict, con-
sensus, and compromise (H ubner 1995).
It was occasionally suggested in FDGB circles that the union functionaries were,
or should be, shop stewards of the working class, not the assistants of the plant
managers (as quoted in Hachtmann 1998, p. 38). However, the FDGB did not have
what it took for that position of trust: the authority to conclude wage contracts
separately from the dictates of the SED-governed state apparatus and those of the
SED. On the whole, even the FDGB had only a minor part in consultations and
discussions about wage policy. And any attempt to establish politically divergent
labor unions was punishable under the East German penal code (Sander 1997, p. 59).
Besides, the FDGB had subordinated itself to SED supremacy. It worked in fact
largely as an extended arm of the state and party apparatus. The FDGBs
contributions to social policy were thus mostly those of a state-controlled union
(Weber 1999, p. 340) incorporated into an authoritarian framework and relegated to
the status of a statutorily subservient association (see Gill 1989, p. 1991). As a kind
of party and state executive government, [it] linked the functions of legitimation

38
The SED-dominated tripartite approach also surfaces in the statute books. For example, the
preamble to the Second Ordinance on the Provision and Calculation of Pensions of Statutory
Social Insurance of 26 July 1984 (Second Pension Ordinance) reads: In execution of the Joint
Resolution of the Central Committee of the SED, the National Management Board of the FDGB,
and the Council of Ministers of the GDR of 22 May 1984, on the additional increase of minimum
pensions and other pensions, the following . . . is decreed in agreement with the National Manage-
ment Board of the Free German Trade Union Federation (Gesetzblatt der DDR, part 1, no. 23,
pp. 281283, citation, p. 281).
4 The Politics of Social Policy Under the Socialist Regime 59

and control to a focus on pseudoalternative interest representation and value


orientations (Weinert and Gilles 1999, p. 22) and was responsible for public
stagings of mass trust in party and state while institutionalizing distrust at the
same time (p. 22).
Incorporation into the administration of social policy transformed the FDGB.
The union henceforth had additional duties relating to the distribution of desired
goods. Aside from heading and administering social policy, helping to mobilize
labor, organizing the payment of wages and bonuses, and participating in numerous
consultations, agreements, and approvals in the enterprises (Gill 1989, pp. 332382),
the FDGB was by far the biggest travel agent in the GDR (p. 69). Spending
on travel services accounted for approximately one third of the FDGBs entire budget
(Hachtmann 1998, p. 37, note 27). The union likewise had a hand in housing
assignments and was the key player in cultural affairs at the enterprise level. The
FDGB also granted its members special financial assistance, such as support in
cases of lengthy illness, loans from a mutual-aid fund (Gill 1991, p. 69), and a
death benefit. In short, the FDGB became an actor whose involvement in regulating
access to and disqualification from public benefits gave it direct or indirect influ-
ence on the GDRs structure of transfer classes. The union thus grew to be the
welfare states titan (Gill 1989, p. 69), exercising power and dominion through its
administration and distribution of goods and services.
Most members of the working class, too, saw the FDGB for what it had
indisputably become: an institution that was important also to the way they led
their lives. They perceived the union primarily as a service agency and developed a
detached, instrumental relationship to it (Hachtmann 1998, p. 37, note 27). How-
ever, involvement in social policy in a managerial and administrative capacity had
put the FDGB in a predicament (Mrotzeck and P uschel 1997, p. 225). The organiza-
tion became a dependent variable of the SED leadership, was not infrequently
overtaxed by all that it had to do, and often responded bureaucratically. For all the
legal paragraphs about union management of social insurance, the FDGBs role was
a relatively formal one (p. 228). The unions so-called power to initiate legisla-
tion was a dull sword as well, for the initiative and legislative jurisdiction really lay
with the government, especially the decision-making centers of the SED. Union
involvement in regulating social and labor policy was permitted only in work
groups or joint committees. In those areas, the Undersecretary of Labour and
Wages usually took the lead in fiscal matters, it was the finance ministry all
under supervision by the Central Committee of the SED (p. 228).

4.4 The Politburo: Hub of the Decision-Making Process

The locus of both the decisions and nondecisions on social policy in the GDR thus
lay essentially at the very center of the SED-states political leadership. And from
the birth of the GDR to the end of the Honecker era, that center was the Politburo.
Under those conditions, the General Secretary of the SED and a small circle of other
60 Social Policy in the German Democratic Republic

Politburo members and outside advisors had the pivotal voice in decisions and
nondecisions on social policy. This finding rests not only on observations by
experts. People who lived through those times have reported the same thing. One
of them is Claus Kr omke, long the personal assistant to Gunter Mittag (Pirker et al.
1995). According to Kr omke, the directives for social policy were always the
domain of the respective general secretaries and [were] Honeckers express con-
cern (p. 63).
Social policy formation in the GDR thus contained peculiarities unmistakably
owing to the regime of the SED state. Comparison between social policy in East
Germany and that in constitutional democracies confirms this impression. Whereas
the process of formulating social policy in western countries has been typified by
institutionalized conflict and cooperation between myriad parties and associations,
that kind of setting was unknown to the policy-formation process in the East German
welfare state, which had no public free speech, either. If any representation of interests
took place, it was dominated chiefly by the SED (Schroeder 1998) and was usually
unofficial, that is, not formalized (Hubner 1995, p. 10). Nor did elections and election
dates have any role similar to that in western democracies. However, important
anniversaries and party congresses did lend regularity to the ebb and flow of action
that the GDRs leadership took on social policy, bringing about a rhythm that formally
resembled the electoral cycle common in democracies. The SED party congresses or
their related activities often served as the occasions at which social policy reforms
(usually improvements) were delivered. But these reforms were defined ad hoc, as
concessions or gifts, not as a rule or as a legal social right. Beginning in the second half
of the 1960s, developments in social policy conformed to the rhythm of the SED party
congresses more than previously, but it was not the only pace-setter. Another one was
the schedule of the GDRs special anniversaries. For example, the 40th anniversary of
the states creation was marked by the decision to increase retirement pensions more
than ever before as of 1 December 1989 although the country was grappling with
severe economic hardships (see Bonz 1989).
Despite regime-specific cadences of social policy, such as the reforms timed to
coincide with party congresses and anniversaries, the process of social policy
formation was less complex in the GDR than it had been before 1933 and was
simpler than that in the Federal Republic of Germany. It was also less transparent.
The GDR lacked the features of social policy characteristic of the Weimar Republic
and the Federal Republic: the give and take between federal or imperial organs,
states, social insurance agencies, organs of self-administration, associations of
statutory health-insurance physicians, federal offices with special task areas, and
autonomous Social Courts (those parts of the judiciary specializing in social law).
These institutions derive from a state based largely on a balanced separation of
government power into three separate branches the executive, the legislative, and
the judiciary and on the delegation of public tasks to societal associations. They
and their built-in barriers to excessive intervention by the welfare state were
eliminated in East Germany partly before and partly after the advent of the GDR,
a period when social and political structures were toppled and social policy was
reorganized. Between 1945 and 1949, SMAD and then the SED virtually dissolved
4 The Politics of Social Policy Under the Socialist Regime 61

social policys traditional nuclei of interest formation (Hockerts 1994a, p. 522)


along with the distinctions between wage earners and salary earners and between
them and civil servants. Early on, the unified structure of social insurance had not
only provided for uniform benefits but had removed the basis for the decentralized
articulation and formation of interests in social policy, as shown by the dissolution
of the company and guild health insurance funds. The reorganization of social
policy before 1949 had also destroyed the pillars supporting the medical
communitys professional interests. In other words, the structure and distribution
of power in social policy had changed totally. Hockerts aptly describes the situation
by pointing to the health system: When the multiplicity of health insurance funds
disappeared, so did a factor of the physicians negotiating power; when compulsory
insurance was expanded and private insurance companies were banned, the private
patient vanished as a societal figure (p. 523). That transformation was in line with
the endeavor to move toward the political objective of systematically narrowing
the differences between the strata and classes by standardizing the access to social
insurance benefits (p. 523).
Achieving this goal further broadened the vast potential range of policy action by
East Germanys party and state leadership. With few, if any, institutional checks and
balances to restrain it, the discretionary latitude it enjoyed was immense even
compared to that of western centralized unitary states with weak formal institutional
constraints on incumbent parties (as in the United Kingdom and Sweden). This
constellation improved the opportunities of the East German government to shape
policy but also escalated its risks of making mistakes. As shown in the following
sections, both aspects ran prominently through the political history of the GDR.

4.5 Restrictions: Foreign Control and the Enduring


Repercussions of 17 June 1953

The range of options was not as large in East German social policy as it may seem,
however. Three things curbed it: (a) the Soviet Unions foreign control over the
GDR, (b) the indirect foreign control exerted by the existence of the Federal
Republic of Germany, and (c) the trauma of 17 June 1953.
The political process in the GDR and in the Soviet zone of occupation that had
preceded the creation of the East German state was molded by external forces to an
extraordinary degree predominantly by the Soviet Union, the power protecting
the SED state (Foitzik 1999; Frerich and Frey 1993a; see also Riegels (1994) thesis
of the client state). Considerable Soviet influence on East Germany continued
even after the GDR was founded. Sometimes it was direct, as when the uprising of
17 June 1953 was put down. At other times it was indirect. Until Mikhail
Gorbachev took office as head of the Communist Party of the Soviet Union
(CPSU) in 1985, East Berlin usually adapted to changes in Moscows political
compass immediately. Social policy was never free of these outside influences,
though the maneuvering room for it was likely wider than in the especially sensitive
62 Social Policy in the German Democratic Republic

fields of foreign, judicial, and military policy. In any case, harmony with Soviet
economic and social policy was more advantageous than disharmony, and the
acceleration of social policy after Honecker took office as the head of the SED
reflected these realities. Honecker had received the backing of the head of the CPSU
at that time, Leonid Brezhnev, whose upgrading of social consumption vis-a-vis the
investment-oriented economic policy of the Khrushchev era paved the way to the
expansion of the East German welfare state as well (Hockerts 1994b, pp. 793794).
A second far-reaching external constraint on the social policy of the GDR was
the presence of its western neighbor, the Federal Republic of Germany, particularly
its great wealth. The SED leadership found it especially hard to cope with the
influence that West Germany exerted passively, by virtue of its very existence,
prosperity, freedom, openness etc (Ash 1993, p. 135). The leaders of the SED in
the 1950s regarded the Federal Republic as the incarnation of a hostile society in the
grip of the class enemy and classified that countrys social policy under terms such
as bourgeois, deficient, and historically obsolete (see Thude 1965).39 Moreover, the
SED leadership of the 1950s expected that the GDR, upon achieving the seven-year
plan, would become the inviting example for the working class and the entire
population of West Germany (H ubner 1999a, p. 35). But nothing came of this
prospect, a fact the GDR leadership was late to register. As Ulbricht commented
in an internal discussion in 1965: Were pressed by the competition with West
Germany. He further pointed out that what we were saying just 10 years ago, that
we are superior, pensions, health insurance, has reversed. West Germany is better,
even in health insurance (Schmidt 1996, as quoted in Hockerts 1998, p. 24).40
Indeed, even the unemployed and the recipients of public assistance in the western
part of Berlin did not migrate to East Berlin. By contrast, the bulk of the East
German population saw the Federal Republic as the attractive reference society
(Ebert 1997, p. 109; Ritter 1998, p. 157). As Harry Tisch put it: Our people want
the social safety net, security, steady jobs, and training from us and the department
stores from the F[ederal] R[epublic of] G[ermany] (as quoted in Hertle 1995, p. 342).
This situation forced the hand of the East German leadership, which tried to respond
by expanding its welfare state (Hockerts 1998, p. 24). Social policy did in fact expand
more under Honecker than it had previously.41 The leaders of the GDR held to this
course even when social policy had already long since proved too great a burden on
the countrys economic and financial resources.

39
Lauding East Germanys social policy, this agitprop criticized West Germanys social policy as
lagging qualitatively and quantitatively far behind in the interest of monopoly enterprises and the
state apparatus (Thude 1965, p. 48). Ulbricht (1965) spoke for many others in leaning toward this
assessment.
40
The statements are taken from a transcription of consultation between party and government
delegations of the GDR and the Soviet Union on 18 September 1965.
41
It is not altogether clear from the material analyzed by this author whether the increase was also
an indirect reaction to the participation of West Germanys Social Democratic Party (SPD) in the
conduct of the federal governments affairs as of December 1966.
5 The Welfare State as a Political Process 63

However, measuring the GDR against West Germany in ideologically proper


doses did sometimes help everyday East Germans successfully claim their rights, as
illustrated by a look at the relation between citizens and the courts in the GDR. One
plaintiff in civil court stated: Im worse off here than an unemployed person in the
FRG. The court granted his petition; a notation on the cover of the file read:
Grounds recognized (Markovits 1999, p. 317).
In addition to external influence, there was a domestic factor that outstripped all
others. East German social policy cannot be understood without an appreciation of
how traumatized the SED leadership had been by the events of 17 June 1953, when
nationwide protests against government practices and the SED and the demand for a
liberal regime had to be crushed by the Red Army troops stationed in the GDR
(Schroeder 1998, pp. 119130). Many observers agree that the subsequent
guidelines for government practice bearing on social policy included the dictum
of avoiding anything that could come even close to triggering a similar situation
(see, for example, Bienert 1993, p. 352; Brie 1996; Ritter 2005; Weinert and Gilles
1999, p. 20).

5 The Welfare State as a Political Process: From Ulbricht


to Honecker to German Unification

5.1 Disequilibrium Between Economic Performance


and Social Policy

The events of 17 June 1953 stemmed not only from pervasive dissatisfaction with
the GDRs political regime but also from discontent over falling wages and salaries,
rising production quotas, and cuts in social benefits. The SED leadership had hoped
that prolonged belt-tightening would enable it to put priority on investment in order
to accelerate the development of socialism. But the resulting mid-June uprising and
its political impact on the SED state induced a change of direction, though at first
only a temporary one. Wage reductions and escalations in production quotas were
mostly rescinded (Hoffmann 1996, p. 304).

5.1.1 Social Policy of the 1950s and Early 1960s: Priority


on Capital Investments and Social Investments

Although the SED continued keeping a tight rein on the primarily consumption-
oriented components of the East German welfare state until well into the 1960s, the
restrictions were still loose enough to permit measured development in priority
areas of social policy. Social insurance, for example, was made universal in scope.
Thereafter, employment-promoting social policies and those measures intended
to benefit production and stimulate growth were expanded (Lampert 1985,
64 Social Policy in the German Democratic Republic

pp. 100102).42 To aid production and growth, there were measures to enlarge the
entire educational system, including kindergartens and senior high schools. For
reasons of both family policy and employment policy, the SED also set up day-care
centers and augmented the space available in nursery schools. The latter two
institutions were both supposed to provide ideological education conforming to
the system and to support womens participation in the workforce so as to help relieve
the chronic labor shortage that hampered the GDRs economy. All of East Germanys
social policy put a good deal of emphasis on securing and building labor potential
(Lampert 1996, p. 102). In the 1950s and 1960s, fostering and mobilizing human
resources was even its foremost objective. It was also the purpose behind the states
health policy based on prevention and follow-up care (e.g., expansion of the
polyclinics, out-patient facilities, and workplace health services), rehabilitation,
and occupational safety programs (see Lampert 1985, pp. 101103).

5.1.2 Subordinate Social Consumption and Low Retirement Pensions

The priority that social policy placed on work, production, and growth put social
consumption at a disadvantage. Moreover, a gap opened between the social safety
net for the working classes and social policy for people who were not gainfully
employed. This problem arose especially among retired persons, whose pensions
from social insurance were far below earned incomes, which were not generous to
begin with (Hoffmann 2004b; Ritter 2005). The differential was evident, for exam-
ple, from the average level of social insurance pensions received by workers and
salaried employees in 1960. It amounted to only 27.3% of the average gross earned
income of a full-timer working at a nationalized enterprise and had risen to only
33% by 1970.43 The average retirement annuities in the Ulbricht era were low even
in comparison to the systems minimum wages, coming to 70.1% thereof in 1970.44
Retired people were not the only ones having to cope with the thorny problem of
small pensions; so was the SED state. The trifling payments offended and unsettled
the older members of the working population and signaled to people in the labor
force that old age could well mean impoverishment. The intra-German comparison
made this picture especially dire, for most East Germans knew that West Germany
had experienced an economic upswing and had expanded its social policy, particu-
larly through the pension reform of 1957 (Hockerts 1980). The new arrangements

42
The second period, during which the focus on consumption-oriented social policy intensified, is
discussed in Sect. 5.
43
The calculations are based on the data in Bundesministerium f ur Arbeit und Sozialordnung
(1996, Tables 10.15 and 10.7). Estimates based on Winkler (1989, pp. 375, 398) show that the
disparity in 1955 was even greater than those for 1960, with the 1955 figures being an average of
21.8% of the income of a full-time employee.
44
These calculations are based on Bundesministerium f ur Arbeit und Sozialordnung (1996,
Tables 10.15 and 10.7) and the minimum wage rates reported in Winkler (1989, p. 376).
5 The Welfare State as a Political Process 65

had substantially raised the living standard of people on retirement pensions in


the Federal Republic, and East Germans subsequently expected the same of their
state, too.

5.1.3 Revaluation of Consumption-Oriented Social Policy

The party and state leadership of the GDR responded to the need for action on social
policy, albeit with a long delay.45 In one common interpretation, the shift toward
attaching higher value to consumption-oriented social policy came about in 1971,
chiefly after power had passed from Ulbricht to Honecker (see, for example,
Lohmann 1996, p. 71, and especially Winkler 1989, pp. 153154). However, this
view is a simplification reflecting lax acceptance of the way the SED leadership
wanted to be perceived under its new party chief, Erich Honecker, who in fact
propagandistically and programmatically upgraded social policy. It sees a turning
point where precise investigation of social history documents more continuity than
change (Hockerts 1994b, p. 792; Klinger 1989).
Be that as it may, self-portrayal and the reality of running a government and an
administration are not the same thing. In practice, the SED leadership had begun to
broaden social policy even before Ulbricht had left the scene (Boyer 1999), though
with far less expense and fanfare than under his successor, Honecker. This build-up
of social policy started around the mid-1960s, when the economic situation created
a degree of leeway for the social policy agenda and thus offered an opportunity to
ease away from the unpopular priority of investment over consumption. Transition
to the 5-day work week, an increase in the minimum wage in 1967 from 220 to 300
Eastmarks a month,46 and a modest appreciation in the child benefit were initial
signs that the quality of social policy was rising. At the Seventh Party Congress of
the SED (1967), Ulbricht, the party chief of the SED and the head of state at that
time, announced improvements in social policy for 1968, by which he also meant
bigger pensions. The various subsequent corrections in old-age insurance plans
were rated by West German experts, too, as a perceptible enhancement of the
retirees material situation (Frerich and Frey 1993a, p. 336).47

45
The rates of social benefits, among other things, indicate the relatively minor part that social
policy had initially played in the GDR even when compared to that in other socialist countries (see
International Labour Organization 1988, pp. 7476, 1996, p. 75).
46
The latter figure corresponded to 44.8% of the average income of workers and salaried
employees at nationalized enterprises in 1967 (calculations based on the data in Bundesmi-
nisterium fur Arbeit und Sozialordnung 1996, Tables 10.15 and 10.7).
47
In 1968 social insurance pensions, for instance, were recalculated upward for many persons on
retirement pensions, and minimum pensions rose from 120 Eastmarks to 150 Eastmarks. The
spouses bonus for retirement pensions and the sickness benefit for working persons with two or
more children were augmented as well.
66 Social Policy in the German Democratic Republic

The introduction of voluntary supplementary pension insurance in 1968 was


particularly significant.48 It was intended to flesh out the lean provisions for old age
through voluntary insurance with guaranteed benefits in proportion to the premiums
paid by the policy holders. Technically, the advent of voluntary supplementary
pension insurance was the equivalent of hiking the assessable income ceiling for
setting old-age insurance premiums, a change that had long been due. Voluntary
supplementary pension insurance also undoubtedly served the macroeconomic
desire to absorb purchasing power. But its importance in terms of social policy is
unmistakable. By bringing in voluntary supplementary pensions, the SED leader-
ship spectacularly deviated from the hitherto preferred approach of destratifying
compulsory social insurance.
Opting for voluntary supplementary pension insurance, which was greatly
improved in 1971, temporarily defused a stormy dispute in the SED about the
future path of social policy. Addressing the Party Congress of 1967, Ulbricht
intimated that the proposal to better the paltry pensions by increasing the premiums
had been rejected and that he therefore advocated relaxing the strict limits on
pension insurance benefits by creating voluntary supplementary insurance under
the roof of social insurance (Frerich and Frey 1993a, pp. 335336).49

5.2 Social Policy After the Change in Power from Ulbricht


to Honecker

After Honecker succeeded Ulbricht as head of the SED, the standing of social
policy rose in the official propaganda of the party and state (Bouvier 2002; Boyer
et al. 2008). A new rationale was adopted, too. The population was no longer
consoled with prospects of achievements belonging to some distant, redeeming
future; the efforts of the present were to be honored here and now. The SED
leadership thereby embarked on a momentous change, completing the break with
a social policy whose main thrust had been to cushion the consequences of the
economic change in the GDR. Social policy was thereafter cast as a comprehensive

48
Regulation on Voluntary Insurance for Supplementary Pension from Social Insurance
(15 March 1968), Gesetzblatt der DDR, part 2, no. 29, pp. 154160. Voluntary Supplementary
Pension Insurance was reorganized a few years later and made considerably more attractive. For
details, see Frerich and Frey (1993a, pp. 338342).
49
The architects of the voluntary supplementary pensions were not thinking only about the
downward social mobility that threatened many insured persons when they reached the retirement
age. These types of pensions also had macroeconomic merit, not to mention advantages for fiscal
policy. Planners hoped that the new pensions would strengthen the funding of social insurance,
especially in the phase when they were being built up. When people paid huge sums into this
system, it was able to help shrink the menacing inflationary surplus purchasing power of the East
German economy.
5 The Welfare State as a Political Process 67

policy of securing living standards and a distributive device based on both income
from work and the supply of subsidized consumption goods.

5.2.1 Revaluation of Social Policy: Discontinuity and Continuity

Although the Eighth Party Congress of the SED (1971) took place shortly after
power had passed from Ulbricht to Honecker, interpreting it only as a profound shift
in social policy would underestimate the continuity it represented. Nonetheless, the
congress was important in determining where social policy was headed. It spelled
out the responsibilities of what was officially called shaping the developed social-
ist society in the GDR, the declared principal task being to elevate the material
and cultural level of the nations life through constant growth of production and
productivity (Lexikonredaktion 1982, as quoted in Panskus 1986, p. 21). This
main long-term program encompassed a far-reaching social policy program. It
rendered the consumption-oriented variant of social policy acceptable in official
party terminology and propaganda. This commitment and its codification in so-
called joint resolutions of the Central Committee of the SED, the GDR Council of
Ministers, and the FDGB leadership, in the following two years tangibly raised the
status of social policy.50 It did so not in the sense of fundamentally abandoning past
policy but rather of accelerating the journey on a road that had already been steered
onto and that was now being widened.
This watershed had palpable results in social policy in the years after the Eighth
Party Congress. The party and state leadership increased minimum wages and
minimum pensions more than it had in the past, boosted retirement pensions several
times, and extended minimum vacation time. Maternity and womens employment
were henceforth rewarded more than had previously been the case. An ambitious
housing program was inaugurated as well. The SEDs program of 1976 was
conceived of as the core of social policy in the GDR (Programm der
Sozialistischen Einheitspartei Deutschlands 1976, adopted version, section A.6).
The SED leadership wanted to use it to solve the question of housing as a social
issue by the end of the twentieth century, as it was especially pressing in the GDR
for many reasons (see Buck 2004; Siegrist and Straht 1996) and gave rise to
innumerable complaints (Merkel 1999, pp. 317319). The Law on the Five Year
Plan for the Development of the National Economy of the GDR, 19711975,
promulgated on 20 December 1971, stipulated that 500,000 dwellings were to be
built or brought up to standard (Gesetzblatt der DDR, part 1, no. 10, p. 175). In 1973
the Central Committee of the SED formally set its targets even higher, with 2.8 to 3
million dwellings to be built or brought up to standard by 1990.

50
See, for instance, the Law on the Five Year Plan for the Development of the National Economy
of the GDR, 19711975, of 20 December 1971 (Gesetzblatt der DDR, part 1, no. 10, pp. 175177,
and 186189).
68 Social Policy in the German Democratic Republic

5.2.2 Unity of Economic and Social Policy

The new social policy stance of the Ninth Party Congress (1976) came to be
anchored in a principle referred to as the unity of economic and social policy.
From that time on, the leadership of the GDR regarded the unity of economic and
social policy even as the trademark of its socialist regime (Gunter Mittag as
quoted in Hockerts 1994b, p. 794; Manz 2001). No matter how troubled the waters
later became, the leadership never strayed from it (see Schurer 1999b, for example).
From then on, social policy was no longer subordinated to economic policy as it had
been under Ulbricht; the two areas were accorded the same rank. As a concept,
however, the so-called unity of economic and social policy remained elastic. Some
observers believed it to mean the revaluation of social policy or the equal standing of
social and economic policy. Others interpreted it as giving social policy priority
over economic policy.51 To a third group the economic policy-makers in the state
and party apparatus, especially the planning experts it was the dictum of consum-
ing only as much as what had been produced beforehand (see Schurer 1992). To this
extent, some of the advocates of the unity of economic and social policy sought to
counter inflated expectations of social policy (see Spittmann and Helwig 1990, p.
47).
Many people, however, understood the unity of economic and social policy to
mean a free pass for an expansive policy promoting social benefits. In practice, this
interpretation gained ascendance (see Boyer and Skyba 1999a, b; Hockerts 1994a, b;
Ritter 1998), and that with Honeckers full backing. Social policy subsequently
moved further than ever before toward consumer-oriented socialism (Staritz
1996, p. 281; see also Boyer et al. 2008). The pace was particularly rapid in the
1970s until the Ninth Party Congress of the SED. It slowed afterward, not least in
response to an already evident deterioration of foreign trade. Shocks to foreign
trade, especially the first worldwide leap in oil prices (19731974), jeopardized the
19711975 Five Year Plan. Some of the East German leadership anxiously
registered the extraordinarily difficult conditions of foreign trade (Trumpler
et al. 1980, p. 24). But most of the SED leadership was still lulling itself into
believing in the unity of economic and social policy. To be sure, the Ninth Party
Congress of the SED revolved less around social policy than had the Eighth Party
Congress. The later congress was marked instead more by social policys preoccu-
pation with projects designed to stimulate the economy. That focus was evident, for
example, in the resolution to upgrade meritocratic components of remuneration. On
the whole, though, the SED and the state leadership largely saw the signs as still
relatively auspicious. The housing policy seemed to show the desired success, too.

51
This position tended to be held by those who advocated a shift from a policy of putting
accumulation (i.e., capital investment) first to one of improving the balance between economic
and social concerns. For this interpretation of the unity of economic and social policy, see
Schluchter (1996), Staritz (1996), and Wettig (1996). It describes the actual course far better
than the alternative accounts.
5 The Welfare State as a Political Process 69

Official statistics stated that the one-millionth dwelling since the Eighth Party
Congress of 1971 was completed in 1978 (Fischer Chronik 1999, p. 645; but see the
first part of Sect. 5, below). Progress on the regulation of working conditions and
industrial relations was also reported. The labor code was adopted on 16 June 1977
and went into effect on 1 January 1978. It introduced improvements for women
with children, among other groups, and extended employment protection (Fischer
Chronik 1999, p. 618). Lastly, the self-assessment of the social program adopted in
the 19761980 Five Year Plan bore witness to sustained optimism. The foreword to
the retrospective on the SEDs social policy program from 1971 to 1978 hailed the
social program as the most sweeping yet in the history of the GDR (Trumpler
et al. 1980, p. 32). The achievements were said to be of historic dimensions:
The result of the unity of economic and social policy as the course charted by the SED and
accomplished under its leadership is that the citizens of the GDR have bettered their social
position to an unprecedented degree. This expresses the historical superiority and tremen-
dous social progress of socialism in comparison to imperialism (Tr
umpler et al. 1980, p. 35).

However, the costs of the new social policy mounted ominously, as did the costs
of following through on earlier key decisions of social policy. The price of subsidies
for basic goods and services were an especially great burden on the books. The
unwavering retention of the right to work had its rising price as well. Partly in
response to the countrys declining birth rate, family and womens policy, too, kept
expanding in the second half of the 1970s, particularly in ways likely to encourage
population growth. The main vehicles were the measures of continued support for
working mothers, which were announced one week before the opening of the
Ninth Party Congress of the SED. Support for working mothers was granted as of 1
May 1977 through numerous regulations intended to foster the compatibility
between family and work. They included the introduction of the baby year, that
is, paid leave of absence for mothers after postnatal maternity leave until the end of
the infants first year of life (Frerich and Frey 1993a, pp. 416417).
But concern about the escalating costs of social policy had to take a backseat to
party logic, as shown by an instructive example reported by Gerhard Schurer, who
chaired the State Planning Committee of the GDR from 1965 to 1989. Given the
unfavorable trend in the balance of payments in 1977, he proposed to the SED and
state leadership major cuts in social expenditure. The idea was rejected, however.
An especially enlightening glimpse into the partys doctrinaire political thinking on
the subject was the argument that Minister President Willi Stoph52 used against
Sch urer: It is not the balance of payments that has to be the basis of our decisions;
it is the unity of economic and social policy that matters (Schurer 1998, p. 171).

52
Stoph (19141999) was a member of the Politburo of the Central Committee of the SED
(19531989) and Chair of the Council of Ministers of the GDR (19761989).
70 Social Policy in the German Democratic Republic

5.2.3 Interim Appraisal: Results of Social Policy in the 1970s

It is time to take stock of the social policy output and outcome at this midpoint.
What did the revaluation of social policy in the 1970s bring about? Most of the
indicators of the GDRs welfare state reveal what was at times considerable growth
in that decade (see Lampert 1996, pp. 101102; Winkler 1989). Measured by the
criteria of the International Labour Organization (ILO), the share of the gross
domestic product (GDP) spent on social transfer and services climbed from
12.7% in 1970 to 16.1% in 1973, peaking at 16.8% in 1978 (International Labour
Organization 1988, pp. 7475, 1996, p. 75). However, social expenditures according to
the ILO data accounted for only part of the GDRs social policy (mainly the
spending on the provisions guarding against risks of old age, illness, and disability).
The GDRs direct and indirect spending on job security, for instance, was not
counted. In contrast to practice in western countries, this protection did not come
primarily from unemployment insurance benefits. Indeed, the revised labor code
altogether eliminated that strand of unemployment insurance in the GDR as of
1 January 1978.53 Furthermore, the ILO figures on the share of GDP spent on social
services did not contain the state subsidies specifically related to social policy,
either. In particular, they left out the price supports for basic goods and services and
the subsidization of rents (Tr umpler et al. 1986, pp. 329, 333, 338), which devoured
vast sums in the 1970s and particularly the 1980s. All these expenditures created a
double-edged sword. Politically, the price supports were supposed to help close the
gaps in the social insurance systems and to offer legitimation. Economically,
however, the supports had serious consequences. Even East German economists
repeatedly deplored the flaws such as waste, environmental pollution, and the
idea of trying to give everyone a slice of the budget and unsuccessfully recommended
that the subsidization policy change direction.
The remuneration of the working population was also higher at the end of the
1970s than it had been in the preceding decade, thanks in part to the rise in the
monthly minimum wage from 300 to 350 Eastmarks in 1971 and to 400 Eastmarks
5 years later. Working hours were gradually reduced as well, and the number of
vacation days was raised. Moreover, broad labor protection against dismissal was
retained, a decision that turned East Germanys employment relations into de
facto job security for the entire working population (Bundesministerium fur
innerdeutsche Beziehungen 1987, pp. 232240, 591). Enhancement of the provisions
for old age since 1968 gradually bore fruit, too. Although the level of pensions in
the GDR was still no match for those in the Federal Republic of Germany (pp.
566580), the difference between pensions and average wages had narrowed, as
had the discrepancy between minimum pensions and minimum wages (calculations
based on Statististisches Amt der DDR 1990; Winkler 1989, pp. 376, 397). Breaking
with the GDRs typical inclination toward destratification, the reforms of provisions

53
The new situation that arose in 1990 is examined in the final part of this section.
5 The Welfare State as a Political Process 71

for old age henceforth eventuated in widening differences between retirement


benefits. The social income of people who drew a normal pension and a pension
from the voluntary supplementary pension insurance system, which was the case
for more and more retired persons,54 generally exceeded the minimum wage
appreciably. And the higher the recipients contribution to the voluntary supple-
mentary insurance was, the greater the margin. But people who received only the
social insurance pension (i.e., without supplementary retirement benefits) ran
the risk of receiving less than the minimum wage. Once again, the exceptions
were the generous annuities paid by the special pension systems for certain politi-
cally important people working for the state apparatus (such as the full-time
employees of the state security service) and by the supplementary old-age pension
systems.
The upgrading of social policy in the 1970s left definite traces in family policy as
well (Schulz 1997; Trappe 1996). Lampert (1996) has described the most important
of them:
The years from 1972 to 1977 saw the adoption of myriad family measures, beginning with
loans to promote marriage, basic scholarships for married students, and nonrecognition of
nonmarital cohabitation as equal in standing to a conjugal community. They encompassed a
6-week prenatal and 20-week postnatal maternity leave with weekly unemployment
benefits equal to [the womens] net income; the entitlement to a leave of absence from
work until the end of the childs first year of life in conjunction with support payments;
extension of annual vacation for mothers; guaranteed child care in nursery schools and
preschools; work release to care for sick children; increased protection from dismissal;
support for basic training and further training of women and mothers; bonuses for child-
birth; child benefits; income assistance to meet special contingencies in life, such as for
mothers working as teachers or studying; welfare benefits keyed to the number of family
members and children; tax relief, and price reductions. They went as far as nonmonetary
support measures such as child-rearing assistance, social services provided by the enter-
prise, and special criminal prosecution of offenses against youth and family. Families
with three or more children received additional support55 (Lampert 1996, p. 106).

5.3 The East German Welfare State in the 1980s

5.3.1 Social Policy in a Period of Economic Recessions

The professed unity of economic and social policy was grounded in the assumption
that the trade-off between social protection and economic performance could
be bridged or overcome by shrewd coordination. But the world economy and,
indirectly, the economy of the socialist countries had been swept into the vortex
of severe recessions, structural crises, and adaptive reactions as early as 1973.

54
Around the mid-1980s, this group made up 80% of the persons entitled to benefits (Deutsches
Institut fur Wirtschaftsforschung 1987, p. 579).
55
Family assistance also included augmentation of the child benefit (1969, 1981, and 1987).
72 Social Policy in the German Democratic Republic

The 1980s brought a protracted phase of high-interest policy, rising costs of foreign
debt, and intensified world economic competition. Matters became even more
problematic during that decade when the Soviet Union ceased according East
Germany favored status in foreign trade and began billing deliveries of
commodities, above all crude oil, in western currency at world market prices,
exacerbating the external burdens on the GDR and, indirectly, its social policy.
These dislocations in international economic relations hit the GDR particularly
hard, for by the late 1980s foreign trade contributed fully 50% of its national
income. That share was greater than almost any other east or central European
country. To make things worse, the GDRs most important foreign trade partner
was the Soviet Union, which passed on the spiraling costs of crude oil to the GDR
(Kuchler 1999, pp. 123, 108). The second oil price shock (19791980) dealt the
heaviest blow to the GDR. The rise in real interest in the 1980s became especially
onerous because half of East Germanys trade with the OECD countries was
denominated in U.S. dollars (p. 121) and because the GDR had accumulated a
significant volume of public debt in hard-currency countries of the NSE, or
Nonsocialist Economies. At the same time, trade was stagnating between the
member states of the Council for Mutual Economic Assistance (CMEA, more
commonly remembered in the West as COMECON).56 The public debt of the
GDR thus became critical.
The economic policy experts and East Germanys political leadership alike
argued over whether the expansive route of social policy should be sustained
under such adverse conditions (Hertle 1996, pp. 6668; Schurer 1998; Trumpler
et al. 1986).57 Representatives of the State Planning Committee, for instance,
had repeatedly pointed out tensions between ambitious social policies and economic
performance and had cautioned that it needed to be addressed (Przybylski 1992a,
p. 121, b, pp. 4950, 5556; see also Hertle 1995, p. 322; Pirker et al. 1995, p. 119;
Schurer 1998; Wenzel 1998, pp. 1011).58 But the SED regularly viewed warnings
about disastrous economic impacts of overambitious social policy as politically unwise.

56
COMECON was created in January 1949 to promote economic development in the eastern
European countries of the Soviet bloc.
57
Schurer, the chief of the State Planning Committee, later stated that this conflict between the
social policy goals and other objectives of economic policy were easily recognizable by 1972 (see
Schurer 1999b, p. 167).
58
The tightrope walk at the edge of the abyss described by Hertle (1995, p. 322) is corroborated
by numerous sources, including official ones. See, for instance, reports by the State Planning
Committee, such as the document of 30 October 1979, for the Politburo, Analyse zur Effektivitat
der Investitionen in der Volkswirtschaft der DDR [Analysis of the effectiveness of the
investments in the economy of the GDR] (SAPMO-BArch, ZPA-SED, J IV 2/2A/2269, vol. 1)
and Hertle (1995, p. 339). From these reports and articles, however, one also gathers that social
policy had indeed caused some but not all of the GDRs desperate economic situation.
5 The Welfare State as a Political Process 73

Admonitions were shrugged off,59 rejected as overwrought,60 and actually branded


outright as potentially subversive scaremongering. In effect, the GDRs political
leadership stuck by the social policy conceived in 1971, which meant retaining or
further expanding it and trusting that social protection and economic policy were
mutually enriching and stimulating. The rationale, though it clearly hinted at the
difficult conditions framing it, was that this approach could be financed through an
adequate effort on the part of the labor force, especially by boosting productivity
and the volume of exports (Tr umpler et al. 1986).
The reason for persisting in the ways of the old social policy derived mostly from
the conviction that the instruments of the planned economy were powerful and
flexible enough to master even tough challenges posed by the international econ-
omy. Other grounds for holding course were the stalwart hope that labor productiv-
ity would improve to the required degree and the delusion that the GDR was one of
the ten wealthiest industrial countries in the world and had sufficient reserves. That
opinion was a crass mistake, as became plain by 1989 and 1990. To judge from the
makeup of the economic sectors and the degree of industrialization, the GDR was
an industrialized country. But in terms of economic productivity, it was only an
emerging economy with moderate productivity levels. Undeniably, the GDR was
economically more developed than its fraternal socialist states. The GDR led the
central European socialist countries in labor productivity, exceeding the average of
the COMECON countries by some 20 percentage points (Kuchler 1999, p. 192) and
thereby approximating the average labor productivity in the Soviet Union. In the
West, however, the GDR stood on a par with Greece and Portugal at most (Heering
1999, p. 2265).61 The GDR, an economy with a moderate level of productivity, was
indulging in a social policy that had already reached a very high standard by the late
1970s and early 1980s, particularly in light of the price supports for basic goods and
services, housing, and job security. That policy pushed up the costs of the countrys
enterprises and drastically curtailed their ability to adapt to the changing economic
environment.

59
Commenting on the tension between social policy and growing foreign debt, FDGB chief Harry
Tisch is said to have stated: This debt thing shouldnt be exaggerated. I sincerely doubt whether
there is any country without debts in the world (Mittag 1991, p. 319).
60
Ulbricht himself is reported to have repeatedly rebuked his crown prince, Honecker, for
superficiality in economic matters, saying You never see problems (Przybylski 1992b, p. 45).
61
On estimations of the GDRs level of economic productivity, see also Bundesministerium f ur
innerdeutsche Beziehungen (1971), Bundesministerium fur innerdeutsche Beziehungen (1987,
pp. 345350, 389393), and Summers and Heston (1984). For an overview see Gutmann and
Buck (1996). According to the First Report of the Federal Government on German Unification, the
average level of productivity in the East German economy had fallen by the late 1980s to just
under a third that of the West German economy (see Materialien zur Deutschen Einheit und zum
Aufbau in den neuen Bundeslandern 1997, p. 87). Taking stock of the GDRs economic strength in
late 1989, Heering (1999, pp. 22642268) reports that the 1991 estimate of East Germanys labor
productivity in 1990, the year of Germanys unification, came to just under 33% of the
corresponding figure for West Germany. In 1985 it is reported to have been 36%; in 1950, even
as high as 50%.
74 Social Policy in the German Democratic Republic

5.3.2 The Course of the East German Welfare State in the 1980s

What direction did East German social policy take in the particularly difficult years
of economic hardship after 1980? Experts usually answer this question first by
venturing that social policy had just about come to the end of the road (e.g.,
Deutsches Institut f ur Wirtschaftsforschung 1987; Frerich and Frey 1993a,
pp. 153154; Schneider 1989; Vortmann 1989). From 1980 on, they contend, it
was about the consolidation of social policy, about a policy that at best expanded on
existing regulations but offered few, if any, new concepts and indeed occasionally
cut benefits. But this line of thought captures only part of the GDRs social policy. It
does not distinguish adequately by sector and period of social policy. In particular,
it underestimates the increasing importance of the funding that flowed into family
support and social policy in the broad sense, that is, including price supports,
subsidies for rents, and the costs involved in maintaining the right to work. It also
fails to see that the GDRs political leadership clung to social policy in a bid for
legitimacy and a continued hold on power. The leadership affirmed and reinforced
social policy, even widening it by selectively avoiding decisions despite the addi-
tional costs it incurred (see Boyer et al. 2008).
By the criteria of the ILO, the expansion of social policy in the narrow sense had
in fact essentially gone as far as it could, with a few exceptions to be discussed
below. The rates of public spending on social transfers and services had settled at a
level under 16%, that is, lower than in the late 1970s (International Labour
Organization 1996, p. 75). Such expenditures in the narrow sense shrank from
21.9% (1980) of the state budget to 21.2% (1989).62 The legislative and regulatory
activity related to social policy also ebbed in the 1980s compared to that in the first
half of the 1970s, as is evident in the Official Statute Register of the German
Democratic Republic. Provisions for old age, which had been upgraded earlier,
likewise seemed to lose ground to other fields of social policy. Some of the relevant
scholarly literature has interpreted these trends too generally as an expression of
concealed fiscal retrenchment (see Klinger 1989, p. 23). That assessment is based
on the observation that pensions began to lag behind wages again in the 1980s. For
instance, the relation between the average level of retirement pensions and the
income of a worker or salaried employee in a nationalized enterprise shrank from
33.3% in 1980 to 29.8% in 1988 (Bundesministerium fur Arbeit und Sozialordnung
1996, Tables 10.15, 10.7). As of the mid-1980s, retirement pensions, too, lost
ground in comparison to family assistance, especially support for families with
children (calculations based on Winkler 1989, pp. 362364). Retirement pensions
did somewhat catch up with minimum wages, however, particularly after 1 Decem-
ber, 1989, when average retirement pensions jumped to an unprecedented level
equaling 34.1% of average wages a boon timed to coincide with the GDRs
fortieth anniversary.

62
The calculations are based on the percentage of the GDR public budget that was spent on
housing and on health care, social security, and family support (see Buck 1999, pp. 12151223).
5 The Welfare State as a Political Process 75

This financial realignment of retirement pensions is consistent with the argument


that East German welfare state of the 1980s was not just about consolidation and
rollbacks but also about continuity. Despite a deterioration in overall economic
conditions and an urgent need to adapt, the government accepted high hidden
unemployment approximately 15% of the total labor force (Vogler-Ludwig
1990) rather than touch the right to work. The value attached to some fields of
social policy actually appreciated in the 1980s, as was the case with the company-
based welfare state provisions (Autorenkollektiv 1988; von Maydell et al. 1996;
Winkler 1989) and the supplementary old-age pension systems, which were
expanded by ten additional ones in the 1980s. The minimum pension grew as
well (1984). Family policy was expanded, especially its pronatal components. As
of 1 May 1987, this policy included a substantial enlargement of the child benefit, a
change that SED General Secretary Erich Honecker had announced at the Eleventh
SED Party Congress (1986).63 It indicates that the formation of East German social
policy in the 1980s kept following the cycles of those events and national
anniversaries. At the congress, Honecker stated that the hikes in the child benefit
and other spending, such as that on childbirth grants, had the objective of percepti-
bly moderating the disparity between the per capita income of households without
children and those with children (see Buck 1987, p. 394). The revaluation of family
policy that was planned with these changes in mind has been interpreted in the
literature as part of the competition between the systems, as a new round in the
contest with the Federal Republic of Germany for the socially superior system of
protection (p. 395).
Disregarding all economic bottlenecks, the GDRs political leadership adhered
to its expansionary housing construction policy of the 1980s, although the need for
investment was pressing in other areas such as transport and telecommunication.
The policy on housing construction therefore does not convincingly bear out the
assertion that social policy was curbed in the 1980s (see Siegrist and Strath 1996).
Pension policy does not corroborate it, either. As mentioned earlier, retirees were
given their turn again in 1989 after years of falling behind other groups in social
policy. The Fourth Pension Regulation of 8 June 1989 increased their retirement
pensions by an unprecedented amount near the end of the year (Bonz 1990; Fischer
Chronik 1999, p. 852; GBl. der DDR 1989, part 1, no. 299, pp. 229231). The change
applied to minimum pensions and minimum benefits paid as retirement, disability,

63
The monthly child benefit paid by the state rose from 20 to 50 Eastmarks for the first child, from
20 to 100 Eastmarks for the second child, and from 100 to 150 Eastmarks for each additional child
thereafter. Other family assistance was provided through paid leave granted to working mothers
who cared for sick children, a policy that was extended after 1 May 1986 to all working mothers
with two or more children. As of May 1986 one year of paid leave was granted even upon the birth
of the first child.
76 Social Policy in the German Democratic Republic

and accident pensions.64 Pension entitlements were recalculated as of 1 December


1989. New, higher fixed sums were applied to retirement and disability pensions, to
Additional Old-age Provisions of the Intelligentsia, and to the pensions for
surviving dependents of accident victims. This regulation was not signed and put
into effect until the gentle revolution in the GDR had already almost completely
eroded the SEDs monopoly on power.
Nor does the relevant evidence on East Germanys company-based welfare state
support the proposition that it stagnated or was systematically dismantled in
the 1980s (Bonz 1989; H ubner 2008). In that decade more than in previous ones,
the company-based social policies were confronted with tasks that by nature came
primarily under manpower and employment policy. The main reason for this
expansion of responsibility was that the change in economic structures and the
stepped-up efforts to achieve efficiency reduced the number of job vacancies,
displacing labor on a major scale. In the context of the GDRs economy, the
enterprises were the organizations most responsible for coping with the attendant
problems. Workers affected by streamlining and labor displacement were supposed
to be provided with or retrained for a different job in the same enterprise (on
amended contracts) or some other one (on transitional contracts). For the most
part, this arrangement seems to have succeeded until the late 1980s, keeping the
GDRs frictional unemployment negligible in those years.
Another notable aspect is that the expansion of existing social policy, particu-
larly those elements not recorded in the ILOs figures on the share of GDP spent on
social services, devoured an ever greater proportion of the state budget. Aside from
the costs of job security, they encompassed mainly the growing state allocations for
subsidizing housing rent, staple foods, industrial goods significant for social policy
(e.g., educational articles and baby apparel), and important services such as those
charged to the population for local passenger transport and basic utilities (Buck
1987, 1988, pp. 3235).
On the whole, there is little evidence to suggest that the East German welfare
state began retracting parts of the social safety net in the 1980s. On the contrary, this
analysis underscores the high degree to which the net was maintained during that
decade. Spending on social benefits actually accelerated in especially cost-intensive
areas. The same was true of support for women and families in those years.

64
The minimum pensions grew by 30 Eastmarks. Retired persons having had 15 or more years of
service were granted additional increases. For women who had had five or more children and who
were entitled to a retirement or disability pension owing to an activity requiring insurance
coverage, the minimum pension benefit went up from 370 to 470 Eastmarks. Accident pensions
were also improved. The minimum disability benefit received by beneficiaries with a physical
injury leaving them at least two-thirds impaired was likewise increased from 370 to 470
Eastmarks. Other retirement, disability, and accident pensions were increased, too, as were
pensions for surviving dependents, from voluntary insurance with the State Insurance of the
GDR, and for disabled war veterans. There were increases in regular support payments (from
270 to 330 Eastmarks) as well as in spouse and child benefits, the former going up from 50 to 200
Eastmarks and the latter to 60 Eastmarks.
5 The Welfare State as a Political Process 77

Even training programs, an area that one might presume to have been marginal,
were expanded. Scholarships were increased and generalized for all students in the
GDR and, in contrast to the period before 1980, granted regardless of the income
level of the parents (Lohmann 1996, pp. 8586).65
All these benefits must be considered against the deterioration in GDRs econ-
omy and its export performance in the 1980s (Maier 1997, pp. 5759). The competi-
tiveness of the East German economy kept diminishing, and the foreign and
domestic debt rose. Furthermore, the countrys economy stagnated or shrank in
1980, 1982, 1986, and 1987 according to West German calculations (Fischer Chronik
1999, pp. 691, 730, 805, 831), based on DM prices of 1989.66 The public infrastructure
was already in a sorry state. Suffering as it did from lack of investment, it was no better
off than the socialist enterprises with their depreciated, obsolete capital stock (see
Gutmann 1999, for example). In the 1980s the GDR sank deeper and deeper into hard
choices, particularly between high and rising consumption and decreasing investment
and between expensive social protection and waning economic strength.

5.4 Social Policy in the Final Year of the GDR

Did the Honecker era come to a close even before Honecker was replaced as
General Secretary of the SED by Egon Krenz? Or did it end with Honeckers fall
in October 1989? Did it persist until the onset of the GDRs restructuring, which
gathered momentum under the Modrow government67 and which was rerouted,
accelerated, and prepared for reunification by the de Maiziere government?68 Was
it finally eclipsed when the L ander (federal states) that were reestablished in the
GDR in July 1990 acceded to the Federal Republic of Germany? Whatever the
answers to these questions may be, Honeckers fall in October unmistakably marks
a decisive moment in the history of the GDR. It ushered in the final year of the
GDR, a period of fundamental change in the constitution, the structure and
functioning of the political institutions, and the direction and substance of public
policy. The scope of this transformation was reflected by the Law on the Change of
the Constitution of the German Democratic Republic (1 December 1989), which
deleted the clause on the leading role of the SED (Gesetzblatt der DDR, part 1, no. 25).
Eleven other constitutional changes followed, establishing instead the principles of

65
The foundation was laid by a regulation adopted by the Council of Ministers on 11 June 1981.
The basic monthly scholarship was 200 Eastmarks (215 Eastmarks in Berlin), with a deduction of
10 Eastmarks for a place in a dormitory.
66
However, East German statistics based on the economic accounting of the socialist planned
economy showed abidingly positive rates of growth in the material product.
67
Hans Modrow (1928) chaired the Council of Ministers of the GDR from November 1989 to
March 1990.
68
Lothar de Maiziere (1940) was Minister President of the GDR from 12 April to 2 October 1990.
78 Social Policy in the German Democratic Republic

a liberal, democratic, federal, social, and ecologically oriented state based on the
rule of law and opening the constitution to the First State Treaty as constitutional
law. The latter enactment created the legal foundation for the monetary, economic,
and social union between the GDR and the Federal Republic of Germany on 1 July
1990. The change also reshaped the structures of the state. East Germanys unitary
system gave way to federalism when the L ander were reinstated on the territory of
the German Democratic Republic on 22 July 1990 (Mampel 1990, 1997).
In terms of constitutional reality as well, the SED and its successor organization,
the Party of Democratic Socialism (SED/PDS or PDS since February 1990),
lost its monopoly on the political process. In addition, the First State Treaty
between the GDR and the Federal Republic of Germany (the Treaty on the Creation
of a Monetary, Economic, and Social Union between the German Democratic
Republic and the Federal Republic of Germany of 18 May 1990), which went
into effect on 1 July 1990 (Gesetzblatt der DDR, 1990, part 1, no. 34, pp. 332356),
and the Unification Treaty of 31 August 1990, which went into effect on 3 October
1990 (Gesetzblatt der DDR, 1990, part 1, no. 64, pp. 16271985) paved the road for
a rapid transition from the socialist regime to a Western democracy based on a
market economy.
This section discusses how social policy was affected by the social and political
change in the GDR during its final year. Just like science policy, social policy, too,
was characterized by reorientation and attempted self-renewal (Lepsius 1993,
p. 305) in the beginning. And just like science policy, social policy, too, underwent
a radical shift toward the West German model, especially after the election of the
Peoples Chamber on 18 March 1990 (Ritter 2007b). The development of labor law
as of October 1989 exemplifies a larger pattern. It underwent three phases in the
GDRs last year. The first phase was defined by the unrestricted application of
previous socialist labor law, which remained on the books until the end of 1989.
The second phase manifested the emergence of reform-minded democratic labor
law and codetermination of East Germanys own provenance in the months from
January through May 1990 (Sander 1997, p. 68). The third phase was stamped by the
actual transitional law of a predominantly metalegal nature [that applied] from the
signing of the First State Treaty on 18 May 1990 until 3 October 1990, when
the unification treaty went into effect (Sander 1997, p. 68; see also Lohmann 1996).
At first, however, social policy remained as it was. Honeckers successor, Krenz,
retained the social policies that the previous government had already agreed on,
including the improvement in pensions as of 1 December 1989 and in social welfare
(von Maydell et al. 1996, p. 29). The social policies pursued by the Modrow cabinet
were even more ambitions. On 13 November 1989, Modrow, hitherto the First
Secretary in the Dresden SED district, was elected by the Peoples Chamber to
chair the Council of Ministers of the GDR (for the context see Moreau et al. 1999).
One of the declared goals of the first Modrow government was to examine the
pricing and subsidization policy with an eye to consolidating state finances (p.
2017). But the government, convinced that cuts in social benefits and basic public
services could be highly unpopular and hazardous to its political survival, did not
dare tackle this project earnestly. There was also the belief that the historical
5 The Welfare State as a Political Process 79

achievements of East Germanys socialism had to be protected and, if possible,


expanded even beyond the development of the West German welfare state if need
be (p. 2169).
Modrow expressly stated in his first governmental declaration (on 17 November
1989) that his government was striving for good socialism. He later also stressed
that he sought a democratic reorganization of socialism and the continued exis-
tence of the GDR while recasting its relations with the F[ederal] R[epublic of] G
[ermany] (Modrow 1991). The main objective of the Modrow government
consisted in preserving the GDRs sovereignty and modifying the socialist social
order along the lines of democratic, socialist reform under the leadership of the SED
(later the PDS).
These goals also determined the Modrow governments plans for fairly wide
divergence from social policys path, particularly those considered by the actors of
the old regime and of the opposition gathered at the Round Table beginning in
January 1990 (Jackel 1995; Siebenmorgen 1995; Thaysen 2000a, b, c, d, e; Winters
1995). Three projects deserve special mention in this context: new departures in
labor law, the social charter, and trade-union law as formulated in the Law on the
Rights of the Trade Unions in the German Democratic Republic (hereafter the
Trade Union Act of 1990; Gesetzblatt der GDR, part 1, no. 15, pp. 110111).
The first steps in adapting labor law to the changes in East German employment
relations as of late 1989 followed in February 1990 in response to the mounting
trouble with the policy on job security. Since the regime shift in autumn 1989, many
enterprises had had to adjust economically and entire sectors of government
administration had been dissolved, such as part of the apparatus for surveillance
and repression. These upheavals had triggered labor displacement on a scale that
simply overwhelmed the GDRs traditional instruments of job security. A demand
for labor market policy developed, and the Modrow government wanted to meet it
with measures providing for early retirement, retraining, and a safety net for
unemployed persons (Kinitz 1997, p. 71; von Maydell et al. 1996, pp. 304305).
By February 1990, the Modrow government had taken its initial measures to deal
with unemployment. They consisted basically of state-funded benefits as stipulated
in the Ordinance Granting State Support and Company Compensation Payment to
Citizens During the Period of Job Placement, 8 February 1990 (Gesetzblatt der
DDR, part 1, no. 7, pp. 4142). Additional relief came from an analogous legislation,
the Ordinance Granting Early Retirement Allowance, 8 February 1990 (Gesetzblatt
der DDR, part 1, no. 7, p. 42). Lying well above the hitherto customary level of the
social benefits in the GDR, the unemployment payments matched the recipients
previous net earnings up to a ceiling of 500 Eastmarks. Up to 70% of the difference
(again, up to 500 Eastmarks) between that sum and the recipients previous net
earnings was covered by supplementary compensation paid by the enterprise that
dismissed the person. The First State Treaty (1 July 1990), which regulated the
monetary, economic, and social union of East and West Germany, stipulated that the
GDR was to arrange for unemployment insurance and employment promotion
in a manner in keeping with West Germanys Employment Promotion Act.
80 Social Policy in the German Democratic Republic

By majority vote, the Peoples Chamber duly passed the Employment Promotion
Act of the GDR on 22 June 1990 (which was superseded by the West German
Employment Promotion Act when the two countries united). Before the monetary
union, the GDRs offices that oversaw employment started being transformed into
organs of a public employment service patterned on that of the old Federal
Republic. The GDRs Employment Promotion Act of 1990 also contained special
regulations and raised the level of benefits, particularly regarding the payment of an
allowance for short-time work even in cases where the reduction in work was due
to structural changes in operations or to operationally related organizational
measures having to do with the creation of an economic, monetary, and social
union with the Federal Republic of Germany (} 63, Par. 5 of the Employment
Promotion Act of the GDR; see Hauser et al. 1996, pp. 5456).
The Modrow governments aspirations for a welfare state became especially
clear in the social charter passed by the Round Table on 7 March 1990, shortly
before the elections to the Peoples Congress on 18 March (Volkskammer-
drucksache 1990). The intention behind the social charter was to spell out the
GDRs position in the negotiations on an monetary, economic, and social union
with the Federal Republic. The social charter provided for an ambitious program of
welfare state policies that far surpassed even East Germanys brand of socialism.
The Round Table also aimed to expand the catalogue of basic social rights spelled
out in the East German constitution. The right to work, the right to gender equality
and child-rearing, the right to basic training and further training, and the right to a
system of social insurance were expressly listed. This stance was remarkable. It was
disproportionate to the GDRs grave economic and funding problems and would
have inflated them and the costs of restructuring the country not the least of the
reasons that the social charter drew harsh criticism from the West German side.
(Horst Seehofer of West Germanys Christian Social Union, for example, called the
social charter the Round Tables rotten egg, as quoted in Bundesministerium fur
Arbeit und Sozialordnung 1994, p. 35.) The Modrow government never once spoke
of trade-offs between social and economic policy. Not a word was said about ways,
means, or limits of financing ambitious social policy or about the sense and
nonsense of aggrandizing social policy in a country of only modest economic
means. Instead, the social charters express rationale, as stated by Modrow
governments Minister of the Economy, Christa Luft,69 was the goal of reining in
a runaway market economy (Moreau et al. 1999, p. 2170).
The spirit of the social charter also suffused the Law on the Rights of the Trade
Unions in the German Democratic Republic (Gesetzblatt der DDR, part 1, no. 15,
pp. 110111), which was passed on 6 March 1990, likewise shortly before that months
elections for the Peoples Chamber. It had the thinly disguised objective of defining
the framework for the legislature that would emerge from the first democratic

69
Christa Luft (1938), served as deputy chair of the Council of Ministers of the GDR and as
Minister of the Economy from October 1989 to March 1990. From March to October 1990, she
was a PDS representative in the Peoples Chamber.
5 The Welfare State as a Political Process 81

elections for the Peoples Chamber. Flanking the envisaged further expansion of
social transfer and social services, the Trade Union Act of 1990 was supposed to
take the trend of democratization forward yet restructure employment relations
so as to invest the unions with the sole authority to represent the workforce and to
create structures of a state dominated by trade unions. In particular, the idea was to
broaden the opportunities of trade unions to participate in state decisions. The Trade
Union Act provided for the privileged participation of the trade unions in the
deliberations on and the adoption of labor laws and social legislation. Its strike
regulations (e.g., guaranteed right to strike), its injunction against lock-outs, its
exclusion of claims for damages resulting from strikes, and its legally mandated
continuation of wage payments even during indirect strike-related disruptions of
production were exceedingly favorable to trade unions. This legislation aimed to
introduce the right of the union management in an enterprise to conclude the works
agreements and to veto all company decisions that disregarded the right of codeter-
mination. Another purpose of this law was to establish sweeping rights of industrial
democracy for basic trade union organizations in all operational questions that
concern the working and living conditions of the working population (Trade Union
Act of 1990, }11).
At critical places, however, the Trade Union Act lagged behind developments.
The sole claim to represent the interests of the workers and employers was already
outdated, for the countrys enterprises meanwhile had works councils, works
control councils, and works management councils that supplanted the enterprises
old union-controlled boards in the articulation of employee interests (Sander 1997,
pp. 7375). Only a few days after the law was passed, it was worthless in any case.
The elections for the Peoples Chamber on 18 March 1990 produced a government
coalition of the Alliance for Germany, Social Democracy, and Liberals. It did not
seek a union-dominated state but instead changed course and steered toward
reunification essentially on the terms of West German economic, labor, and social
law.
The head of this government coalition was Lothar de Maiziere of East
Germanys Christian Democratic Union (CDU), with Regine Hildebrandt of East
Germanys Social Democratic Party of Germany (SPD) as Minister of Labour and
Social Affairs.70 The de Maiziere government, unlike its predecessor, did not lean
toward preserving and reforming the GDR but rather on having it accede to the
Federal Republic of Germany (Schr oder and Misselwitz 2000). This fundamental
switch of direction affected social policy as a whole. The way was cleared for
reunification that was to have the GDR adopt most of the laws and institutions of the
West German welfare state. The de Maiziere government prepared the country for

70
This coalition survived scarcely 4 months. De Maiziere dismissed Ministers Walter Romberg
(SPD), Peter Pollack (independent), Gerhard Pohl (CDU), and Kurt W unsche (independent at that
time but a member of the Bund Freier Demokraten until the mid-1990s) on 15 August 1990. The
SPD withdrew from the coalition on 19 August 1990. The remaining SPD ministers resigned their
portfolios the next day.
82 Social Policy in the German Democratic Republic

politico-administrative accession as well, setting up a ministry of labour and social


affairs patterned largely on West Germanys Federal Ministry of Labour and Social
Order. However, responsibility for health insurance was moved to the Ministry of
Health as a result of political arrangements within the party and the coalition,
whereby the Ministry of Health was assigned to the CDU and the Ministry of
Labour to the SPD.
Two other laws crucial to social policy were the First State Treaty and the
Unification Treaty.71 Soon after the elections to the Peoples Chamber on 18
March 1990, the West German government and the de Maiziere government agreed
on the principles of a state treaty providing for a monetary, economic, and social
union between the Federal Republic of Germany and the GDR. The treaty was
signed on 18 May 1990 and went into effect on 1 July 1990, after ratification by the
parliaments of both German states.
The First State Treaty and the laws flanking it, such as the Social Insurance Act
of 28 June 1990, and the reform of the East German labor code, which abolished the
main component of socialist labor law, fundamentally altered social policy in the
GDR. For the most part, the institutions of the East German welfare state were
replaced by those of the West German system, with transitional regulations apply-
ing in some cases (see Ritter 2007a, b).
The institutional transfer from West to East Germany was an impressive techni-
cal and organizational feat. The unusually quick, efficient introduction of a com-
plete social safety net modeled on West Germanys system, was justifiably lauded
as a great feat of West Germanys social policy a Sozialstaats-Kunstst uck, to
quote the responsible Federal Minister of Labour and Social Order at that time,
Norbert Bl um (Bundesministerium f ur Arbeit und Sozialordnung 1994, p. 6).
The change brought about by the First State Treaty and cemented by the
Unification Treaty shook all the mainstays of the East German welfare state from
top to bottom. The right to work, its first pillar, yielded to West German labor law,
active labor market and employment policy, and, in case of unemployment, the
benefits of passive labor market policy. The function of social insurance, the second
pillar of the GDRs welfare state, passed to the multifaceted arrangements of West
Germanys social insurance. In contrast to the benefits paid under former East
German practice, those in the West German system were regularly adjusted to
wage development and were financed mostly through social contributions (at much
higher rates). Part of the third pillar of East German social policy, price subsidies
for basic goods and various services, was dissolved by the State Treaty. In their
stead came special programs such as a rent allowance, funding for housing con-
struction, and public social assistance, the means-tested basic income system in
West Germanys welfare state, too. With few exceptions, other parts of the third
pillar such as support for working and single mothers were swept away by

71
Law on the Treaty on the Creation of a Monetary, Economic, and Social Union between the
German Democratic Republic and the Federal Republic of Germany of 18 May 1990 (Constitution
Act) (Gesetzblatt der DDR, part 1, no. 34, p. 331).
6 Outcomes of Social Policy 83

family policy of West German conception, which differed from the East German
policy that had been keyed to policies on employment or population growth. Part of
the fourth pillar of East German social policy the company-based welfare state,
especially job security and the social institutions that were intended to improve the
supply of consumer goods and services fell victim to the change in economic
structures and the impact of the GDRs serious economic crisis. Another part of the
fourth pillar was taken over by more highly specialized institutions of West German
social policy such as those seeing to company provisions for old age, miscellaneous
social services of West German companies, and the local communities (Schmahl
1999). The fifth and last pillar of East German social policy, the supplementary old-
age pension systems and special pension schemes, were dismantled. The parties to
the First State Treaty ruled that existing arrangements of these types be terminated
on 1 July 1990, that hitherto acquired claims and entitlements be transferred to
pension insurance, and that benefits be examined under special regulations to
eliminate unwarranted expenditures and reduce excessively generous provisions.
These terms were carried out, compliance that frequently prompted bitter lawsuits
in subsequent years (see, for example, Mohn 1993; Mutz 1999; Reimann 1991).
The institutional transfer from West to East considerably benefited many East
German citizens because the Federal Republics welfare state offered far more
comfortable conditions than those in the GDR, especially in matters of social
transfers and social services generally.72 Moreover, West Germanys approach to
industrial relations included broad rights of codetermination for employee
representatives. Social needs beyond the sphere of production or population policy
were accommodated far more generously by the Federal Republic, and the West
German welfare state enjoyed much greater prosperity. However, it lacked an
equivalent of the right to work, an entitlement that was now slipping away. Given
the severe employment crisis in the new L ander (the territory of East Germany) that
loss was especially painful to many people and often gave rise to heated criticism of
the social and economic policies in the united Germany.

6 Outcomes of Social Policy

What were the strengths and weaknesses of social policy in the GDR up to the end
of the Honecker era?73 How did it affect East Germanys social structure? To what
type of welfare state policy did the East German brand of social policy belong? And
what sociopolitical legacy did the new L ander, the East German states, bring with

72
There were also losers in the institutional transfer, though. They tended to be people who had
been privileged by East German social policy, primarily former recipients of benefits from the
supplementary old-age pension systems or special pension schemes.
73
Social policy from that point in history to the GDRs accession to the Federal Republic of
Germany on 3 October 1990 calls for its own appraisal. See the final part of the preceding section.
84 Social Policy in the German Democratic Republic

them into reunified Germany? These questions guide the discussion in this section
and the two following ones.
The propaganda of the SED state presented the governments social policy as a
complete success, as it did all other policies in the Arbeiter- und Bauernstaat, or
workers and peasants state (see the foreword and documents in Trumpler et al.
1986).
Because of the development of productive forces and the conditions of socialist production,
our people have attained a living standard unprecedented in their history. Unemployment is
to us a term from another, alien world. We are guaranteed social security and safety, full
employment, equal educational opportunity for all children of the people (Honecker 1986;
as quoted in Winkler 1989, p. 232).

This excerpt from Honeckers speech at the Eleventh Party Congress in Berlin
(1986) is only one of many declarations of success. East German textbooks on
social policy usually contained similar accounts, with one qualification or another.
Some of the publications focused chiefly on housing policy, family policy, the
efforts to improve working conditions, and the subsidies for basic goods (e.g., Manz
and Winkler 1979; Winkler 1989; see also Autorenkollektiv 1975a, b, 1977, 1988).
Were such claims justified or exaggerated?
On the whole, the GDR had indisputably created a prodigious welfare state. And
without doubt, the job security enjoyed by a very large part of the working-age
population was a popular achievement of East German social policy. But it is also
certain that the East German welfare state was trapped in a massive conundrum.
When it came to preserving, cultivating, and mobilizing labor capacity, the state
was especially dedicated. It also went to great lengths to encourage population
growth. But beyond those two prime concerns labor and population policy it
neglected nearly all other fields of social policy, including human resources
(Kaufmann 1994, p. 371). There were also issues with social integration and system
integration. Social policy actively contributed to change in the social structure and
to the emergence of the social fabric of a socialist industrial society with new assets
and liabilities. But the legitimation sought through social policy did not go as far as
had been hoped (see Sect. 6.3). Moreover, the hope that generous welfare state
provisions could maximize the performance of the working population and thereby
appreciably improve labor productivity proved illusory. The East German welfare
state ultimately became too large for the countrys economic strength, which was
only moderate, and that imbalance caused substantial economic hardship (see
Sects. 6.4 and 6.5).
The East German welfare state therefore experienced wide discrepancy between
particularist interests on the one hand and collective rationality on the other (see
Kaufmann 1994, pp. 364365). Neither East Germanys leadership nor the broad
mass of the population properly acknowledged this discrepancy, the backwardness
of the countrys social policy, its demonstrated shortcomings and trouble spots, and
the tensions between it and other important objectives.
6 Outcomes of Social Policy 85

6.1 Areas of Social Policy

6.1.1 Basic Security

The political leadership of the GDR nonetheless justifiably vaunted the protection
that its social policy granted almost all citizens against material impoverishment. It
extended to all citizens, except persons officially or unofficially counted among
those threatened with or condemned to exclusion as class opponents above all,
East German citizens who had officially applied to emigrate from the GDR,
fugitives of the Republic (GDR citizens who had emigrated to West Germany),
persons who had once been particularly active Nazi combatants, and politically
prominent dissidents. The welfare state of the GDR guaranteed cradle-to-grave
basic support covering education, working life, and a tightly woven net of social
provisions in case of illness, accident, or old age. The guaranteed basic livelihood
was relatively low, however, sufficing only because basic goods, housing rents, and
various services were subsidized. The costs of these subsidies soared in the 1980s,
escalating the already high tension between the twin goals of ensuring social
protection and maintaining economic strength. Furthermore, basic care became
less and less able to satisfy the expectations of the great majority of East Germans,
who coveted the prosperity, elevated life style, and higher consumption level in
western Germany.

6.1.2 Provisions for Old Age

East German social policy was riven by internal tensions, too. Providing for old age
was a perennial quandary for the SED state. Despite the many corrections that were
made in this area as of the late 1960s, a fairly large share of retirees still found
themselves socially disadvantaged in the late 1980s, not infrequently living at or
beneath the poverty line (Manz 1992). True, the voluntary supplementary pensions
and the higher wages of the post-war generation had increased the retirement
pensions. The voluntary supplementary pensions would have had quite some effect
as of the 1990s, but by that time the GDR had already acceded to the Federal
Republic of Germany, reuniting the nation. As late as the second half of the 1980s,
only about one third of the retirees had a supplementary pension to draw on. On
average, this kind of pension did not exceed the customary retirement annuities by
more than 100 Eastmarks a month anyway. The overall outcome of old-age
pensions, above all, overt destratification and meager pensions, was thus not funda-
mentally changed. For example, the average monthly retirement pension from the
SVAA in December 1989 was 446.62 Eastmarks or 555.42 Eastmarks if the
benefit from voluntary supplementary pension insurance was counted in
(Statistisches Amt der DDR 1990, p. 384). The first figure corresponded to 39% of
the average net earned income of full-time workers and salaried employees in
nationalized enterprises; the second, to 49% (calculation based on Statistisches
86 Social Policy in the German Democratic Republic

Amt der DDR 1990). Until the demise of the SED state, pensions for most elderly
retirees living alone left little or no room for maneuver.74 Things were better for
younger retirees, especially those of age groups receiving higher retirement
pensions because of longer training, better pay, and more favorable insurance terms.
Members of the FDGB national management board, which was responsible for
administering social insurance, conceded that East German policy on old-age
pensions was badly flawed in general. On 24 November 1989, the boards organ,
the Tribune (East Berlin), tellingly called for a genuinely fair pension system in
which each is entitled by social insurance to expect that his pension will be
calculated according to his income, number of years worked, and premiums paid;
that special regulations will thereby become needless; and that pensions will always
keep pace with the trend in wages and prices. This demand was enlightening, for it
took the pension insurance of the Federal Republic of Germany as a model and
found the East German provisions for old age wanting.

6.1.3 Care for the Elderly and Persons with Disabilities

As noted just above, providing for old age remained a weak link in East Germanys
system of social benefits. But contrary to common opinion (e.g., Wolle 1998,
pp. 181182), it was not the most fragile one. Even less protection came from
social welfare (Boldorf 1998, 2008b; Rudloff 1998; Wienand et al. 1997). The
situation was no better with care for the elderly and the policy on persons with
disabilities (Kohnert 1999; Hoffmann 2008), not to mention the policy on refugees
and expellees (Schwartz and Goschler 2008). The approach taken to the elderly in
need of care and to persons with disabilities was an especially problematic chapter
in the history of the GDR (Kohnert 1999, p. 1726). Many of them stayed a marginal
group in society (p. 1727) even when the GDRs economic situation began to
improve. In principle, nothing changed until 1990. As noted by Kohnert (1999):
Maintaining the fiction that old people and persons with disabilities had a safe and
secure existence remained . . . part of the policy (p. 1779). But the reality was an
utterly deficient system of medical, nursing, and social care with out-patient services,
homes, government administration of the health and social services, social organizations,
and volunteers. Buildings, technical equipment, and vehicles did not meet the necessary
qualitative and quantitative standards, so many people in need of care and many with
disabilities received inadequate assistance, if any (p. 1779).

74
According to my analysis of Survey S 6344 conducted by the Berlin Institute of Social Science
Studies (BISS 1990), just under 50% of East German retirees (persons pensioned for reasons of
age, disability, or early retirement) received a monthly income of up to 500 Eastmarks. A further
24% had an income ranging between 500 and 600 Eastmarks. Just under one third of all retirees
received additional income from such sources as interest, housing rent, or leases. Most of those
respondents (24% of all retirees) reported additional income of up to 500 Eastmarks in 1989.
A very small percentage of the respondents reported additional income greater than that.
6 Outcomes of Social Policy 87

6.1.4 Health Care

Observers in the GDR (e.g., Mecklinger 1999a, b, c, d)75 as well as those in West
Germany rate the East German health system more highly than they do the three
areas of social policy just discussed (e.g., von Beyme 1975, p. 261; Meyer 1997).
The vision guiding the East German health care system was the state-paid physi-
cian of a factory polyclinic as the representative of a work-oriented, paternalistic
health regime that coupled comprehensive state care to rigid behavioral
expectations (Su 1998, p. 97). By contrast, the vision offered by the West German
health care system was the self-employed medical specialist working in a com-
plexly structured, predominantly government-funded health system whose organs
of self-administration buffered it from direct political control. Many experts were
particularly taken by the company health services in the GDR, the close coordina-
tion between out- and in-patient care, and the link between prophylactic and
curative medicine (e.g., von Maydell et al. 1996, pp. 293295). The preventive
orientation of the East German health system was internationally acclaimed
(Knieps 1990), as was the prenatal care it rendered. To judge from the standard
indicators of the populations health, the health policy of the GDR had great merit
compared to that of other socialist states. Given this health system, people in the
GDR were convinced for some time of having long ago definitely surpassed the
West, specifically West Germany, to quote Ulbricht at the Sixth Party Congress of
the SED (1963) (S u 1998, p. 59, note 14).
But the strengths of East German health care were accompanied by grave
weaknesses, too (Wasem 1997; Boyer 2008a, b). The revolutionary reorganization
of the health system had incurred serious damage. As formulated by the director of
the SMAD health department, the underlying philosophy of those measures held
that the working population [had to be] liberated from the dependence imposed by
private health care (as quoted in S u 1998, p. 87) and that its leading exponents
were to be sought among the private doctors and owners of hospitals and other
medical facilities. The radical restructuring of out-patient care, however, was one of
the reasons for the massive emigration of physicians to western Germany and for
the resulting shortage of them in the GDR. Between 1946 and 1961, around
7,500 physicians, or approximately half of the GDRs entire contingent in 1960,
left the country. This number included a disproportionately high number of young
doctors (p. 89).
Overall, the populations health status improved more slowly than in western
countries (Hockerts 1994a, pp. 528529; Rowland 1991; Wiesner 1990). Life
expectancy rose in the Federal Republic of Germany, but the trend was downward
in the GDR from the early 1980s on. The mortality rate due to curable diseases was
4.6 times higher in the GDR than in the Federal Republic of Germany, primarily
because of poor diagnostics and therapy. These circumstances likely stemmed at

75
Ludwig Mecklinger was the GDRs Minister of Health from 1971 to 1989.
88 Social Policy in the German Democratic Republic

least in part from the GDRs scant material resources for health care (Thiele
1990) with adverse working conditions, old and poorly maintained buildings, a
scarcity of requisite medical supplies, and low pay all complicating work in the
health sector (Oertel and Ziesemer 1992, p. 291).
Another source of reproof was the solicitous, paternalistic style of the health care
system (Su 1998, p. 95). The work-centered focus of health care policy (p. 95)
also had a flip side: the relative reluctance to include cases outside the production
process. In addition, health policy, like many other political institutions in the GDR,
tended to avoid addressing faults, such as alcohol-related illnesses and causes of
death (Schieritz 1990).

6.1.5 Housing Policy

Housing policy has been variously rated. Housing, too, was profoundly marked by
the political changes after 1945 (Topfstedt 1999). State management of housing,
regulations that froze rent on old residential buildings at 1936 levels and redistributed
living space at the owners expense, and suppression of owners power of disposal
over their residential property exacerbated the grievous quantitative and qualitative
shortcomings of the dwellings on offer, only worsening the already dire initial
circumstances (Schildt 1998, pp. 179189). Housing construction long remained
sluggish, aggravating the great housing shortage, especially the need for new
buildings. Things eased in the 1950s chiefly because of a decline in the number of
inhabitants, though the number of households did not fall. Existing buildings were
very old, the residential structures in the GDR being an average of 63 years old in
1958 as compared to only 45 years in the Federal Republic of Germany (p. 181). East
German housing policy was indeed a ticking time bomb (p. 181).
At the Fifth Party Congress (1958), the SED announced a housing program that
seeded great expectations. The aim was to solve the housing bottleneck by the mid-
1960s, eliminating the centuries-long housing shortage of the working masses in
the historically shortest amount of time (Walter Ulbricht as quoted in Schildt 1998,
p. 184). New housing construction fell far short of the target, though (p. 184).
Housing moved forward more energetically after power passed from Ulbricht zu
Honecker, with the failings of Ulbrichts policy being rebuked in the process
(p. 185). Nevertheless, housing policy under Honecker, too, kept lagging well behind
the ambitious plans, a fact that the governments wildly euphemistic statistics could
not hide. Housing construction never came close to fulfilling the goals and living
up to what was reported in the propaganda. As detailed research has revealed, the
number of units actually built or modernized in the years from 1976 through 1990
came to only about 1.7 million instead of the 2.8 million reported in the official East
German statistics up to 1989 (see Buck 2004; Hoscislawski 1996). Total housing
between 1971 and 1990 grew by only about 946,000 units, for the number of new
buildings did not keep pace with either the rate at which old ones decayed or the
demand for high-quality living space (Bouvier 2002, pp. 200201).
6 Outcomes of Social Policy 89

These gaps figured among the reasons for widespread criticisms of East German
housing. In common parlance, the quality of housing was derided in a takeoff on the
opening phrase of the GDRs national anthem. Instead of Risen from ruins and
facing the future, they turned the line into Given to ruins and facing the future.
The GDRs housing policy was fundamentally beset by what were usually out-
dated reactions, disregard of the experts, and the rigid adherence to low rents that
neither covered costs nor permitted maintenance (Manz 1992, pp. 5758). In many
places Honeckers housing construction program also became mired purely in the
ideology that more is better. The opportunity costs of the program were onerous as
well: The concentration on construction of new housing has simultaneously led to
the dilapidation of old structures because desperately urgent repair work has been
put on hold (Hertle 1992, p. 1022, based on Schurers crisis analysis, 1992).
Still, quantitative success of the housing construction program was undeniable.
The policy of the 1970s and 1980s in this area did add to the number of units on
offer, with prestige projects even demonstrating qualitative improvement. It also
had more to show for itself under Honecker than under Ulbricht. For instance, the
number of new buildings (and the total number of units completed) after Honecker
succeeded Ulbricht was higher each year than it had been before 1972. Compared to
the lofty housing targets that were set, the outcomes of this purported heart of
social policy were not a success. But relative to the inattention to housing
construction before 1970, they were a step forward.

6.1.6 The Right to Work

Until late 1989 and early 1990, job security was thought of as the jewel of East
German social policy. The great bulk of the population applauded this achieve-
ment, though its true value did not really become apparent until many people had
lost their jobs. The guarantee of employment, though not of a specific job, was a
benefit with which the GDR surpassed most western industrialized countries. But in
the long run, East German citizens would not have been able to enjoy full employ-
ment. It was bought with hidden unemployment, which under the customary
conditions of East German production and sales was estimated to have been
approximately 1.4 million employees. An additional 1.6 million working persons
were superfluous as measured by the production and sales conditions of a market
economy (see Vogler-Ludwig 1990). Full employments productivity-reducing
effects, especially job securitys erosion of initiative and the incentive to work,
must also be figured in to the extent they have not already been accounted for.
Lampert (1996), for example, concludes that the GDRs absolute priority on the
right to employment no matter what the cost is judged to have been one of the most
important causes of the entire systems economic inefficiency (p. 108). One must
also bear in mind the costs of operational ossification that rigidly sheltered employ-
ment imposed on the countrys enterprises, all but precluding flexible adaptation to
changed production and market conditions (Gr unert 1997, pp. 99101).
90 Social Policy in the German Democratic Republic

6.1.7 Family Policy

Until the mid-1960s, one count against the GDR was the absence of an indepen-
dent family policy (Obertreis 1986, p. 3). After that time, however, family policy
became a tightly woven program (Helwig and Hille 2004, 2006, 2008). Its leading
instruments included classical elements such as maternity leave and a progressive
child benefit based on the number of children.76 Many other elements existed as
well. In the late 1980s, for instance, health insurance and pension insurance
provided a number of social benefits oriented to families and keyed to the number
of children (e.g., the early crediting of periods of child-rearing as time legally
recognized by pension insurance). There was assistance for families with children
and for single parents; ample options for the care of preschoolers, kindergartners,
and school-aged children; family-oriented educational, training, and counseling
measures; and basic and postbasic training specifically for women (including
mothers). Through housing policy families received support such as rent subsidies
and priority housing assignments. Interest-free marriage loans, basic scholarships
for married students, and a moderation of working hours for employed mothers and
for fathers raising a child alone were further measures supporting families and
single parents (Lampert 1990, pp. 7576).
The family policy of the GDR was widely seen as particularly effective, and not
just by East German authors or western observers advocating high rates of womens
participation in the labor market (e.g., Lampert 1990, pp. 7576, 1996, pp.
105106; Speigner 1989; for critical reviews see Helwig 1995, 1996; Helwig and
Nickel 1993; Meier 1989; for feminist critique of East German womens policy,
with emphasis on the persistence of income disparity between women and men, see
Srensen and Trappe 1995). For instance, family policy reaped praise for being
more comprehensive and differentiated and, relative to the GDRs economic
strength, overall more positive than the family policy of West Germany (Lampert
1996, p. 106). It was extolled, too, for largely meeting its aims with a well
coordinated system of resources (Lampert 1990, p. 78; for comparison of family
policy as it was in the two German states in 1989 to 1990, see Schuster and Tugel
1990). At times these views also applied to the objective of stabilizing the birth rate
(Deutsches Institut f
ur Wirtschaftsforschung 1989; Lampert 1996, p. 106), which in
the GDR was lower in most years than in other socialist states (Reimann 1975, pp.
107108). Many people saw family policy epitomizing an appropriate design of
instruments expressing the so-called unity of economic and social policy (Lampert
1996, p. 106). For instance, the GDR had recognized child-rearing periods as being
relevant to pensions approximately 15 years earlier and on a greater scale than West

76
In the late 1980s the progressive child benefit amounted to 95 Eastmarks a month for the first
child up to 12 years of age and 115 Eastmarks from then until lapse of the childs eligibility. The
corresponding figures for the second child were 145 Eastmarks and 165 Eastmarks; for the third
and each additional child, 195 and 215 Eastmarks. Compared to the minimal pension (350
Eastmarks), the child benefit rates were significant.
6 Outcomes of Social Policy 91

Germany had. Moreover, this incentive was linked to the further stimulus of
increasing the retirement pensions for women who had worked the maximum
number of years. There is no doubt that this family policy substantially facilitated
womens employment. The result satisfied people to whom the only good mother
(Schmidt-Kolmer and Schmidt 1962, p. 99) was a working mother77 and abetted
those who sought to distinguish themselves through a sometimes fanatic campaign
for equal opportunity (Helwig 1971, p. 141). Opponents of a family-centered
vision of the mother were discontented, however.
The high number of women in the labor force changed surprisingly little in the
gender structure of East German society. Helwig (1996) observed that a remark-
able range of public child care and generous special regulations for working
mothers (p. 208) eased the dual burden of combining family responsibilities and
a job outside the home, but entrenched the conventional division of labor between
women and men (p. 208; see also von Maydell et al. 1996, p. 322; on time budgets,
see Merkel 1999, pp. 351352). This argument surfaces frequently, as in a study on
the GDRs power elite, which attributed a pattern of paternalistic care to family
policy (Meyer 1991a, pp. 345346). Feminist and nonfeminist circles perceived a
bourgeois differentiation between gender roles (Huinink and Wagner 1995,
p. 150) that was common in the East German family and the family policy of the
GDR. Housework and child-rearing was seen for the most part as the responsibility
of women. Sociological studies on families in East Germany and contemporary
novels reflected that the upheaval in social conditions had not done much other than
double the load for women in many cases (Schulz 1998). Objections to the
excessively long working hours, the lack of time for the children, and the
constraints on providing for the family were standard fare in those publications
(Gysi 1989). Numerous commentators found that family policy and support for
women were not particularly sympathetic to women:
General doubts about the success of the SEDs womens policy . . .. are warranted. It neither
contributed to the economic independence and equality of women nor stabilized the family.
The GDRs divorce rate was . . . one of the highest in the world. Womens policy scored
successes solely as an instrument for promoting the birth rate (Mocker et al. 1990, p. 1703).

Such findings only added to the evidence prompting feminist critics to view East
German family policy as a patriarchal system in operation (Diemer 1994, p. 221).
Family assistance and support for working mothers and single mothers generated
new social tensions as well. The repeated expansion of support for single parents
and families with children was bound to offend a person drawing an average
retirement pension at most. Considerable conflict did grow between the child-rearing

77
The entire passage reads: A good mother today . . . is a working mother who stands alongside
the father on an equal footing and with equal qualifications.
92 Social Policy in the German Democratic Republic

cohort on the one hand and members of the older generation on the other (Hockerts
1994a, p. 531; Niethammer et al. 1991, pp. 447448).78

6.1.8 Price Subsidization as Social Policy

The subsidization of prices was another policy that was welcomed and opposed
alike (Wei 1998). It appealed to defenders of the basic security that it ensured.
Subsidization had a sizable effect. It is estimated that basic goods in the GDR were
subsidized at a monthly rate of about 250 Eastmarks per person, or more than half
an average pension. These figures mean that approximately one third of the average
consumption of persons on retirement pensions was financed in advance across the
board (Lohmann 1991b). The share of the state budget accounted for by price
subsidies also spoke volumes; it rocketed from 11.6% in 1980 to 20.1% in 1989. In
the latter year it devoured almost as much of the state budget (21.2%) as did
government spending on health care, social security, family policy, and housing
combined (calculations based on Buck 1999, pp. 12151223).
The advocates of price subsidies, such as J urgen Kuczynski, conceded that the
policy was inefficient and potentially wasteful. But, they countered, those
drawbacks were secondary to the unique success of socialism in our republic,
the assurance of a minimum standard of living for all which had been accom-
plished by the policy of subsidizing prices (Neues Deutschland 22 December 1989
and 28 January 1990; as quoted in Spittmann and Helwig 1990, p. 152). This group
argued that the least well-off strata of the population were impoverished wherever
price stability for basic needs had been abandoned in socialist countries. Otto
Reinhold, Rector of the Central Committee of the Academy of Social Sciences,
sounded the same horn, saying that price reforms had brought about more economic
effectiveness, even more prosperity, in the GDR than in any other country.
According to him, scrapping the subsidies would likely compound difficulties in
four crucial ways. It would (a) cause steep price rises, (b) set off a wage-price spiral,
(c) foil the policy of ensuring affordable housing rents, and (d) devalue savings
(Neues Deutschland, 14 February 1990; as summarized in Spittmann and Helwig
1990, p. 152).
The picture looked similar within the GDRs political leadership, which addi-
tionally emphasized the political functions of stabilizing the price subsidies. The
assertion was that subsidies not only stabilized prices for especially important
goods, which the East German population appreciated just as much as the West
Germans did, but also gave an edge in the contest between East and West. Given
the price hikes on the world market and in the capitalist countries, the fact that the
prices for basic goods and services, housing rents, and transport fares had been kept
as low as before stood out as one of the most valuable achievements of the GDRs

78
The poles of West Germanys social policy are the reverse, with people who draw retirement
pensions generally being better off than young families with children.
6 Outcomes of Social Policy 93

working population (Tr umpler et al. 1986, p. 23). The East German leadership was
also persuaded that subsidizing prices had a socially integrative effect. In a speech
as General Secretary of the SED at the Tenth Conference of the Central Committee
(20 June 1985), Honecker lauded the stable consumer prices, describing them as
essential to the climate of social security and safety and saying they were a
major attainment of socialism as practiced in the GDR (as quoted in Trumpler
et al. 1986, p. 316). The price subsidies for the populations basic goods and services
counted as insurance against political crisis. Schurer (1998) reports that Honeckers
position had always been that all political trouble in other socialist countries had
begun when retail prices were raised and [that] the GDR must not risk its good path
by committing such foolishness (p. 77; see also Meyer 1991a, p. 392).
Experts warned against prolonging the price subsidies, however (see Wei 1998;
Steiner 2006, 2008). To many people the dizzyingly mounting cost of subsidization
was not the only concern; there was also the conspicuous waste it induced. For
instance, people were feeding animals with subsidized bread in order to save on
expensive fodder. Per-capita energy consumption was inordinate, too, exceeding
that of the Federal Republic of Germany even though that country was far more
economically developed than the GDR. The low price of electricity (0.08 Eastmark
per kilowatt hour) was partly responsible for this imbalance, which veritably invited
profligacy. Over and above these misgivings came grave doubts about the unselec-
tive nature of price subsidies. They benefited everyone, not just the needy.

6.1.9 Company-Based Social Policy

What effects did company-based social policy have by 1990?79 The hope had been
that it would aid in solving economic problems, mainly by combatting labor
shortages, boosting the rate of womens participation in the labor force, forming
regular workforces, battling employee absenteeism, and increasing labor output.
The available studies find that company-based social policy came closer to meeting
the first three goals than it did the last two (see, for example, Deich and Kohte 1997;
Grunert 1997, pp. 7677; H ubner 1999a, b, 2008). In particular, it went a long way
to mobilizing female labor. It also promoted the training of regular workforces,
though the habituation effects were great.
East German company-based social policy certainly had much that was attrac-
tive to the working population. In many cases it made the enterprise into a social
place that to many workers was more important as an organ for distributing fringe
benefits than the work process, which was not pivotal to the pursuit of subjective
interests (Deich and Kohte 1997, p. 107). Primarily, however, company-based social

79
Development after the elections to the Peoples Chamber on 18 March 1990 already heralded
unification. From that point on, the company-based welfare state began undergoing a transforma-
tion in which it was partly communalized, partly privatized, and partly eliminated (Deich and
Kohte 1997, pp. 7173; von Maydell et al. 1996, pp. 383385).
94 Social Policy in the German Democratic Republic

policy helped prevent economic issues from suddenly tipping into political crises,
notably in the 1980s. Especially impressive support for this argumentation comes from
Hubner (1995, 1999b, p. 71, c, p. 347), according to whom company-based social
policy reduced the social costs of the centrally planned economy and enhanced the
social cohesion of East German society.
The deficiencies of this economic system the bloated administrative costs; the careless
investment planning; the poor organization of work; the inadequate exploitation of raw
materials, auxiliary resources, and fuels; the waste of labor; the squandering of public
money; and the often lax work discipline were not eliminated by company-based social
policy. But it surely had some success at recoining this complex flaw into cohesion between
the workforces of the plants (Hubner 1999b, pp. 7374).

Company-based social policy was thus not just a soft stabilizing factor. It
counted as one of the most effective stabilizing factors (p. 74) in the GDR. Social
policy at that level thereby came to have effects of political stabilization, though
the SED gained little lasting legitimation from them (p. 74).
However, stabilization demanded a high price, including exhaustion of eco-
nomic resources and . . . . the burying of initiative (Hubner 1999b, p. 74). The
inherent dynamics of the company-based social policies must be borne in mind as
well. Analyses have shown that it was nearly impossible to abolish or at least
restrict measures or institutions once they had been introduced (Deich and Kohte
1997, p. 67). These policies were thus soon perceived more as legal custom (Hubner
1999b, p. 67) than as an incentive for additional effort. This aspect must also be
figured into the price of company-based social policy. By augmenting the tension
between government planning and egoitistic action taken by the plants, it added to
the forbidding burden on the economy (G otting 1998, pp. 6568; Hubner 1999b).

6.2 The Impact of Social Policy on Social Structure

6.2.1 Equalization and New Inequality as Results of Social Policy

Studies on the social structure of the GDR unanimously report that social
differences were evened out far more in East Germany than in the Federal Republic
of Germany (e.g., Adler 1991a, b; Belwe 1989; Geiler 1996; Grundmann 1997;
Hauser 1992; Szydlik 1992; Vortmann 1985). This observation applies to the
distribution of wealth, which was largely equalized by expropriation and forced
collectivization, as well as to the housing conditions, training, and income distribu-
tion. Social policy had neither the sole nor even the main role in flattening out social
differences, but it did help.
The leveling of income distribution, for instance, was partly brought about and
partly intensified by selective social policy. For ideological reasons, the means to
that end were the mandated narrow spread of earned income; measures for ensuring
a basic livelihood (e.g., minimum wage and subsidized basic goods), and the
ordinance restricting differences between the retirement pensions received by the
6 Outcomes of Social Policy 95

vast majority of retirees, the exceptions being the beneficiaries of the supplemen-
tary old-age pension systems or special pension schemes.
Social policy was not only about leveling, however. It also fostered regime-
specific disparities. At times, as with consumption-related social policy in general
(Merkel 1999, p. 15), it was supposed to favor some people and discriminate against
others. The social benefits were differentiated according to the importance that the
recipients had for production and procreation. The leadership of the SED and its
mass organizations, for example, were treated with particular deference when it
came to health care, provisions for old age, and, usually, housing. Social policy
looked after the workers more than it did towards people who were not gainfully
employed (insofar as members of the latter group received any benefits at all). It
especially rewarded working mothers to an ever greater extent. Foreigners, how-
ever, were legally subject to exceptions from the preferential treatment enjoyed by
the working population. True, resident aliens having a permanent address in the
GDR were almost on a par with native East Germans. But foreigners with tempo-
rary residence permits had only a limited right to work, freedom of movement,
social benefits, and training (Roesler 2008b, pp. 633640). In the 1980s this group
came to encompass more and more persons whose skin color identified them as
visible minorities from the Third World states.
The social policy of the GDR went much further than that of western countries in
distinguishing between the political significance of the target groups. Below the
level of the political leadership, too, this practice was apparent from the privileged
status that the supplementary old-age pension systems and special pension schemes
gave the intelligentsia and people of special political importance to the state
apparatus. The rewards of social policy were also bestowed for active political
involvement on behalf of the SED, as illustrated by the relatively high scholarships
for students especially loyal to the party line and world view. These examples, like
others, clearly bring out the links between social policys orientations and socio-
structural stratification in the GDR.

6.2.2 Class Structure of the GDR

Class structure set the GDR sharply apart from the western industrialized countries
(Wehler 2008, pp. 216234). The propertied class in Max Webers sense of a class
whose livelihood rests principally on the utilization of the capital or land they own
had no importance whatever. It had withered under socialism. The dominant classes
by income classification were gainfully employed people, that is, social classes
whose livelihood rested mostly on the utilization of their labor and qualifications.
But they did not determine the structure of East German society. The party-states
omnipresence in society, the economy, and political life blocked that possibility. To
gauge from the countrys socioeconomic stratification, the GDR was nevertheless a
work-centered, factory-oriented society with a fairly narrow range of differentials.
However, lack of prosperity, the flattening of society, and the relatively advanta-
geous social circumstances of workers and peasants had also contributed to
96 Social Policy in the German Democratic Republic

making East German society a society of workers and peasants equalized


downward not toward the middle (Geiler 1996, p. 63). Aside from the proper-
tied classes, the victims included the self-employed and the old small business
sector. Social policy played a part in this upheaval as well, especially by virtue of its
focus on working people and the massive leveling of wages and pensions.
Though East Germanys socioeconomic differences had become fairly flat, the
distribution of political power in the GDR was highly uneven, particularly because
of its concentration in the nomenklatura the political leaders of the SED state. It
was they who constituted the hub of political power, the strata that determined the
structures of society. Together, destratification and the regime-specific, new
inequality of social structure produced a structure in which the lower range of
income was only slightly more evenly distributed in East Germany than it was in
West Germany and in which equalization at the top of the income hierarchy was
significant (Geiler 1996, p. 63). The difference between the remuneration of
university graduates and nonuniversity graduates, for instance, was much smaller
in the GDR than in the Federal Republic of Germany. At the same time, the system
spawned a new kind of schism: the two-class society (Merkel 1999, p. 245)
consisting of people who had western currency and those who did not.
Differences in wealth contracted discernibly. This convergence came about
chiefly through expropriation, socialization, collectivization, state-sanctioned
devaluation of real estate as a result of the decay or destruction of privately
owned residential property, and the high taxation and onerous premiums levied
on income from self-employment.
Social disparities had been fundamentally changed in education also. The system
evened out traditional class-specific differences mostly by qualifying persons from
social strata customarily without strong educational backgrounds (Geiler 1996,
pp. 264265). The mobilization of daughters and sons of workers and peasants to
attend training schools and universities and subsequently to assume middle-
management positions in the East German workers and peasants state put
many on the path to social ascent, especially until about the mid-1960s. These
options were particularly open to people from the right class best of all, the
ranks of the workers or peasants and to especially committed persons who toed
the party line closely (Solga 1995). Conversely, sons and daughters from the old
middle and upper class often faced obstacles to advancement. If a middle- or upper-
class origin was combined with political dissent, the downward slide of the
individual in question was preprogrammed or flight to the West was the escape.
Studies on mobility show that generational affiliation also had a bearing on a
persons chances of moving up or down (Meyer et al. 1997; Solga 1995). Ritter
(1998) states that the winners in the GDRs formative years, notably the 1950s and
1960s, mainly included the generation of people who came from the lower classes,
grew up in the 1940s and 1950s, and did not seek their way to the West as so
many of their peers did but rather pledged their allegiance to the new state
(p. 177). The East German state offered this group possibilities for identification
despite massive restrictions on political freedom. Working-class children in partic-
ular were offered the prospect of education and upward mobility, and many of them
6 Outcomes of Social Policy 97

were able to move up to positions in middle and senior management. The top
echelons in those years were reserved for the communists who had been trained in
Moscow while in exile and for members of the communist resistance in Germany.
That arrangement deteriorated perceptibly for the following generations, though.
Their opportunities for upward mobility narrowed drastically (pp. 177178).
East German socialism pursued the project of evening out social differences on a
grand scale. The aspirations to broaden social equality also found expression in
womens possibilities for sharing in it, one example being the high percentage of
gainfully employed women. Social policy had created jobs for women in the
administration of social policy, in social services, and in education and had
facilitated the participation of mothers in the labor market by providing incentives
and beneficial policies on work schedules. To some observers, these outcomes
mean that East Germany had a lead in equal opportunity (Geiler 1996,
p. 298), arguing that gender discrimination surrounding qualification, occupations,
advancement, income, and political participation were reduced more in the GDR
than in the Federal Republic of Germany (p. 298). They have also contended that
the traditional division of labor in families was loosened to a greater degree in East
Germany. But that line of reasoning deserves to be challenged as far as gender
differences are concerned. Except for the gainful employment of women, the
division of labor between women and men in the GDR remained marked by a
traditional, conservative pattern that left most women with the double yoke of
working a paid job and shouldering the brunt of the responsibility at home (Diemer
1994; Gysi 1989; Schulz 1998).
Many other observers of the GDRs social structure have documented the
coexistence of equalization and inequality (e.g., Adler 1991a; Frick et al. 1991;
Geiler 1991, 1993; Huinink et al. 1995; Kretzschmar 1991a, b). Indeed, research
has justifiably stressed that leveling and social inequality were outright structural
characteristics of the GDR, though the latter was rather tabooed (Mertens 2000).
Adler (1991a), for instance, has corroborated the assertion that the scale of social
inequality in the GDR was comparatively small but that political power was
unequally distributed in the extreme (p. 154). As regards income distribution, he
adds, the largest disparity (about 1:3) existed between retired women on the one
hand and the intelligentsia on the other. According to Adler, the most important
determinants of opportunities for income were employment status; managerial
responsibilities, especially those of a political nature; the level of occupational
qualification; and gender.
Housing conditions also attested to considerable equalization and divergence.
Comparison across different strata shows that unskilled and semiskilled laborers
lived in the least favorable housing. The groups with the largest dwellings (retirees,
peasants, middle managers, and self-employed persons) and the greatest comfort
(senior managers and the intelligentsia) enjoyed living conditions one third more
favorable at most (Adler 1991a, pp. 157158).
Reflecting primarily the difference between essentially manual or non-manage-
rial activities and mostly intellectual or managerial ones, the distribution of work-
ing conditions overlapped with this pattern of inequality. Unskilled and semiskilled
98 Social Policy in the German Democratic Republic

workers had the least beneficial situation; persons performing managerial functions
or mental work, the most advantageous (Adler 1991a, p. 158).

6.2.3 The Stratification Pattern of Society in the GDR

Keeping in mind this distribution of income, working and living conditions, and
political influence, one finds a social structure made up of three main strata: low,
high, and middle.
The lower social stratum consists mostly of persons on small pensions and employed persons
with the lowest level of education and qualification . . . Women tend to be found here more
often than men. An especially problematic situation confronts retirees in need of nursing care,
handicapped persons unable to work, and persons with a concentration of certain attributes
(single, female, with child(ren), poorly qualified). In any case, however, the elementary needs
were met (work, shelter, basic medical care, food, etc.) (Adler 1991a, p. 159).

The highest social stratum encompassed mostly (a) persons with managerial
responsibilities or functionaries in the party, state, and security apparatus and the
major enterprises; (b) leading representatives of the intelligentsia; and (c) some of
the self-employed.
By contrast, the middle social stratum had more layers than either of the other
two. Its lower region was populated mostly by persons on relatively sizeable
pensions, low-skilled salaried employees and semiskilled workers. The intermedi-
ate region accounted for most of the skilled workers and the peasants of
cooperatives along with the junior executives. The upper region of the middle
social stratum mainly comprised the graduates of universities and technical colleges,
mid-level managers, and some of the self-employed (Adler 1991a, p. 159).
The pattern of stratification was flexible rather than rigid, however, and the
processes of moving up and down differed from period to period and generation
to generation. Analyses of class positions in the GDR and of the shifts between
them have yielded a number of findings (see, for example, Solga 1995, pp. 208, 212).
First, structural mobility, particularly collective class mobility, waned after the
establishment of the state socialist order in the GDR. Second, the risk of down-
ward mobility into the working class also declined, as did the chances of upward
mobility into the socialist service class, and ways for children of members of the
service class to remain in that stratum later improved. Third, traditional marriage
patterns persisted, with people usually choosing partners of the same social origin.
Fourth, the number of womens independent occupational trajectories on a par
with mens careers multiplied. Fifth, earlier studies showing loyalty to the system
to be crucial for successful careers in the socialist service classes have been borne
out.
These data support the proposition that a state socialist class society (Solga
1995, p. 208) emerged in the GDR (Wehler 2008, pp. 216229). They also validate the
hypothesis that the social structure in the GDR was molded in great part by political
influences, including social policy. Moreover, such research has proven that the
privileged classes reproduced themselves in the GDR as well and that the young
6 Outcomes of Social Policy 99

generations thereby encountered more and more career obstacles, especially in the
1980s. Entries to managerial functions were also affected by a rigid political
selection process, the key factor being demonstrated loyalty to the SED regime
and active participation in the SED and societys mass organizations. Analysis of
the GDRs class structures also confirms that gender differences were curbed,
mainly through the effects of economic, educational, and family policy (pp.
207209).
The analysis of the social structure of East German society has also brought to
light a high degree of status inconsistency. Key characteristics of the social struc-
ture such as income, performance, qualification, consumption opportunities, status,
and mobility had no consistent, correlative relationship; instead, they were a
function of political positions and decisions and of informal relations (Meuschel
1992, p. 227). This scale of status inconsistency was a two-edged sword. It could
serve to stabilize rule, and to that extent it was welcome in the eyes of the political
leadership. But it was inimical to a meritocratic orientation to ones occupation and
thus diminished initiative and drive.
In addition, studies on the social structure of the GDR show that the reduction of
old inequalities and the creation of new ones rested on relatively modest and
incoherent prosperity on the whole. Taking stock of the material living conditions
in the GDR, Schwartau and Vortmann (1989), for example, have pointed out
ambiguous outcomes. Things were more or less satisfactory in a quantitative
sense. No one had to go hungry, and consumption was steadily rising. Qualitatively,
however, supply left much to be desired. Nonbasic consumption goods, including
luxury items, were scarce or unduly expensive and inordinately hard to come by.
Environmental impacts were high as well. In particular, the use of brown coal
(lignite) in the 1980s had increased to hazardous levels, even becoming intolerable
in some regions. The public infrastructure languished, with streets and railroads in
poor shape and the utilities and waste disposal systems prone to breakdowns. The
telephone network was not up to standard and did not lend itself to advanced
telecommunication technologies. The tourist industry lacked quality, and housing
was still plagued by dilapidated old buildings. The cause of this neglect lay not only
in the mediocre economic strength of the socialist planned economy. The demise of
basic public services outside the realm of social policy also mirrored the fact that
resources were siphoned into the structures of the planned economy and the
disproportionately large welfare state.
The social policy of the GDR contributed to the differentiation of social
positions, too, and even more so to their destratification. In the end it actually all
resulted in what tended to be a modernity of little people (Merkel 1999, p. 15; see
Ritter 1998, p. 186, who speaks of a society of little people) rather than a society
structured along new status distinctions. But it was a modernity with an autocratic
political leadership.
The upward and downward mobility to which East German social policy gave
rise came not only from the creation of jobs and managerial functions in the welfare
states countless institutions but also from the conferral of or exclusion from
privileges, as with training programs, or from distinction between social benefits.
100 Social Policy in the German Democratic Republic

The party-states official view on social structures and classes could not explain
these processes. The perpetual differentiation between the ruling working class
and its allies chiefly the intelligentsia, the peasants in a cooperative society,
and other working strata (see Grundmann et al. 1976; Manz and Winkler 1979,
1988; Weidig 1988) did not give great insight into social policys distributive
effects and the stratification of East German society. Without question, living
conditions had been equalized more than ever before in Germany. The avenues of
upward mobility were indisputably numerous among politically loyal and espe-
cially committed workers and children from the homes of workers, especially in the
1950s and 1960s. But there was little visible of the rule of the working class, as it
was officially called. The people of the GDR were not oblivious to that discrepancy,
however. They clearly saw that the working class, purportedly the ruling class,
did not occupy the upper part of the stratified pyramid but rather the bottom. As one
quip put it, the path of someone relegated to the production sphere was called the
plummet into the ruling class (Niethammer et al. 1991, p. 44).

6.3 Legitimating and Delegitimating Functions of Social Policy


in the Honecker Era

6.3.1 Eternal Progress: The Official View of Social Policy in the GDR

The top ranks of the GDRs party and state leadership had hoped that social policy
would bring huge economic and political benefits. It was supposed to pave the way
to economic performance, spur it on, and serve as socialisms watchword both at
home and abroad. Other hopes were that social policy would strengthen the
populations compliance, win confederates for the SED, and as found by nearly
all western researchers on the GDR impart legitimacy to compensate for the SED
regimes structural want of it (see, for example, Meuschel 1992; Pollack 1997;
Schroeder 1998). Indeed, Pollack (1997) maintains that the central issue with the
SED state was its dearth of political legitimation (p. 131). Were these goals
achieved?
The state and the party claimed that East German social policy was an everlast-
ing success. Messages to that effect commonly contained formulations like the
developmental trends of social insurance in socialism are always in harmony with
societys development as a whole (Scheel 1975, p. 27). That statement may simply
have been written without much thought. It may also have had its share of
propaganda and may have resulted from unshakable faith in a never-ending cor-
rectness of socialist policy. But it was no exception. The reflex of many East
German scholars was to certify that the social policy of the GDR was a success.
According to one text authored by a group of experts from the GDR, measures and
activities of social policy promote the working populations identification with the
objectives of the SEDs policies and lead to new initiatives, especially in socialist
competition (Autorenkollektiv 1975b, p. 11), resulting in the desired improvement of
6 Outcomes of Social Policy 101

labor productivity. This unsubstantiated, categorical, and blinkered pronouncement


stands for many more. To believe this tract and a host of others like it, social policy
seemed to have no serious gaps, failures, side effects, or troublesome repercussions.
The documents suggest that the great majority of the functionaries in the SED
state were genuinely persuaded that its social policy was a success. Few officials
expressed themselves as reticently as former SED Politburo member Gunter
Schabowski has.80 Looking back on East German social policy, he commented
that it was the only thing the GDR had to offer . . . with which it could define its
socialist character (G. Schabowski, interview, Bremer Nachrichten, 30 September,
1992, p. 3, as quoted in Schmahl 1992a, p. 41). Other people, including representatives
of the bloc parties, spoke with greater conviction. For instance, Manfred Gerlach,81
the chairperson of the Liberal Democratic Party of Germany (LDPD) in the GDR,
retrospectively lauded the social policy of the GDR:
What is said today as a reproach justifiably in many respects that the state in the GDR
provided for everything from the cradle to the grave was to my mind a tremendous asset.
The right to work, housing, education, free health care, nursing care in old age and in case
of disability those were not just constitutional principles on paper. There were no
unemployed people, no homeless persons, no children without prospects for training or
advancement for want of parental money, no sick people whose chances for treatment were
restricted for financial reasons, no old or handicapped persons without any kind of security.
There were no drug addicts, no AIDS problem, and no prostitution to speak of. The GDR
was one of the countries with the lowest crime rate. There was steady income from wages
and salaries at what for a long time were low prices, low housing rents, [and low charges
for] basic goods and services. Millions of new housing units were built, though old
buildings did decay. There was the network of day-care centers and nursery schools, the
generous financial and material support of general and higher education. There were
medications and treatments, including cosmetic interventions, available at no charge.
There was the accommodation of the aged in retirement and nursing homes at low rates
with medical care and cultural activities (Gerlach 1991, p. 368).

Gerlach was not the only one to praise social policy. Niethammer (1993), too,
notes that the right to work enjoyed particularly great respect, as reflected by the
fact that the policy of job security was cited positively also by most visitors.
Commenting on the findings of an oral history approach, he states: For all the
criticism of other dimensions of life, there was no one in the GDR who did not extol
job security as the main advantage of socialist society (p. 145). In principle, most
of the population prized social policy, an opinion known from demographic surveys
in the GDR (though the utility of their findings is usually compromised by inappro-
priate methodological foundations and distorted interview settings). For example,
social policy was usually rated better than other policy areas. And on the item
inquiring about where socialism was superior to the system in the West,

80
Gunter Schabowski (1929), editor-in-chief of the SEDs central organ, Neues Deutschland
(19781985) and member of the Politburo of the Central Committee of the SED (19841989).
81
Manfred Gerlach (1928), born in Leipzig. He also served as Chairman of the State Council of the
GDR (6 December 19895 April 1990).
102 Social Policy in the German Democratic Republic

respondents put social policy ahead of all other policy fields (see Niemann 1993,
pp. 49, 406; Ritter 1998, p. 163).

6.3.2 Stabilization Effects of Social Policy

For the most part, social science research in the West, too, has meanwhile tended to
argue that social policy in the GDR helped stabilize the SED regime (e.g., Meyer
1989, p. 426, 1991a; Niethammer 1990, p. 65, 1993, p. 145; Schulz 1997). Many
observers trace that stabilization mostly back to the 1970s (e.g., Boyer and Skyba
1999a, b). They state that social policy brought about or reinforced compliance and
consumption-oriented adaptation by providing goods and services that protected
against income loss due to major risks, such as sickness or invalidity, and by
guaranteeing at least a minimum livelihood. The stabilization theory is occasionally
corroborated in these terms. Other commentators agree that social policy at least
intermittently succeeded at building a more solid bridge between the rulers and the
ruled (e.g., H ubner 2008; Meyer 1991b; Michalsky 1984). They usually point to the
generally positive reception of social policys upgrading in the 1970s, the recogni-
tion of social insurance, and the esteem in which company-based social policy was
held (as discussed at the outset of this section). In their studies, too, the right to work
is seen as a prime source of legitimation, with most of the population deeming it an
outstanding triumph.
It is to the credit of East German social policy that it compared well on average to
that of other socialist states in central and eastern Europe (von Beyme 1975, 1984) a
result that was a source of pride to many people in the GDR (Niethammer 1990,
p. 65). The East German leadership pointed out these merits to anyone such as the
reformers in the Gorbachev era who wanted to sweep away the long-standing
achievements and to risk innovations. It was declared that reforms were not needed,
for East Germans had managed better than those who now sought their deliverance in
rash reforms. Besides, so went the argument, social inequality was greater, and the
political situation less stable, in the countries that had pursued the most radical
reforms, specifically Hungary, Yugoslavia, and Poland (see Meyer 1991a, p. 329).

6.3.3 The Two Faces of East German Social Policy: Legitimation


and Delegitimation

In-depth studies also stress the limits of the legitimation afforded by social policy in
the GDR. East German social policy had contradictory effects, fostering recogni-
tion, inciting protest, and leading to apathy. Sociologists and social historians who
have studied the East German welfare state have shown that both legitimation
and deligitimation have to be weighed (see especially Boyer et al. 2008; Hockerts
1994a, b; H ubner 1999b; Lepsius 1994a, b; Ritter 1998; Wehler 2008, pp. 342346).
On the whole, socialist achievements such as full employment and health care were
accepted by the population. But they were less robust in propping up authority
6 Outcomes of Social Policy 103

across the board than the rulers had hoped. Not that the SED state lacked backing; its
confederates and followers added up to an impressive array of adherents. The nucleus
of this group consisted of more than two million SED members, first and foremost the
party cadres, the functionaries of societys mass organizations, the members of the
security organs and the military, not to mention most of the dependents of these
groups. The roots of the SED state and its brand of socialism were no doubt strongest
in this part of society. Beyond it, however, the bonds between state and citizen
obviously weakened and became brittle. The submissiveness (Niethammer 1997,
p. 314) of the East German population at large may well have usually been mistaken
for legitimacy of the SED state.
The counterproductiveness of the GDRs social policy, as opposed to the
stabilization that was sought, must also be remembered. It elicited approval and
vehement protest alike. Confrontation with cases of social policys blatant
underperformance fed discontent, as attested by the high number of petitions related
to matters of social policy (see Bouvier 2002, pp. 313327). Suggestions, notices,
concerns, and complaints were constitutionally legal and legitimate ways to com-
municate interests to representative bodies, their members, or state and economic
organs. Such petitions were a kind of partial surrogate for the administrative court
system that had been abolished in 1952. They were more than just constant carping
and frequently centered on working and living conditions. Housing was another
inadequately met social responsibility. So were the provisions for old age, with the
usually low, extremely leveled retirement pensions spawning immense frustration.
Many pensioners and working people in the upper age brackets were galled by the
inattention to life circumstances and risks such as those endured by many aged
retirees and other groups not (or no longer) related to the production and reproduc-
tion process of East German society. Their displeasure stemmed also from the
preferential treatment that the GDRs pronatal population policy and employment
policy gave single parents and families with children. In many cases people saw
such favoritism to be illegitimate Sozialpolitik ohne Vorleistung, or handouts as
social policy (the argumentation and the expression are from Dr. P. Hubner,
personal communication, 4 April 2000).
According to Lepsius (1994b), the East German welfare state suffered from
waning cohesive strength (p. 24). Analyses of the petitions bearing on social
policy support this view. Those filed during the 1980s in particular reflect dwindling
faith in the accuracy of the SEDs official avowal of its success in social policy
(Bouvier 2002, p. 321). This loss of cohesion had several reasons. For example, social
policy did meet basic needs but not the rising demand for nonbasic consumption
goods. And the older East German socialism grew, the stricter the standards became
against which it was measured. These trends lay at the bottom of the complaint
widely heard in the late 1960s and early 1970s: And that after 20 years of the
GDR! (Boyer 1999, p. 40, note 8). People could point out the flaws all the more
emphatically in the GDRs third and fourth decade. They were one of the grounds
for the perceptible sullen loyalty (Ludtke 1994) among the industrial workers of
the GDR. In addition, social policy of the GDR since the 1970s required more
legitimation than before. One reason was the higher priority put on the idea of social
104 Social Policy in the German Democratic Republic

protection after the change of power from Ulbricht to Honecker. Another was the
governments policy vis-a-vis West Germany, which was enhancing the chances of
travel to the Federal Republic of Germany82 and thereby tending to raise
the standards applied to social policy in the GDR rather than keep them constant. A
third mechanism wearing away the cohesive strength of social policy was the fact
that most of the population no longer perceived low housing rent, reasonably priced
basic goods and health services, and other positive aspects of social policy as an
achievement of economic and social policy. According to Siegfried Wenzel, former
Deputy Chairperson of the State Planning Committee of the GDR, people con-
sumed these benefits as something taken for granted, coveting instead the supe-
rior quality, wider range, and sometimes lower prices of consumer goods offered in
the [West German] market economy (interview, as quoted in Pirker et al. 1995,
p. 119). The population had become accustomed to the social benefits, thought of
them as an automatic part of what they considered fair wages, and no longer saw
reason to acknowledge them in particular. What is more, the persistent scarcity of
consumer goods plainly signaled to the East German population every day that the
economic power of socialism was not all it was said to be.
These shortcomings of the GDRs social policy were hardly conducive to
legitimacy, yet they were not the only ones limiting it. Still another was something
researchers have discussed primarily as the intensified emphasis on socialist pater-
nalism: the fact that social policy consigned its citizens to the role of policy
recipients far more than was the case in western countries (see especially Meyer
1991b, passim; Opp de Hipt 1989, passim). To the extent that this status robbed the
citizen of opportunities to take personal initiative (which was resisted as undesir-
able insubordination), the leaders of the GDR could see their social policy as
compatible with their system and ideology. But such disempowerment simulta-
neously fostered passivity and a mentality of entitlement. More than anything, it
thwarted what the partys official ideology alleged to be the actual purpose of social
policy in the GDR: to develop virtues fitting for a politically loyal, economically
productive, and socially constructive, cooperative socialist personality (Meyer
1991b). However, there was hardly any evidence of such a personality, a vacuum all
the more ominous because the much ballyhooed unity of economic and social
policy was only a rubber check.
The legitimacy of social policy in the GDR was also perilously thin compared to
that of social policy in western countries, especially the Federal Republic of
Germany. It was the Achilles heel of East German socialism. Although the
GDRs social policy usually held up well against that of other socialist countries

82
Travel from the GDR to the Federal Republic of Germany consisted mostly of retirees. From
1967 on, the annual number of these journeys exceeded one million, with the trend increasing. The
tally in 1987 was 3.9 million journeys; in 1988, 6.75 million. In most years, the number of trips
from the Federal Republic of Germany and West Berlin to the GDR or East Berlin surpassed those
in the opposite direction. In 1979, for example, 7.4 million crossings were counted (Grosser et al.
1996, p. 259).
6 Outcomes of Social Policy 105

(Meyer 1991a, p. 392), EastWest comparisons left many East German citizens
feeling that their countrys social accomplishments, including the social benefits,
were mediocre, often unsatisfactory and unattractive, or simply inadequate. Much
of the social and private consumption in the GDR was not up to the mark: backward
technology, poor-quality service, low purchasing power of wages and social
income, and the quantitatively and qualitatively insufficient range of nonbasic
consumer goods (see Merkel 1999, passim). Moreover, the GDR economys medi-
ocre level of productivity left national prosperity including the level of private and
public consumption far behind that of the advanced western industrial countries,
such the Federal Republic of Germany. This lag depreciated the social
achievements of the SED state to charitable acts that the vast majority of East
German citizens willingly accepted yet ultimately traded in at the first chance in
order to share fully in the benefits of West Germanys social market economy. In
this sense, the stability of the GDR proved illusory (see Hurtgen and Reichel 2001;
Vollnhals and Weber 2002).83
Social policy did not free the GDR from its legitimation trap by the close of
the Honecker era (Brie 1996, p. 44). It was not strong enough to bestow a relatively
high, stable degree of output-centered legitimacy beyond the followers and most
important confederates of the SED state. And in much of the population its intended
educational contribution to the socialist way of life degenerated into mere
materialism. Social policy did little to strengthen the socialist morals supposedly
based on the ten commandments of socialist morals propagated at the Fifth Party
Congress of the SED (1958).84 The fragility of rule in the SED state aggravated the
situation. This state could not invoke traditional grounds for legitimacy (all of
which had been eliminated during the march to socialism). Nor could it lay claim to
a rational, legal type of legitimate authority (which was superceded by the suprem-
acy of the SED). It could not draw legitimacy from charisma, either (which was
ruled out by the mediocrity and incompetence that was largely typical of the

83
Special studies point in a similar direction. On youth policy, for example, see Skyba (2000).
84
The ten commandments, which were formally adopted at the Sixth Party Congress of the SED
[1963], read: 1. You shall always champion the international solidarity of the working class and
all working people as well as the steadfast bonds of all socialist countries. 2. You shall love your
Fatherland and be prepared at all times to invest all your strength and ability to defend the power of
the workers and peasants. 3. You shall help eradicate the exploitation of humans by humans.
4. You shall do good deeds for socialism, for socialism leads to a better life of all working people.
5. In building socialism, you shall act in the spirit of mutual aid and comradely cooperation,
respect the collective, and take its criticism to heart. 6. You shall protect and increase national
property. 7. You shall strive to improve your performance, practice thrift, and strengthen socialist
work discipline. 8. You shall raise your children in the spirit of freedom and socialism to be
broadly educated and physically steeled persons of solid character. 9. You shall lead a clean,
decent life and respect your family. 10. You shall act in solidarity with the peoples struggling for
their national liberation and defending their national independence. (Minutes of the proceedings
of the Sixth Party Congress of the SED [1963], pp. 297298, as quoted in Thomas 1974, p. 136).
106 Social Policy in the German Democratic Republic

countrys leadership). The GDR therefore remained a predicament for the political
leadership, a polity without sufficient loyalty and legitimacy, or, in the language of
Aristotles theory of the state, a state with a relatively small rule by friends and full
of enemies (Aristotle 1990, III, 11, 1261b, 30).85 The social policy pursued
throughout the Honecker era mitigated this flaw but changed nothing essential in
it. As of the first quarter of 1990, the GDRs new social policy, which was designed
with German unification already in mind, no longer focused the populations
expectations on the old GDR state but rather on a fundamentally different model,
the West German welfare state.

6.4 The Lost Unity of Economic and Social Policy

6.4.1 The Repressive Welfare State

Unlike the expansion of social policy in the countries of the West, that in the GDR
coincided with persistently high government spending on the military and with
mounting expenditures for domestic surveillance and repression within society
(Buck 1999, pp. 12111212, 12151223). Having committed itself to achieving both
greater social security and more state security (see Schroeder 1998, pp. 643646;
Suckut and Su 1997), the GDR turned out to be a repressive welfare state (Schroeder
1998, pp. 643648; Vollnhals 2002). That outcome alone put a twofold strain on the
state budget and the economy. A second determinant was even more important the
fact that social policy was stretched thinner and thinner between the promise of
consumption and the pressure to innovate (Steiner 1999, p. 153) and between
competing goals of social protection and economic efficiency. Some of the reasons
owed to social policy itself (e.g., the growing costs of job security and strict protection
from dismissal); others, to deteriorating external conditions (Gutmann 1999; Maier
1997, pp. 6264, 7897; Wiards 2002).

6.4.2 The Increasing Trade-Off Between Social and Economic Policy

One of the now widely established research findings on the GDR is that the desired
unity of economic and social policy receded into a remote future and gave way to an
ever more fixed trade-off between social protection and macro- and microeconomic
performance (see, for example, Steiner 2003, pp. 253257; Wehler 2008, pp. 88107).
The number of people who concur is large, though the reasons differ. To Schurer, as the
chairman of the State Planning Committee of the GDR, social and economic policy

85
In Aristotles treatise, this kind of state is one whose many poor people are excluded from public
affairs and therefore potentially become enemies of the ruling structure and destabilize the state.
6 Outcomes of Social Policy 107

under Honecker was contradictory from the outset and inherently carried the seed
of bankruptcy (Sch urer 1998, p. 151). Schurer later put it more pointedly, as in the
29th session of the German Bundestags Inquiry Commission on Overcoming the
Impacts of the SED Dictatorship in the Process of German Unification (12th
German Bundestag). He explained that it had been clear as early as 1972, after
presentation of the SEDs social policy program to the Politburo, that the primacy
of politics over the economy from the Ulbricht era had survived intact, the only
difference being that Honecker and his team wanted to distribute more than could
be produced (Sch urer 1999a, b, p. 167).86 This view was basically borne out by some
members of the SEDs leadership apparatus, such as Carl-Heinz Janson, who was
for many years a department head in the Central Committee of the SED and a
subordinate of G unter Mittag. Janson (1991) saw the oversized social policy
(p. 63) as one of the main causes of the widening gap between consumption and
investment. Others judged the situation similarly. Social policy had come at the
expense of investment (S. Wenzel, interview, see Pirker et al. 1995, p. 119). The
polarity between an economy of scarcity and consumption policy, including
ambitious social policy, had become greater and greater (e.g., Kaminsky 2002, p. 81;
on the context from the perspective of an economic historian, see Steiner 2003).
Schalck-Golodkowski87 (1995) tersely stated that the highly touted unity of eco-
nomic and social policy had been the nail in the GDRs coffin (p. 169; see
Przybylski 1992b, pp. 4950).
Economic analyses show that planning and economic policy experts were not
the only ones in the GDR to point out severe goal conflicts between economic
and social policy since the early 1970s or 1980s. Hubner (1998), citing a multitude
of concurring interpretations, spoke of social policy eating away at real assets
(p. 74). Previous analysts of social structure had also seen the unsolved social
question of East German socialism to be an eminent cause of the GDRs economic
plight and of the rising tension between social protection and the economy (Adler
1991a, p. 171). To these observers, the trouble lay in the countrys diminishing
economic efficiency, which reduced the legitimating effect of personally tangible
improvements, the scope for paternalistic pacification of society, and trust in the
future ability to master difficulties. There is also substantial agreement that East
German social policy was inimical to meritocratic principles (Niethammer 1997,
p. 327). Another common opinion was that the growth in the living standard in the
1970s came about at the cost of economic opportunities in the 1980s (e.g., Ritschl
1995, p. 42) and that social policy had overtaxed the economy (Boyer and Skyba
1999a, b). Many observers subscribed to the view that there existed a policy of

86
On the primacy of politics in the Ulbricht era, see Hoffmann (2003), the subtitle of whose book
aptly captures the dialectic of the supremacy of politics: Forced restructuring and abortive
modernization.
87
Alexander Schalck-Golodkowski, head of the Agency for Commercial Coordination in the
Ministry of Foreign Trade (19661989) and Undersecretary in the Ministry of Foreign Trade
(19751989).
108 Social Policy in the German Democratic Republic

unsecured social benefits (Kaiser 1997a, p. 456; Wolle 1998), a standpoint that had
already been developed by sociologists (see especially, Lepsius 1994b, pp. 2324;
1996) and social historians (particularly Hockerts 1994a, b, 1998, 1999). The
hypothesis of an escalating conflict between social and economic policy was
supported by assessments written more than a decade apart. The strategy of material
pacification through social policy had undermined its own economic foundations.
The process undermining the economic foundation of social policy was reinforced
by the very strategies that were supposed to help achieve the so-called principle
task. Despite warnings from experts that the social and employment policies were
incommensurate with the strength of the economy, the measures were retained even
after they began eroding the capital stock (Skyba 2008a; Boyer 2008a).
The data on the structure and trends of investment and consumption in the GDR
from 1949 through 1989 confirm the continued neglect of investment (Baar et al.
1995, p. 66). The GDRs own official statistics stressed the critical situation
surrounding social policy. The upgrading of social policy in the 1970s was
accompanied by a rate of capital investment (i.e., accumulation rate) that had
been declining since 1970 and by consumption, which accounted for a growing
share of the national income (Statistisches Amt der DDR 1990, p. 106). Obviously,
social consumption, especially social policy, had gained importance from the 1970s
on. And the investment rate was falling in a manner that Marxist political econom-
ics said should actually happen only to the profit rate in the capitalist West.
Furthermore, the new information and communication technologies showed no
sign of catching up. In other words evidence abounds that a serious trade-off had
indeed evolved between social protection and economic strength in the GDR.
Nevertheless, it is necessary to check carefully whether this argument holds up
under scrutiny. Do the findings conclusively show that the aspirations of the SED in
the field of social policy were solely, or at least mainly, to blame for the countrys
economic woes? How compatible is this judgment with the findings on social policy
in the narrow sense (i.e., social benefits in the classical systems shielding against
income losses due to accidents, illness, disability, age, and death of the breadwin-
ner)? They show that East German social policy was riddled with holes. The SED-
state did not prove itself generous in key areas of social insurance. Provisions for
old age were underfunded. The share of the states net material product represented
by government expenditures on old age in general was not lavish, either less in the
GDR than in Czechoslovakia from the 1960s on (calculations based on International
Labour Organization 1996, p. 75). The situation looked even worse for people needing
nursing care and for persons with disabilities.
The comparable international data relating to the GDRs efforts in social policy,
as measured against the ILO rates of public spending on social services, for
instance, also fail to deliver outright proof that social policy overtaxed the econ-
omy. Despite widespread opinion in the East German scientific community (e.g.,
Manz 1992, p. 14; Brie 1996, p. 96), figures from the International Labour Organi-
zation (1996, p. 75) show that the GDRs rates remained at an intermediate level:
15.6% of the countrys net material product, a figure plainly above those of the
Soviet Union (10.8%) but far below Czechoslovakias (21.8%). Although the GDR
6 Outcomes of Social Policy 109

had an above-average percentage of senior citizens88 and both a higher percentage


of people at work and greater economic strength than the other socialist states, the
share of East Germanys GDP accounted for by social service expenditures
was remarkably not even above average. Compared to the prevailing interna-
tional trend, it was even a few percentage points too low (see Schmidt 1989, 2005d,
pp. 236244).89
Without further explanation, none of these facts is consistent with the notion of
tension between social protection and economic strength. This mismatch by no
means weakens the thesis that the GDR had maneuvered itself into a tough trade-off
between social policy and economic performance. But it does need to be spelled out
with greater precision. Social policy in the narrow sense was not extravagant in East
German socialism. The cause of the undue strain on the GDRs economy lies
elsewhere. The overload on the economy stemmed from the cumulative weight of
the GDRs welfare state, namely, the interaction between (a) social insurance
policy, (b) the profligate subsidization of basic goods and services, (c) the costs
and subsequent financial impacts of defending the right to work through rigid job
security, (d) the inflation of labor costs because of the company obligation to design
work schedules favoring mothers and children-rearing, and (e) the excessive equal-
ization of wages, which reduced productivity, and its attendant reinforcement of the
mania for egalitarianism.
The East German welfare state did in fact steer itself into a trap with these social
policies. They were expected to achieve too much at once job security, social
protection, wage equalization, and stable prices for basic goods and the concomi-
tant trade-offs with macro- and microeconomic performance were disregarded.

6.4.3 Welfare State on Credit: The GDRs Foreign Debt Predicament

Additionally, the GDR found itself ever more ensnared in domestic debt. The
country could still have managed the situation in an emergency, but the entrapment
in foreign debt, especially that pegged to hard currencies, was a thorny matter. The
Politburo was informed of the problem early on but usually ignored it or dismissed
it as exaggerated (see the strong case made in Pirker et al. 1995). However, the
Politburo was alarmed on 31 October 1989, by a document that Egon Krenz,
the SED party chief at the time, had requested from Gerhard Schurer, the chair of
the State Planning Committee. It contained a revealing sentence: More was
consumed than we had produced ourselves (Schurers Krisenanalyse 1992,
p. 1114). Schurer added that overindulgent consumption had come primarily at

88
Though the share of the population at retirement age in 1989 (16.2%) was less than its peak of
19.5% in 1970 (Statistisches Amt der DDR 1990, p. 64), this figure was very high by international
standards.
89
This finding is based on international comparative analyses with bivariate and multivariate test
models and is not weakened by the accurate observation that the GDR, unlike western countries,
had no notable social insurance expenditures on unemployment.
110 Social Policy in the German Democratic Republic

the price of debt in the nonsocialist economic region (the GDRs official term for
western countries) and that this debt had swelled from to 2 billion valuta-marks
(nearly U.S. $1.09 billion)90 in 1970 to 49 billion (U.S. $26.6 billion) in 1989. In
other words, as explained in Sch urers paper, social policy since the Eighth Party
Congress [1971] has not rested entirely on our own output but has instead led to
growing debt in the non-socialist economic region (p. 1114). Schurers picture of
the GDRs disastrous economic situation culminated in the widely quoted sentence:
Capping the debt alone would require a 2530% reduction in the living standard in
1990 and would make the GDR ungovernable (p. 1119). But, wrote Schurer, even
if such sacrifice were to be demanded of the population, it would not be possible to
achieve the export surpluses necessary to remain solvent.
Schurers diagnosis in October 1989 held that the GDRs economy and social
policy could not be maintained for long without a drastic change of course and the
serious repercussions it would entail for the state and the economy. In his opinion,
the prospects for the countrys population were gloomy. Overall, this conclusion is
correct, though recent calculations indicate that the scope of the debt was consider-
ably less dramatic than Sch urer had assumed. According to retrospective estimates
by the Central Bank of Germany (Deutsche Bundesbank), the GDRs foreign debt
in the non-socialist economic region had indeed surged to 19.9 billion valuta-
marks (US $10.8 billion), not 49 billion (Deutsche Bundesbank 1999; Volze 1999a, b).
Moreover, one must distinguish between risky and less risky foreign debt. The crux
of the problem was not the debt to the non-socialist economic region as a whole, for
that figure included both the less menacing sum owed to developing countries and
the loans the GDR received through intra-German trade. The really exposed risks
lay with hard-currency debt and the liquidity in convertible currencies (Volze
1999a, p. 163). East Germanys leadership had embarked on a treacherous adven-
ture with them (p. 163), one whose hazards had already been apparent in the 1970s
(Skyba 2002; Steiner 1999, 2003) and had become greater in the 1980s. One of its
major causes is the fact that the course of social policy did not change.
Was the GDR bankrupt by the end of the 1980s? Certainly not in the short term,
for it had been able to contain the liquidity crisis. The room for maneuver in late
1989 was initially larger for the East German economy and for social policy than
Sch urers balance sheet would have one believe. But the end was in sight. The GDR
forestalled the liquidity crisis only with a Pyrrhic victory: generating sales on
foreign markets at a growing loss (Volze 1999a, p. 161). The future held no
prospect of improvement in the countrys innovation, labor productivity, or foreign
trade. The tension between economic and social policy had irrefutably reached a
critical level. The bid for unity of economic and social policy in the GDR had failed
once and for all.

90
The valuta-mark was a statistical unit of calculation that the GDR had used for all its foreign
trade accounts since the mid-1960s. Its exchange rate derived from a certain relation to the
transfer ruble. The exchange rate in relation to western currencies fluctuated with the changes
in parity values between the ruble and the convertible currencies.
6 Outcomes of Social Policy 111

Like a deus ex machina, however, a way out of the crisis appeared a few months
later the monetary, economic, and social union with the Federal Republic of
Germany on 1 July 1990 and the accession to that state three months thereafter
(Ritter 2007a, b).

6.5 Political Causes of the Trade-Off Between Social Protection


and Economic Performance

Why did the GDRs political leadership never veer from its soft, rather populist
course in social policy, though it did not shrink from trampling on the interests and
even the rights of the population in other policy areas? Why did it not dig in its heels
and massively cut back on social policy, even against the will of the people if
necessary? Despite the most egregious economic inefficiencies, the SED leadership
flinched from making the necessary changes. This astonishing inaction calls for
explanation.

6.5.1 The Long Shadow of 17 June 1953

All observers agree that this aversion was partly due to the traumatic repercussions
of uprising in East Berlin and in many other cities in the GDR on 17 June 1953. Any
political decisions that could retrigger events like the ones experienced on that day
were shunned by the SED like the devil shuns holy water. The leadership exercised
particular caution when dealing with bread-and-butter issues, especially wage and
social policy: After June 1953, the SED cadres who had risen from the ranks of the
workers never again dared test how those they had left behind at the workbench
would react to wage cuts (Niethammer 1997, p. 327). This argument, which
encapsulates innumerable findings of similar tenor, applied to social policy as a
whole from the 1970s on.

6.5.2 The Programs Inherited Burdens

Both the legacy of past policies and programs and the SEDs resulting interpretation
of reality precluded a firmer stance on social policy than the one the party took.
After all, the SED was, by ideology, platform, and organization, a party rooted in
the tradition of the socialist and communist wing of the German workers move-
ment. It saw itself as striving to build a better society, which, as a long-term
objective, was understood to mean a society unfettered by destitution, unemploy-
ment, or differences between classes or status groups and marked by a culmination
of productive forces. That vision was not just propaganda; it was also a utopian
history of salvation inspired by Marxism-Leninism (Bender 1991; 300). It grew
112 Social Policy in the German Democratic Republic

from the experience of precarious existence that shaped most of the SED leadership
under Ulbricht and Honecker and predisposed them to a social policy guaranteeing
security.
Furthermore, the East German leaders had increasingly become prisoners of
their own tenets when it came to social policy. Anyone who constantly calls for the
benefit of the many finds it hard to reduce or eliminate social or economic benefits
once they have been granted. Despite immense foreign-trade complications, the
leadership felt itself confirmed in its convictions by the Central Committees
rationale for steadfastly pressing on with the economic and social policy adopted
at the Eighth Party Congress (1971): The fundamental political lesson that the
level of social policy, once achieved, must never be abandoned (Trumpler et al.
1980, p. 24).

6.5.3 Socialism in Half a Country

The thought of sharply cutting back on the benefits of social policy was bound to
come even harder to anyone who, like the GDRs political leadership after 1971,
had expressly not consoled the people with blessings of a distant communist future
but who had sought instead to satisfy their immediate material interests. It was
especially difficult for anyone presiding over socialism in half a country (Birke
1989, p. 408) and having an economically powerful and socially attractive neighbor
(the Federal Republic of Germany) that one impatiently wished to catch up to and
overtake or leapfrog beyond, as it was later cunningly formulated. That lot,
too, fell to the political leaders of East Germany.
More forbidding still was the competition with the western part of Germany, in
which the SED saw a social democratic peril (Stephan 1997, p. 66). As a coalition
partner in the Federal Republics federal government from 1966 to 1982, West
Germanys Social Democratic Party (SPD) had sought detente toward the socialist
states and had worked to expand the welfare state. To the East German leadership,
though, the SPD was a particularly treacherous opponent, not least because much of
the GDRs population had a liking for social democracy. That partiality, too, put
pressure on the East German leadership, which could not afford to retrench social
policy in any major way as long as the Federal Republic of Germany was governed
by Social Democrats. Even after West Germanys federal government passed in
1982 to Helmut Kohl and his coalition comprising the CDU, the Christian Social
Union (the CDUs Bavarian sister party, CSU), and the liberals (the Free
Democractic Party, FDP), East German party politics alone essentially ruled out a
restrictive social policy in the GDR. It would have made the East German govern-
ment guilty of what it reproached Kohls government for, albeit in grossly
exaggerated terms. Namely, the GDR would have been seen as resorting to
Sozialabbau (the dismantling of the social welfare), the belligerent term that East
German propaganda all too gladly adopted from West German Social Democrats
and union dissenters decrying the coalitions social policy in the Federal Republic
6 Outcomes of Social Policy 113

of Germany. (The diagnosis was erroneous on both sides of the border, however;
see Schmidt 2005a, b, c).
The interaction of social policy and the aspiring foreign policy aims of the GDR
leadership, above all the General Secretary of the SED, Erich Honecker, should not
be underestimated, either. A salient objective of Honeckers national policy was to
make the GDR presentable on the international stage. He was persuaded that it was
possible. Had not the GDR gained international recognition and to a degree
previously not thought possible shortly after Ulbrichts departure from the
scene? Had not diplomatic relations with other countries reached an all-time high,
with 24 countries recognizing the GDR in 1972? Had not that total climbed to 43
(including the United Kingdom and France) in 1973 (Fischer Chronik 1999,
p. 509)? These successes and social policy had enabled Honecker to close in on
his greatest goal, much later described by Schalck-Golodkowski (Schalck-
Golodkowski 1995): Honeckers greatest ambition was to win international
respectability for the first workers and peasants state on German soil and prove
it possible as it were, specifically in Germany, to put forward such a model of
society internationally at a high industrial and sociopolitical level and thereby
highly motivate the people [of the GDR] (p. 165). But given the GDRs rich
neighbor, the Federal Republic of Germany, that design made sense only if East
Germany managed to raise the performance of its economy and its society to a point
approaching that of West Germany. Hence, the leadership of the GDR strove to
catch up with, surpass, or even leapfrog past the West (p. 165). Taking this train of
thought further, one can see how there was no reason especially in the minds of
communist revolutionaries who wanted to bring heaven to earth91 to give ground
even in economically rough times like the 1980s.

6.5.4 Paralysis and Inability to Correct Mistakes

Was not paralysis also at work? Was not the GDRs leadership too old? Was there
not a paucity of qualified young leaders feeding into the system? Was not the
Central Committee attended by ever more comrades with hearing aides, as a
former member of the Central Committee quipped (see Hertle and Stephan 1997a,
p. 25)? The average age of the Central Committees members under Honecker
60 years in 1989 exceeded that of previous years; in the Politburo it was more than
66 years. There were few, if any, innovation-minded elites coming up through the
ranks. This scarcity stemmed mainly from the GDRs only mechanism for building
elites, the principle of nomenklatura the system of state-party controlled

91
The formulation is a variation on Wolf Biermanns impressive one-line portrait of Honecker
over the Phoenix television broadcast station on 30 September 2003, 8:15 p.m. to 9:00 p.m.: He
wanted to bring heaven to earth.
114 Social Policy in the German Democratic Republic

patronage to senior positions in the bureaucracy.92 The consequences constituted


yet another basic factor leading to a rigid policy that was oriented to the status quo:
Physically, the older generation of the communist party functionaries from the Weimar
period had reached the end of the road in 1989, [and] the generation of the Hitler youth and
flak auxiliaries was about to retire. The first age group shaped by the GDR had been kept
away from the levers of power. There were hardly any innovative young elite (Hertle and
Stephan 1997a, pp. 2526; see also Meyer 1991a).

No less revealing was the GDRs underdeveloped ability to correct mistakes, an


obstacle common to all autocratic regimes (Schmidt 1999). Such states, with their
predominantly hierarchical political processes, have little or no advance warning of
mortal danger. The political leadership in these states is usually so powerful that it
lulls itself into the false hope of not having to learn. It can then inflict heavy damage
on society, the economy, and, indirectly, itself by overregulating, overreaching, and
thereby further weakening its legitimacy and stability, which are fragile to begin
with.
These factors played themselves out in the GDR as well. The countrys political
system was not equipped with the rules and institutions of constitutional democ-
racy. It therefore did not accommodate diversity and . . . techniques for periodi-
cally reviewing policy (Zacher 1998, p. 511), which in functioning democracies
are more or less guaranteed by a political opposition, the mass media, and a wide
variety of interest associations. In other words, the system lacked the due process
and institutions allowing for the toleration and the clash of different viewpoints
that compel people to correct and learn from mistakes (p. 511).

6.5.5 A Disconnect Between Politics and Economic Considerations

Three additional powerful factors determined the inability to alter social policy
appropriately. First, the party and state leadership of the GDR saw itself as the
executor (Stephan 1997, p. 88) of a historic mission. This self-concept made
perseverance an obligation, particularly under adverse conditions. Second, the
leaderships profoundly politics-centered world view fortified that commitment.
Third, this world view was coupled with untrammeled faith in the steering capacity
of policy-makers and in the controllability of society. The optimism about control
was manifested not only in the idea of being able to ensure long-term full employ-
ment, competitiveness, and even development higher than that in western countries.
It also came through in the belief that all vital issues of society and the economy

92
This system precluded election, market success, and heredity as alternatives. The procedure of
filling the listed posts therefore always depended on the consent of the SED department responsi-
ble for the corresponding lists of appointees. In terms of ideological qualification, there emerged a
relatively homogeneous functional elite whose characteristic trait [was] its immobility (Weinert
1999, pp. 6667). Another factor was upward social mobility based on the specific opportunity
structures in the newly created workers and peasants state.
6 Outcomes of Social Policy 115

could eventually be aligned and managed as desired if one only had the will to do so
(Schonebeck 1994, p. 98).
This belief in political feasibility was accompanied by the circumstance that
economic considerations were alien to Honeckers policies (Weinert and Gilles
1999, p. 41). Having claimed the primacy of policy, Honecker and the leaders
around him imagined themselves at the commanding heights of government,
society, and the economy. All of them colossally overestimated the resilience of
the economy and society. In the early 1970s, experts warned Honecker against
overextending social policy and about the undue burden it would place on the
economy, but he and his followers threw caution to the wind (see Skyba 2002, pp.
5254, 78; Steiner 1999, p. 164). Warnings against dependence on international
economic relations received the same response. Foreign debt? What state was
without it (see Tisch 1995)? Indebtedness to western countries? It was not nice
and was no doubt politically risky should Moscow ever suspect it to mean too much
dependence on the West.93 But where was the supposed problem in economic
terms? Was it not instead that the GDR was leading the class enemy in the
West by the nose with foreign debt? Foreign debt actually had the charm of making
it possible to outmaneuver the class enemies with their own money (see Przybylski
1992b, p. 49, where the statement is attributed to Honecker).
The reverse side of the SEDs megalomania was its political vulnerability.
Because the SED professed it had overall responsibility for society and the econ-
omy and supreme jurisdiction over policy, all the concerns and needs of the
population were addressed to it. The SED thereby became largely answerable for
the major offenses and the minor nuisances alike for political repression, absence
of freedom to travel, and inadequate pensions as much as for the burst water pipe
(see Scherzer 1989). This psychological condition made the SED highly sensitive to
expressions of displeasure, protest, and overt or covert renouncement of allegiance.
It was especially ominous because the SED had no notable, reliable reserves of
legitimation beyond its immediate followers and confederates in the state appara-
tus, the party, and the mass organizations. For all the authority of the ruling party
and the SED state, they stood on thin ice, and the political control by the party and
state apparatus was amazingly inflexible on occasion (Kaiser 1997a, p. 455). The
events of 17 June 1953 had taught that lesson. That crisis had intensified the deep
insecurity of the GDR leadership and had exacerbated its predilection for paternal-
ism and paranoia (Fulbrook 1995, p. 22). The SED was utterly bent on preventing a
repetition of what happened on 17 June 1953 (see Weinert and Gilles 1999, p. 20;

93
Parts of the SED leadership did in fact take exception to the procurement of money from
Western countries. Members of the Politburo commented critically on this practice (probably also
to Soviet leaders). One of them was Werner Krolikowski (member of the Politburo from 1971 to
1989), who had an eye on the Tenth Party Congress (1981) when he accused the SED leadership of
having succumbed to the abominable practice of ideological coexistence (Przybylski 1992b:
60). He charged that the leadership was pursuing a policy of calling an ideological truce with the
Federal Republic of Germany and the United States for stinking money (p. 61).
116 Social Policy in the German Democratic Republic

Malycha and Winters 2009), which was officially called a counterrevolutionary


putsch attempt (Lexikonredaktion 1982, as quoted in Panskus 1986, p. 21). The
strict continuation of social policy was intended to serve this purpose as well.
The SEDs own doggedness Meuschel (1992) justifiably refers to the SEDs
immobility (p. 14) inflicted the party with paralysis and an inability to reform,
sapping the countrys economic strength more and more. Even dictatorial rule hits
limits, and the GDR was no exception (Bessel and Jessen 1996). As the East
German welfare state demonstrated, these limits included self-overestimation and
structural incapacity to correct mistakes.

7 The GDR in Comparative Perspective: A Socialist Work


and Welfare State

The East German welfare state up to the end of the Honecker era94 is difficult to
equate with any of the types derived from comparison of western industrialized
countries, whether one speaks of the institutional redistributive model of the
welfare state, the social insurance model, and the residual welfare state or, as
Esping-Andersen (1990) does, of liberal, conservative, and social democratic
welfare state regimes. Attempts to classify the East German variety founder on
the considerable heterogeneity of its welfare state, its special focus on job security
and price subsidization of basic goods, and its embeddedness in an authoritarian
state with a state-controlled union (the FDGB) as the authorized implementation
agent of social policy.
In short, the GDR had given rise to a heterogeneous, expansive, highly
interventionist welfare state (Hockerts 1994a, b; Polster 1990; Scharf 1988;
Vortmann 1989) with a social policy far more fragmented than that of the Federal
Republic of Germany (Manow-Borgwardt 1994). Based on employment and the
earned income of as many people as possible, the welfare state of the GDR
paternalistically guaranteed basic security for almost all East German citizens
from cradle to grave at a low level on the whole. This description seems compatible
with Hockertss (1998) suggestion that the social policy of the GDR added up to an
authoritarian caring state based on a planned economy (Versorgungsstaat, p. 7).95
But the East German welfare state also featured discrimination and favoritism, such
as the privileged old age-pension schemes that beneficiaries of the supplementary
and special provisionary systems could take advantage of. The system was marked
by coercion, exclusion of politically undesired people, and repression, too,

94
Changes in priorities and course as Germany headed toward unification are not discussed in this
section. See Sect. 5.4 for further information.
95
By contrast, Bouvier (2002) accentuates the supply-related character and dictatorial form of the
GDRs social policy by arguing that it be conceptualized as a Versorgungsdiktatur (p. 337), an
autocratic caring state that treats its clients as objects, not as autonomous citizens.
7 The GDR in Comparative Perspective: A Socialist Work and Welfare State 117

examples being the major inequalities in, or exclusion from, access to social
benefits generated by the political instrumentalization of social policy.
Unlike the welfare states of western countries, the one in the GDR was flanked
by an unusually large apparatus for surveillance and repression. The heterogeneity
of social policy and its coexistence with the police state as a whip have done much
to shape the conceptualization of the East German welfare state. Schroeder (1998)
has called attention to the duality of care and surveillance (Dualit at von

Versorgung und Uberwachung, p. 646). Jarausch (1998) proposes that the GDRs
dual sense of security (meaning both social and state security) be seen as a
provident dictatorship (F ursorgediktatur; Jarausch 1998). Indeed, the GDRs
security complex consisted of both welfare state and police state (Niethammer
1997, p. 318).

7.1 Social Policy in East and West and Across the Eastern
European Nations: Commonalities and Differences

Experienced cross-national researchers have revealed similarities between elements


of social policy in the GDR and the welfare state of other countries (Kaelble 1994).
Some of these analysts believe that the East German variety tended strongly toward
Sovietization. The health system, particularly its nationalization, repeatedly
serves as a case in point (Frerich and Frey 1993a, pp. 29, 205, 209), as do the weight
attached to the company-based welfare state, and the travel bookings, vacation
arrangements, and other popular services that the unions saw to for workers and
employees. Other commentators assert that the primary influence on the GDRs
social policy was the resort to traditions of the Weimar eras leftist parties, espe-
cially to platforms of groups associated with the communist party, the Unabhangige
Sozialdemokratische Partei Deutschlands (USPD), and the left wing of the SPD.

7.1.1 Sovietization and Domestic Roots of Social Policy in the GDR

The dispute over whether East German social policy harked back mainly to Soviet
practices or to the Weimar Republic does not lead very far. Both strands were
present, both were operative in the SED, and both figured in the process of shaping
social policy (see Frerich and Frey 1993a; Hockerts 1998; Hoffmann 1996;
Jarausch and Siegrist 1997; Klemann 2000). However, research results do suggest
a definite ranking of their priority. Building on the patterns of social and economic
policy that had been shaped by the socialists and communists of the Weimar
Republic was more important than Sovietization (see Hockerts 1998; Jarausch
and Siegrist 1997). Traditions going back to the 1880s played a surprisingly
significant role as well. For instance, formal retention of the social insurance
precept in the GDR was a legacy of Bismarckian social legislation, with its
118 Social Policy in the German Democratic Republic

principle of the group and of insurance (Lohmann 1987b, p. 281). Whereas social
policy in the Soviet Union had long clung to the heritage of czarist Russian culture
of officialdom and bureaucracy, with its patriarchal-paternalistic principle of care
(p. 281), the social policy decision-makers in the GDR only partly followed suit.
They established welfare state policies that only occasionally emulated Soviet
precedents, avoided Soviet-style pigeon-holing (Stiller 1983), and relied more on
funding social policy by means of premiums.
Another practice more important than Sovietization was that of borrowing from
the Weimar Republics plans for social reform. The GDRs polyclinics, for
instance, descended from the treatment centers that had been set up by the local
public health insurance offices of several cities governed by the Social Democrats
in Germany of the late 1920s. Both the rent freeze at 1936 levels and the almost full
protection of tenants were rooted mainly in the platform of the communist workers
movement of the Weimar Republic (Schildt 1998, pp. 178186). Such regulations
justify skepticism about the preeminence of Sovietization in the GDRs social
policy. Many changes in the social policy pursued in the Soviet occupation zone
and, later, the GDR were based on what until then had been non-dominant, rather
alternative lines of custom that had earlier influenced health care in the Soviet
Union. Some of the changes can therefore be seen as re-imports, but most of them
selectively continued German strands of policy (Su 1998, pp. 9698).

7.1.2 The East German Welfare State Compared

Parallels existed between East German social policy and the welfare state in some
of the Western countries, such as France, particularly with respect to family policy
that encouraged population growth. But pro-birth family and educational policy in
France, unlike that in the GDR, was not driven chiefly by ambitious employment
policy.
Observers familiar with the German case have also seen parallels between the
pronatal intentions of the GDRs family policy and the demographic objectives of
social policy under Nazi dictatorship. And in underscoring full employment and the
mobilization of labor, East German social policy arguably had certain facets in
common with Soviet development on the one hand and the aspirations behind the
Swedish welfare states employment policy of the 1970s and 1980s on the other.
Sweden, however, set store by public and private employment, whereas the
employment policies of the GDR and of the Soviet Union were geared solely to
the economic sector of state socialism and the production cooperatives.
Parallels existed in the realm of health care, too, with the East German system
and the United Kingdoms National Health Service both marked by a high degree of
nationalization. It was even more pronounced in the GDR than in the United
Kingdom, though.
The GDRs meager social insurance pensions and community care corresponded
to the parsimonious welfare benefits granted by a largely liberal welfare state
regime of the type described by Esping-Andersen (1990, pp. 6978). Both models
7 The GDR in Comparative Perspective: A Socialist Work and Welfare State 119

coupled welfare (state benefits without direct reciprocation) and workfare (the
taking of individual responsibility, especially the obligation to take a job). Yet in
contrast to the liberal welfare states, the GDRs social policy guaranteed the
working-age population the right to work.
The GDRs company-based welfare state, too, had parallels elsewhere. The
enterprises played a prominent part in East German social policy by maintaining
full employment policy, allocating housing, arranging weekend and local recreation
activities, helping to manage family conflicts, and providing child care at the place
of work. Some of these functions had counterparts in the corporatist dimension of
Japans social policy (Seeleib-Kaiser 2001, pp. 155187) and the social benefits
afforded by big Soviet enterprises, to mention just two examples. This role also
tied into traditions of social policy in key enterprises of the German Empire of
1871 first in the period from 1871 to 1918 and, subsequently, under the Weimar
Republic from 1919 to 1933.

7.1.3 Social Policy in the GDR and the COMECON States

Comparison between the social policy of the GDR and that of other East-bloc states
shows that some of their attributes, too, are the same. The socialist countries were
more statist in their social policy than the vast majority of western welfare states
were. Moreover, all East-bloc states adopted an ambitious social policy measured
by the rate of public spending on social services and by the share of the total
population protected by social policy upon reaching only a moderately advanced
level of economic development. Multivariate analyses of the rate of public spend-
ing on social services in western, socialist, and Third World countries show that
membership in the socialist bloc of states was among the important determinants of
expansive social policy. Other critical determinants included the level of economic
development, the percentage of senior citizens in the total population, and the
degree of institutional constraint on national government policy-making. The
GDR was no exception (Schmidt 2005d, pp. 241244).
Analysis of social policies in the former East bloc turns up more than just
commonalities. Notable dissimilarities existed as well, such as the circumstances
framing social policy. Although macroeconomic data generally overestimated the
economic strength of the socialist countries, the ranking of the countries by their
level of economic productivity per capita can be regarded as sufficiently reliable.
According to those data, the level of East Germanys economic development
exceeded that of all the socialist countries (Maddison 1995, pp. 131132,
139141, 174175).
The Soviet zone of occupation and, subsequently, the GDR were affected more
strongly and less favorably by the consequences of World War II and the Cold War
than were the other socialist countries. This difference owed partly to the extensive
reparations to the Soviet Union and partly to the GDRs exposed geopolitical
location at the iron curtain between western and eastern Europe. Under the
conditions of the Cold War, this site and the division of labor within the East
120 Social Policy in the German Democratic Republic

block exacted a heavy toll in terms of security and military policy. These burdens
were compounded by the GDRs self-inflicted problems. The SED-states radical
policy of class struggle did much to provoke the emigration of more than 2.4
million East German citizens in the years up to 1961 alone.96 Wholesale emigration
hit the GDR hard, partly because the country lost qualified labor. On top of that
problem came the dislocations that the mass migration caused in the age structure of
East Germanys population. It inflated the percentage of senior citizens, an age
bracket that had swelled early on to unusual size by international standards.
Given the relation between the level of economic development and the share of
the East German GDP spent on social services, one also finds that outlays for the
principal institutions of social policy were more frugal in the GDR than in
Czechoslovakia, Hungary, and Poland. For instance, the extra spending incurred
in the GDR by the countrys substantial proportion of senior citizens was somewhat
offset by a late retirement age and quite restricted retirement pensions (Voirin
1993). Furthermore, the unusually high percentage of the East Germanys total
population participating in the labor force reduced the share dependent on social
benefits. In states with a fairly low percentage of their population in the labor force
(and, hence, less earned income with which to cover living costs), the dependence
on assistance from the government, family, or other source rises as a rule.
In some ways the GDR likewise trailed other socialist countries in housing policy,
to which the East German leadership had attached special importance since 1971.
True, housing in East Germany, for all its obvious defects, was superior to that in the
other socialist countries by quantitative standards such as surface density and
dwellings equipped with running water and built-in toilets (von Beyme 1975,
p. 264, 1984, p. 304). But it was not as good as that in the western industrialized
states. As for long-term housing construction, even Czechoslovakia was a serious rival
within COMECON (Siegrist and Straht 1996; von Beyme 1975, pp. 263, 265). The
GDR did not lead the COMECOM countries in the scope of its university-level
education and training, either. The number of university students per 10,000
inhabitants in the GDR (76.0) was still at the lower end of the scale in the late 1970s.
Another fact brought to light by this analysis of the COMECON countries is that
the GDR had the most upward and downward mobility in the East Bloc. This
distinction stemmed mainly from the extreme turnover of elites in the Soviet zone
of occupation and the GDR. In addition, the GDR was Europes most female work
society (Niethammer 1993, p. 135) that is, Europes socialist society with the
highest percentage of women in its labor force. This profile resulted mostly from an
especially active mobilization of labor in conjunction with policies promoting

96
From 1950 to 1961, 2.7 million people left the GDR (Hoffmann 2003, p. 189). Migration in the
opposite direction occurred, too, however. In the same years, approximately 603,000 West
German citizens settled in the GDR (p. 189). From 1962 to 1988, 625,000 people were recorded
as having relocated from the GDR to the Federal Republic of Germany. Around 10% of the East
Germans who fled to West Germany have since resettled in the former territory of the GDR
(Geiler 1996, p. 350).
7 The GDR in Comparative Perspective: A Socialist Work and Welfare State 121

families, womens advancement, population growth, and employment; tight-fisted


provisions for old age; and a late age for retirement. All these aspects set the GDR
apart from the other socialist states.
The conspicuous degree of upward and downward mobility and the high share of
women in the labor force in the GDR had to do with another striking result of this
cross-national perspective on the COMECON countries. No other socialist country
lost as many of its citizens through emigration to the West as East Germany did.
They left not least because of the relentless policy of class struggle against anyone
obstructing the project of building socialism entrepreneurs, the middle class, the
self-employed, and people who for whatever motives kept their distance to the SED
state. This circumstance explains why the GDR was in fact an emigration society
(Niethammer 1993, p. 135) deserted by many members of its labor force, bereft of
male reserves for the domestic working population, and therefore forced to recruit
women for participation in the labor market.

7.1.4 Social Policy in the GDR and in Western Countries

How does the social policy in the GDR fare alongside that in western countries? To
answer this question, it may be helpful to consider the yardsticks used to help
construct typologies of welfare states. One such typology is Esping-Andersens
(1990) commonly cited distinction between three main forms of welfare state
regimes: (a) the liberal type, which is rather reserved with social policy (e.g., the
United States); (b) the social democratic type (e.g., Swedens social policy of the
early 1980s); and (c) the conservative type (e.g., the Federal Republic of Germany).
How does the GDRs social policy measure up when examined for the indicators of
these types of welfare states and for complementary characteristics? And what
differences surface when the social policy of the GDR is seen beside that of the
Federal Republic of Germany (see Table 1).
East German social policy proved amazingly ambitious when it came to employ-
ment objectives. The government spared no cost in the effort to ensure the right to
work, which amounted to job security approaching the guarantee of employment
(von Maydell et al. 1996, p. 58). That goal was its foundation. The political
leadership of the GDR steadfastly pursued it to the end literally at any price.
The difference between this commitment and that underlying the social policy of
western countries in this respect was enormous. Nothing like it existed in the
West and does not to this day. Even Sweden, the most venturesome of all western
industrialized countries in matters of labor market and employment policy, was
unable to sustain its full employment policy indefinitely. West Germanys balance
sheet in that policy area was far weaker than Swedens. The period of full employ-
ment ended in West Germany with the oil price shock of 19731974, despite the
fact that the countrys funding of its expansive welfare state was facilitated by a
highly productive economy created with what by international standards was only a
moderately high rate of the populations participation in the labor market.
Table 1 Welfare state regimes and social policy in East and West Germany
122

Characteristic Social policy in East and West Germany Ideal-type welfare state regime
GDR: authoritarian, Liberal Conservative Social democratic
socialist workfare and Federal Republic of Germany:
welfare state centrist welfare state
Full employment Yes (intended and actual) No No No Yes (intended)
guarantee
Social rights or relief of Primacy of politics Social rights Relief of the poor Social rights Social rights
the poor over social rights
Private social spending Low Average Relatively high Average Low
Percentage of social Average with a Large Average Large Average
expenditure funded downward trend
by premiums
Percentage of social Large and increasing About 40% Average Small Large
expenditure funded
by the state
Differentiation of Slight for most people; Average Slight Large Slight
benefits by privileged status
occupational group for groups of special
political importance
Pensions level of wage Low (but high for Average to high Low High High
substitution supplementary and
special provisionary
systems)
Level of standard net Low (but high for special Average to high Low Average to high Average to high
pension provisionary systems)
Required number of Relatively few Average Many Average Average
years of paid
premiums to qualify
Size of group covered by Citizens Almost all citizens, universal Small Large Citizens
social policy means-tested public
Social Policy in the German Democratic Republic

assistance
Subsidization of basic Yes, increasing Low No Low Low
goods and services
Redistribution Large Relatively large Relatively large among Relatively slight Large
narrowly defined (priority on
target groups status
preservation)
Nature of family policy Designed to promote Between conservative and Market-oriented Focus on Focus on
employment and egalitarian gender order traditional egalitarian
population growth division of division of
labor between labor between
women and women and
men men
Social spending as Average (narrowly defined), High Low High High
percentage of GDPa high (broadly defined)
Protection against Extremely strong Strong Weak Average Strong
market forces
Incentive or obligation Very strong Weak Strong Weak Weak
to work
Wage policy Dominated by the state, Based on social partnership, Low minimum Based on social Based on social
little difference in wages moderate wage spread wage, usually partnership, partnership,
company-specific average wage usually
arrangements, large spread moderate wage
wage spread spread
Existence of basic Yes, especially through Yes, through means-tested None Public assistance Yes, especially
income maintenance minimum wage, public assistance for through
scheme minimum pensions, citizens and benefits employment
7 The GDR in Comparative Perspective: A Socialist Work and Welfare State

and price subsidies for asylum-seekers policy and


public
assistance
Type of labor relations Authoritarian-consultative Liberal-corporatist social Liberal Liberal- Liberal-corporatist
partnership corporatist social
social partnership
123

partnership
(continued)
Table 1 (continued)
124

Characteristic Social policy in East and West Germany Ideal-type welfare state regime
GDR: authoritarian, Liberal Conservative Social democratic
socialist workfare and Federal Republic of Germany:
welfare state centrist welfare state
Relation between state Statism and authoritarian Partly liberal-corporatist, Pluralistic Liberal- Liberal-corporatist
and societal corporatism partly pluralistic corporatist and
associations occasionally
state-centered
Carrot and stick Both increasingly used Increasing role of carrot, Small, but increasing, Increasing role of Increasing role of
decreasing role of stick role of the carrot; carrot, carrot,
decreasing role of decreasing decreasing role
stick role of stick of stick
Level of per capita Moderate Very high Average High Very high
benefits
Note: The characterizations of East German social policy apply to the period through the end of the Honecker era. Those of West German social policy are
based particularly on Kaufmann (2012), Leisering (2003), von Maydell et al. (2003), Schmidt (2005e), Zacher (2013). The distinction between three welfare
state regimes liberal, conservative, and social democratic is taken from G. Esping-Andersen (1990). Changes that took place in East German social policy
as German unification approached are not considered in this table. See instead Sect. 5.4 in this chapter.
a
Gross domestic product.
Social Policy in the German Democratic Republic
7 The GDR in Comparative Perspective: A Socialist Work and Welfare State 125

Social benefits in the GDR were a social right, not alms (for a synopsis, see
Lohmann 1996). But they were overshadowed by policy prerogatives much more
than was the case in constitutional democracies like the Federal Republic of
Germany. This picture, too, illustrates the difference between the social policy of
an authoritarian state and that of a democratic one. The GDRs lack of rules for
adjusting social benefits to the development of wages and salaries and the states ad
hoc approach to the improvement of those benefits both fit this pattern. By contrast,
most social benefits in the western part of Germany (and in most western countries)
were adjusted to the development of earned income at regular intervals. The
politically very sensitive systems providing for old age were adjusted annually by
law in a fixed pension schedule that predictably and verifiably linked income
growth of retirement pensions to developments in the earned income of the
contributors. In the GDR, however, there was no standard progression of social
benefits, and innovations in social policy came abruptly. As pointed out earlier,
both kinds of change usually coincided with an SED party congress or an especially
important national anniversary. In other words, the GDRs political system did fall
back on populist measures with a certain regularity, though it was hard to calculate
which of them would come when.
Unlike West Germanys relatively large sector of private insurance against
social risks, private spending on social benefits constituted only a small percentage
of all expenditures in that field of policy in the GDR. It is true that the GDR did have
private life insurance, with 11.3 million policies based on premiums totaling nearly
3.8 billion Eastmarks in 1989 (Statistisches Amt der DDR 1990, p. 304). This form
of providential coverage did not extend far, however. Only marginal areas lay
outside East Germanys state monopoly on social policy, which, aside from the
company-based welfare state, was completely unitary and marked by pronounced
centralization. In the Federal Republic of Germany, the statist component of social
policy was at least to a limited degree decentralized among the individual L ander
(federal states) and accompanied by a much stronger corporatist component that
consisted primarily of self-administration and indirect government administration
through the social insurance carriers, with complementing social policy provided
by local government and private welfare associations.
Funding, too, bore witness to the statist design of social policy in the GDR and
differed sharply from the approach taken in the Federal Republic of Germany,
where statistics from the federal government and the OECD show that up to two
thirds of the governments social expenditures were financed by social insurance
premiums paid by employers and employees (Bundesministerium fur Arbeit und
Sozialordnung 1998, pp. 292293; Organization for Economic Cooperation and
Development 1999). In the GDR, about half the revenues for social security (in the
narrow sense) came from taxes alone. Most of the social benefits in the wide sense,
including the price subsidies for basic goods and services, were financed almost
solely from taxes. Taxes also financed the costs of the right to work.
The social policy of the GDR had been instrumental in dissolving the class and
status divisions of the period before 1945. However, it also gave rise to the regimes
own brand of entitlement. It resulted principally from the introduction and
126 Social Policy in the German Democratic Republic

expansion of the many supplementary old-age pension systems and special pension
schemes. They constituted a labyrinth of partiality and privilege that left the
nomenklatura and other groups of followers eminently important to the SED state
much better off than the rest of East German society much to the annoyance of
many people. Moreover, East German social policy had a particularly steep gradient
distinguishing economically and demographically important and unimportant risks
and life circumstances. Unlike West Germanys social policy, the GDRs was thus
skewed toward special support for families, above all those with several children,
and the relative discrimination against persons living on retirement pensions.
The difference between West and East Germany was massive in this way as
well. Let there be no mistake, social policy in the Federal Republic of Germany
favors some groups over others to this day, too. Provisions for old age and health
care are still as lavish compared to social policy for families with children.
Privileges are granted within individual branches of social policy as well. Because
a persons retirement income from statutory pension insurance funds depends on
the premiums the beneficiary has paid into the system, the differences between the
sizes of retirement pensions far exceeds the divergence that existed in the East
German system. The fringe benefits differ, particularly the company pension
schemes. Generous pensions also go to former parliamentarians, undersecretaries,
and state ministers. Given the differences in wages and salaries and the consider-
able span between the lower and the upper income groups (not to mention the top
salaries in the private economy), the range of privileges accorded in the Federal
Republic of Germany is much broader than it was in the GDR. In the Federal
Republic, however, they are distributed across government, society, and business,
not concentrated on the policy-making community and the state apparatus as they
were in East Germany.
To judge from the degree of equalization, East German social policy excelled in
many areas. Two instructive examples were the small wage differential and the
pronounced leveling of retirement pensions from social insurance. Still, equaliza-
tion had its gaps, and occasionally the political leadership of the GDR cautiously
bucked the trend, as when it introduced voluntary supplementary pension insurance
in 1968 and 1971 and mildly accentuated its emphasis on wage differences begin-
ning in the mid-1970s. Particularly obvious divergence in provisions for old age
resulted from the preferential treatment that the supplementary and special provi-
sionary systems gave.
Many people think that the GDR had reached a particularly high degree of
equalization by virtue of its social policy and that the western part of Germany
had not. The first belief is largely correct; the second is wrong. In the Federal
Republic of Germany that existed before 3 October 1990, social policy and tax
policy together had brought about a good deal of redistribution, both between the
income groups and between the generations (Barr 1992; Wagschal 2001). Even so,
wage and salary differences have always been much more perceptible in the Federal
Republic than they were in the GDR.
Compared to average earned income, many social benefits in the GDR were
modest, as illustrated, first, by the fairly limited average state income support
7 The GDR in Comparative Perspective: A Socialist Work and Welfare State 127

received from retirement pensions paid through social insurance and, second, by the
governments paltry public assistance. Guaranteed existence at a subsistence level
for everyone was the watchword. It meant national insurance and basic care at a
level based on the standard of consumption and the life style of a workers
household before World War II, supplemented by job security for the working-
age population. In the Federal Republic of Germany, too, public assistance (and,
since 1994, the benefits for asylum-seekers, which are smaller than those of
standard public assistance) has afforded basic if means-tested security at a
level at which no one will get rich. Nonetheless, public assistance suffices to ensure
a livelihood at present standards, not those of 1938. In the Federal Republic, welfare
state benefits of quite different levels and scope arch over the basic security from
public assistance. As old-age insurance plans demonstrate particularly well, the
West German system has achieved a far higher level of social benefits than East
German social insurance did.
It is well known and frequently documented that the level of benefits providing
for security in old age was rather low in the GDR. In 1989 the estimated average
pension for a person insured for 40 years came to about 40% of the average of the
beneficiarys net wages or salary as opposed to nearly 65% in the Federal Republic
of Germany at that time (Kleinhenz 1997, p. 51).97 The mediocre size of the GDRs
average retirement pensions owed partly to the small wage spread and the relatively
low minimum pension.98 Another factor was the income ceiling for the assessment
of pension insurance premiums. It was set at 600 Eastmarks per month and, unlike
the corresponding figure in the Federal Republic of Germany, was never adjusted to
wage increases. The pensions in the GDR were not adjusted either, except on the
occasion of key political events such as a congress of the SED. East German
retirement pensions could therefore wind up lagging further behind rising wages
and salaries than was the case with a process that indexes retirement pensions to
prices or to gross or net wages.
Another characteristic of the East German welfare state was a family policy
designed to encourage population growth. It aimed (with moderate success) to
increase both the birth rate and (with great success) the number of women in the
labor force. The difference between the GDR and the Federal Republic of Germany
becomes apparent in this respect, too. In western Germany, measures to promote
the birth rate have been frowned on since the end of the National Socialist era, and
for a long time the architects of family policy in the Federal Republic would not

97
A person who had paid into the GDRs voluntary supplementary pension scheme, however,
could expect a larger pension.
98
At the end of June 1990, the minimum monthly pension from the GDRs pension insurance was
330 Eastmarks. Persons could file for the pension and receive it if they had worked fewer than
15 years and if they were entitled to a retirement pension. They had therefore normally qualified by
paying voluntary premiums. For persons who had worked 15 years or more, the amount of the
minimum retirement pension benefit rose according to the number of years worked. It came to 340
Eastmarks for 15 to under 20 years of work, 390 Eastmarks for 30 to under 35 years, 430
Eastmarks for 40 to under 45 years, and 470 Eastmarks for 45 years or more.
128 Social Policy in the German Democratic Republic

hear of mobilizing women for the labor market. Particularly in the 1950s and 1960s,
they designed family policy to promote families as part of a division of labor that
accorded the man the role of breadwinner and the woman the task of keeping house
and rearing children. Family policy later shifted toward the objective of widening
options to accommodate a choice between employment outside the home and
family-centered activity. But the difference between West German family policy
and the East German family policy of underlining employment and population
growth remained immense.
From 1970 through 1989 the GDRs rate of public spending on social services in
the narrow sense, as reflected in the corresponding ILO figures, was substantial but
not inordinate, climbing to 12.7% in 1970 and 16.8% in 1978 (International Labour
Organization 1992, pp. 7778, 1996, p. 75). In view of the countrys high percent-
age of senior citizens, the share of the national product accounted for by
expenditures on support for the aged was even fairly low. These statistics, too,
bear witness to the backwardness of the approach to providing for old age in East
Germany. However, the ILO statistics on the percentage of GDP spent on social
services do not convey the entire scope of the GDRs efforts as a welfare state. Nor
does the ILO data on social spending record all (if any) of the generous social
benefits yielded by the special provisionary systems. Keeping this fact and the costs
of job security in mind, one arrives at a far higher, though not precisely quantifiable,
rate of social spending in East Germany.99 Indeed, it was excessive in relation to
what in other states were the usual trends and linkages between the level of social
spending and the economic, social, and political variables of social policy.100

7.2 Social Policy in the GDR in an Expanded Comparison


of Welfare State Regimes

To grasp East Germanys social policy in its entirety, one must go beyond the types
of welfare states discussed in the highly regarded book The Three Worlds of
Welfare Capitalism (Esping-Andersen 1990) or related typologies. They do not
take account of wage policy traditionally an especially important branch of social
policy or of social policy measures providing for basic security (e.g., public
assistance). Nor do these typologies capture most social policy associated with
labor relations, occupational health and safety, or legally mandated job protection.
Concentrating on democratic welfare states, the customary typologies ignore both

99
The expense of subsidizing the prices of basic goods, housing rents, and transport fares suggests
that the actual percentage of East Germanys GDP spent on social services in the late 1980s was
about double the figure based on ILO criteria (e.g., International Labour Organization 1996, p. 75).
That level of social policy, however, no longer lay within the GDRs economic capacity.
100
This comparison is based on the previously mentioned model for explaining the rates of social
benefits in rich and poor countries (see Schmidt 2005d, pp. 241244).
7 The GDR in Comparative Perspective: A Socialist Work and Welfare State 129

the meaning that democracy has for social policy and the degree of freedom (or
absence thereof) in the social order. Welfare state typologies also tend to overlook
two more dimensions of social policy and its context: (a) the nature of the link
between the carrot of social protection and the whip of repression and (b) the
purchasing power of per-capita social benefits.
Adding these components to the typologies of social policy and the comparison
with East German social policy helps focus the resulting picture. Two features of
the GDRs wage policy stand out. First, it was mostly dictated by the state, though
generally in consultation (and sometimes in agreement) with FDGB representatives
(Schwarzer 1996, pp. 359360). This practice clearly distinguished wage policy in
the GDR from that in the Federal Republic of Germany, where the representatives
of the employer and employee organizations autonomously negotiated wages and
salaries. The fact that various wage incentive systems (typically company bonuses
or fringe benefits) corrected for the centralized wage policy in the GDR has little
effect on this elemental difference (Hachtmann 1998, p. 46). The second striking
attribute of East German wage policy was the exceptionally advanced leveling of
wages. Wage policy underscored this equalization and exacerbated the tensions that
already existed between the twin goals of social equality and economic perfor-
mance in the GDR.
Basic security, one more dimension that the customary typologies of welfare
states gloss over, was mentioned earlier. The East German welfare state guaranteed
basic security from cradle to grave albeit at a modest level. It is estimated to have
included relative poverty on a grand scale. The assumption is that 10% of all
households in the GDR in the late 1980s, and 45% of its households living on
pensions at that time, received less than 50% of the average household income
(Deutscher Bundestag 1999k, p. 538).
Researchers have repeatedly mentioned a particularly important characteristic
of East German social policys orientation to labor policy: the right to work and its
manifestation as a guaranteed job for the bulk of the working-age population.
Relatively broad occupational health and safety also existed (Lohmann 1996,
pp. 9091), as eventually borne out by such evidence as a declining number of
industrial accidents and recognized occupational diseases (Frerich and Frey
1993a, p. 139). Another notable aspect was that the standard formal employment
relationship in the East German economy rested on the work contract. It did not
ordinarily come about by appointment, through choice, or as with authoritarian
labor allocation in some places during the Soviet occupation and the early
1950s by command (Mampel 1966, p. 197; Thiel 1997). The approach to industrial
relations, however, derived from the conviction that the personal and collective
interests of the working population were fundamentally identical and that the
members of the working population, according to prevailing doctrine, were both the
producers and the owners of the socialist economy (Hachtmann 1998, p. 36;
Lampert and Schubert 1982; Lohmann 1987a; Sander 1997; for a dissenting view,
see Kuczynski 1972). Institutionally, labor relations persisted along consultative
authoritarianism lines. The working populations rights to have a say in running
the economy were not framed by liberal freedom of association and opportunities
130 Social Policy in the German Democratic Republic

for involvement. They were decided instead essentially by a party-dominated


consortium of the SED and the state apparatus on the one hand and the FDGB
as the state trade union on the other. Unlike the liberal-corporatist setting in which
the social partners operated in the Federal Republic of Germany, labor relations in
the GDR were molded by the authoritarian corporatism of the party state and its
occasional statist command.
Another point was the fragility of due process in the GDR compared to the legal
processes in the Federal Republic of Germany, where the jurisdiction of the labor,
social, and administrative courts, the Constitutional Courts in the L ander, and the
federal Constitutional Court gave, and still gives, nearly complete legal protection
in all matters of social policy. The GDR did have an abundance of legal guarantees
and rules on due process in questions of social and labor law, but, crucially, it
lacked a court responsible for judicial review of administrative acts and a Constitu-
tional Court (Lohmann 1987a, 1996).
Analysis of East German social policy and its context reveals an additional issue.
The welfare state of East German socialism had two sides to it. Social policy was
the carrot alongside the stick of repression. It was both the counterpart and the
complement of the police state. This constellation was not entirely new. But the
especially remarkable thing about the GDR was that the introduction and expansion
of social policy coincided with an equally energetic introduction and expansion of a
mammoth apparatus for observation and repression. At the same time the GDR
built up one of the worlds more elaborate military systems (von Beyme 1984,
pp. 306307). Combined with paramilitary training facilities, it thoroughly disci-
plined and regimented everyday life (Niethammer 1997, p. 324) and turned many
citizens at least temporarily into soldiers (Niethammer 1997). This development
was yet another outstanding difference between social policy in the GDR and that in
the western industrialized countries, including the Federal Republic of Germany.
Granted, the West, too, had militaries, armaments, secret services, and domestic
security agencies. But in contrast to the situation in the GDR, the percentage of
public spending on these policy areas on these fields of policy shrank, whereas the
percentage allotted to social expenditures continued to grow (Keman 1988; Orga-
nization for Economic Cooperation and Development 1999).
Lastly, the GDR had nowhere near the economic strength of the western
industrialized countries. East German labor productivity in the year of reunification
(1990), for instance, was estimated to be just under one third that of West Germany.
It had been 36% 5 years earlier and as high as 50% in 1950 (Heering 1999, p. 2265).
All efforts to increase labor productivity through social policy had evidently come
to little (Tisch 1995, p. 135). Responding in an interview to Professor Rainer
Lepsiuss question of how leaders in the GDR had hoped to achieve that aim, the
former head of the FDGB explained: We naturally concentrated intensely on the
awareness factor (p. 135). Lepsiuss reply deserves to go down in the history
books: But that is turning Marx on his head! You governed the GDR with Schiller,
not Marx (Pirker et al. 1995, p. 135).
7 The GDR in Comparative Perspective: A Socialist Work and Welfare State 131

The failure of the efforts to raise labor productivity by means of social policy
affected the level of social benefits per capita as well. It was not high in the GDR, as
many East German citizens knew from experience, especially when a trip to the
western part of Germany or a visit from West Germany drove home the difference
between the purchasing power of the East Germanys currency and that of West
Germanys. The social policy of the Federal Republic of Germany thus had a
further advantage that East German social policy could not match: a very high
level of per-capita social spending (Schmidt 2001a).
Keeping the narrow and the broad senses of social policy in mind, one arrives at
the following conclusions. The welfare state in which the GDR indulged was
extensive, even disproportionate given the countrys only moderate economic
strength. Rushing from plan to plan (Steiner 2003), the leaders had sought the
salvation of their entire economic policy in the planned economy. It had thus
become vital for their social policy to mobilize and protect the work capacity of
the working-age population. To this end, the East German welfare state had entailed
both the right and the obligation to work coupled with strong incentives to engage in
paid work in the planned economy even for persons of retirement age, and
especially women.
These circumstances and the East German welfare states preoccupation with
social positions and risks affecting the process of production and population growth
suggest that the social policy of the GDR be classified as an example of a unique
dual-track welfare state. First, it was a comprehensive welfare state of the authori-
tarian-paternalistic variety. It provided shelter from market forces, assured the basic
livelihood of almost all its citizens, and protected persons and groups it especially
wooed, all in a hierarchical and authoritarian manner subordinated to the primacy of
policy. Second, this welfare state made a point of mass-mobilizing the capacity to
work partly through family policy that energetically encouraged population
growth and guaranteeing job security in the socialist planned economy even if
it meant gross economic inefficiency. To that degree, East German social policy
blended the welfare state and the workfare state. It was a mix between a socialist-
authoritarian welfare state and a workfare state. This authoritarian, paternalistic
work and welfare state distinctly differed from West Germanys welfare state,
which occupies a position all its own between the conservative and the social-
democratic models (Schmidt 2005d), and was far removed from the liberal, conser-
vative, and social-democratic types of welfare state (see Table 1).
Ultimately, the path of social policy in the GDR did not lead to a viable welfare
state but rather to a huge welfare state on credit, which drained economic strength
and mortgaged the future. In this sense, one lesson of East German social policy is
that an industrialized society with only moderately high labor productivity and an
ambitious welfare state will overreach and eventually bankrupt itself unless it takes
corrective action.
132 Social Policy in the German Democratic Republic

8 Continuity and Discontinuity in East Germanys Social Policy

By 1990, failure of the GDRs leadership to redress the imbalance between the size
of the East German welfare state and the countrys micro- and macroeconomic
performance had contributed to bringing the country to the brink of collapse. A way
out did present itself, however. Germanys reunification presented the opportunity
to solve the self-created problems of social policy in the GDR, and it was seized.
The institutions and regulations of the West German welfare state were transferred
to the new Lander, the states that were reestablished in the GDR shortly before its
accession to the Federal Republic of Germany. The costs, along with the debts of
the East German welfare state, were passed on to the taxpayers of united Germany
and all its people obliged to pay social insurance premiums, especially those living
in the economically prosperous West German L ander. The most important stages of
this transformation were the monetary, economic, and social union, which went into
effect on 1 July 1990 as set forth in the First State Treaty of 18 May 1990
(Deutschland-Archiv 1990), and the constitutional unification of Germany on 3
October 1990 along with the execution of the transition arrangements spelled out in
the Unification Treaty of 31 August 1990.
All these developments triggered a massive wave of legislation in the Federal
Republic of Germany and the GDR before July 1990. The result was an unimagined
quantitative and qualitative boom in social policy legislation during the final year of
the GDR (see Sect. 5.4). As one gathers from the Official Statute Register of the
German Democratic Republic, lawmakers were busier with social policy in 1990
than in any other year. After the election to the Peoples Chamber in March 1990,
the de Maiziere government, with the support of a large parliamentary majority and
in consultation with experts from West German ministries, put in motion the second
great reorganization of social policy on East German territory. Unlike the first one
after 1945, which proceeded without democratic legitimation and bequeathed the
authoritarian socialist work and welfare state, the reorganization in 1990 moved
democratically toward the West German model of a comprehensive welfare state of
the West European tradition.

8.1 The First and Second Reorganization of Social Policy


on East German Territory

The reorganization after 1945 and the one begun in 1990 were distinguished by
discontinuity and continuity. The political leadership in the Soviet zone of occupa-
tion and the GDR had changed social policy more radically than any other regime in
Germany before 1945. The sea change in the Soviet zone of occupation and the
GDR shaped the form, the political processes, and the results of social policy. It
achieved in social policy what no previous regime in Germany had brought about:
On the whole, it shed the inherited burden of previous social policy, broke with the
constraining patterns of the past, forged its own way in social policy, and
established that path by means of pronatalist family policy, job security, and
8 Continuity and Discontinuity in East Germanys Social Policy 133

extensive price subsidies for basic goods and services, to mention only some of the
major measures. The change during the soft revolution that engulfed the GDR in
1989 and 1990 was scarcely less profound, however, and led to the accession of the
new Lander to the Federal Republic of Germany on 3 October 1990.
The argument that far-reaching change took place in social policy after 1945
and again as of 1990 is borne out by detailed exploration of the discontinuity
in the five rings of East German social policy discussed in Sect. of this chapter
and by the processes of shaping it (see Table 2). But the picture remains

Table 2 Continuity and discontinuity of social policy in the Soviet zone of occupation, the
German Democratic Republic (GDR), and the New L ander (States) in East Germany
Area of social policy 19451989 compared to the Social policy in the GDR in
pre-1945 period 1990 and in the new Lander in
East Germany compared to
19491989
First ring: right to work Discontinuity Discontinuity
Second ring: social insurance Continuity and discontinuity Continuity and discontinuity
Third ring: family policy, Discontinuity Discontinuity
price subsidies for basic
goods, housing policy
Fourth ring: the company- Continuity and discontinuity Continuity and discontinuity
based welfare state
Fifth ring: supplementary old- Discontinuity Discontinuity
age pension systems,
special pension schemes,
and honorary pensions
Social policy formation Discontinuity: centralization, Discontinuity: transition to
process hierarchization, multifaceted social safety
homogenization, and party- net and to pluralistic system
state pervasion of of parties and associations;
consensus-building; state consisting of many co-
destruction of pluralistic governing actors and veto
interest mediation; players; delegation of
delegation of government government responsibilities
responsibilities to the to social partners and social
FDGBa; supremacy of the insurance carriers;
SEDb; consultative- protection of property
authoritarian mitigation of rights; transition to labor
regulation of labor relations; relations based on social
policy of fusing powers, partnership and to
which permits only fragile, systematic separation of
erratic legal protection powers
a
Freier Deutscher Gewerkschaftsbund (Free German Trade Union Federation), the state trade
union in the GDR.
b
Sozialistische Einheitspartei Deutschland (Socialist Unity Party of Germany, the ruling political
party in the GDR, 19491989).
134 Social Policy in the German Democratic Republic

incomplete until continuity, too, is duly recognized in both the static and
dynamic senses.101
Establishing the right to work, the first ring of the GDRs social policy, broke with
the past to meet an old demand of the communist and social democratic workers
movement: job security for as many people as possible. This change was radical,
though actually achieving job security was greatly facilitated by the emigration of
innumerable members of the workforce to the western part of Germany. No less
sweeping was the change that took place in 1990, when West Germanys institutions
of social and labor policy were transferred to the new L ander. Unified Germany
offered no right to work, aside from perennially vague government objectives in the
constitutions of some L ander (e.g., Bavaria, Berlin, Bremen, Hesse, and North
Rhine-Westphalia). And given the many imponderables on which it depended and
West Germanys already high level of unemployment, there was little probability of
achieving full employment, let alone of guaranteeing jobs.
Breaks in continuity also characterized the second ring of social policy in the
GDR social insurance. It was fundamentally restructured in the Soviet zone of
occupation and the GDR. Specifically, it was centralized, standardized, largely
absorbed into the national budget, and entrusted mostly to the FDGB for adminis-
tration. Retention of old features somewhat bridged over this hiatus, however.
Social insurance was not abolished. The funding of social insurance from premiums
paid by the persons insured and by the enterprises survived as well, though this
portion of the financing ultimately accounted for only about half of the spending on
social insurance. In principle, social insurance benefits went on being linked to
gainful employment, albeit in a significantly looser fashion because dependents
were coinsured. Discontinuity upended social insurance during the transition to
German unification, too. The social insurance of the former GDR was replaced by
the Federal Republics multifaceted system, which had been shaped by the struc-
tural principles of the social insurance state far more than had been the case with
East German social policy (Jochem 2001; Riedmuller and Olk 1994).
The third ring of East German social policy, too, went through upheaval after
1990 and the following years. The exorbitant price subsidies for basic goods and
services all of which had been a special trademark of GDR socialism fell victim
to unification policy. The monetary, economic, and social union of the GDR and
Federal Republic of Germany did away with the subsidies for food, clothing, and
utility goods. Reduced rates for electricity, fuels, water, and transport fares were
maintained, however. Housing rents remained stable until the end of 1990, after
which point they were gradually raised to market prices. This shift ended the
exorbitant rent subsidies, which themselves had meant a departure from past
practice in their day.

101
The useful distinction between static and dynamic continuity stems from Lepsius (1983, p. 16).
He states that static continuity is marked by the consistency of substance over time; dynamic
continuity, by the constancy of the direction and pace of change. Exponents of the continuity thesis
focus on what persists. But what persists can also mean steady change.
8 Continuity and Discontinuity in East Germanys Social Policy 135

Family policy underwent massive changes as well. Its pronatal and proemp-
loyment thrust and the state monopoly on this policy area in East German socialism
had not parted altogether with practices of the National Socialist era (19331945)
and traditions predating it but, together, did chart quite a different direction. Much
of this reorientation, especially the components bearing on population growth and
employment, was reversed on the way to and after the constitutional unification of
Germany. The same fate befell the GDRs rather liberal, permissive statutory
regulation on abortion.
Discontinuity and continuity were, in turn, a feature of the company-based
welfare state. The idea of occupational fringe benefits, which had such a prominent
role in East Germanys economy and society, was not wholly new. Some of the
encompassing benefits provided through the enterprises had already existed in
the big companies under the German Empire of 1871, the Weimar Republic, and
the Nazi state, especially in the war years, when the country mobilized all its labor
reserves. But the company-based East German welfare state unmistakably bore
attributes specific to the regime, such as the fact that the occupational fringe
benefits provided goods and services on a massive scale just to make ends meet.
The change of course in 1990 had a seismic impact on the company-based
welfare state in many respects. It transferred the West German institutions of
economic governance and labor-management relations to the new L ander, requir-
ing at the enterprise level a social policy apparatus leaner than that of East
Germanys socialism. Many of the tasks hitherto taken for granted as part of the
occupational fringe benefits provided by East Germanys large enterprises passed
wholly or in part to other agents. Preschool child-care, for example, moved into the
purview of local government and social welfare associations or disappeared
completely. In short, discontinuity was evident in this field as well even though
certain established institutions of the company-based welfare state carried on.
Lastly, the supplementary old-age pensions and special pension schemes were
arrangements that existed only in East German Socialism. Technically, all these
systems were shut down as of 1 July 1990 under the First State Treaty, under whose
terms generous benefits paid by them were to be examined and possibly reduced by
future legislation. Action to this effect ushered in an often painful and litigious
adjustment process, whose analysis, however, falls outside the period under review
in this chapter (see Mutz 1999, p. 510).
The transformation of social policy after 1945, after the birth of the East German
state in 1949, and in 1990, the year of German unification, were all beset by
discontinuity. The road to the Soviet zone of occupation and the GDR had been
paved by centralization, hierarchization, homogenization, the party-states perva-
sion of the political process, and the destruction of the pluralistic articulation of
interests. State responsibilities were delegated to the FDGB, the SED ruled
supreme, and labor relations came under authoritarian state management. The
regimes fusion of powers also precluded the jurisdiction of constitutional and
administrative courts, impairing the protection under social and labor law at its
key points.
136 Social Policy in the German Democratic Republic

The break in continuity in 1990 and subsequent years led to a multifaceted


system of social protection, a pluralist system of parties and associations, a state
with many co-governing actors, the delegation of some of the welfare state
responsibilities to the associations of capital and labor on the one hand and social
insurance institutions on the other, the protection of property rights, an industrial
relations system based on cooperative relations between capital and labor, and a
separation of powers that also included autonomous administrative courts and an
autonomous Constitutional Court.

8.2 Regime Shift and Continuity

The transformations in the Soviet zone of occupation and the GDR and the
transition from the GDR to the Federal Republic of Germany in 1990 left deep
traces in the political process and thoroughly recast public policy in substance and
direction. This finding supports the hypothesis of a close causal relation that
comparative research on political systems has formulated in the law of regime
shift: If the political order and the nature of the political process change, so do the
direction and substance of public policy. Both the rise and the fall of social policy in
East German socialism corroborate this law.
Yet another feature of the restructuring in 1990 and the subsequent years is
noteworthy. For all the discontinuity in united Germanys new L ander, one tenet of
Alexis de Tocquevilles seminal work The Old Regime and the French Revolu-
tion (1856/1955) also applies to the shift from the East German to the West
German welfare state every change is accompanied by considerable continuity.
Tocqueville had the French states high degree of centralization before and after the
revolution of 1789 in mind. The continuity represented by the unification of the two
German states lies in the high and enduring tension between comprehensive social
protection and a lagging economy. The gap between them had increasingly turned
the East German welfare state into a major risk. In the new L ander of reunified
Germany, that conflict has now been vastly reduced, though not defused, because
social policy is financed predominantly by workers, salaried employees, and other
taxpayers of the economically wealthier L ander in the western part of the country.
The percentage of Germanys GDP accounted for by spending on social transfers
and services indicates how wide the chasm has initially been between the abidingly
weak economic base of the new L ander and the developed, expensive West German
style of welfare state. Rising as high as 66.8% in 1992, the proportion of Gross
Domestic Product spent on social expenditure in the new L ander settled at 54.5% in
1997 (Bundesministerium f ur Arbeit und Sozialordnung 1998, p. 279) and declined
to a less spectacular level thereafter. This picture sharply contrasts with the
commonly held opinion in the new L ander that they are not receiving their fair
share of social policy pie and not enough state support in general. The reality is
different. Nowhere in the western industrialized countries, not even in Italys
Mezzogiorno, has the discrepancy between ambitious social policy and lagging
References 137

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German reunification. Only during the era of state socialism was there anything
approaching it, namely, the mismatch between overwrought social policy and
underperforming economies in the socialist states of central Europe, including the
German Democratic Republic.

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The Politics of German Unification. Social,
Economic, Financial, Constitutional
and International Issues

Gerhard A. Ritter

1 Introduction

German reunification in 1990 has markedly changed the character of the Federal
Republic of Germany, and especially that of its welfare state. Since its introduction
in the 1880s, the modern German welfare state has been characterized by an
astounding degree of continuity. Despite the radicality of the political ruptures of
1918/19, 1933, 1945 and again 1989/90, and despite the enormous expansion in the
number of persons as well as types and scope of benefits covered, it has not
fundamentally changed its norms, institutions, actors or method of financing. This
pronounced path dependency, even by European standards, has hitherto constituted
its strength. However, the transformation of the employment sphere, the globaliza-
tion of financial and exchange markets, population aging, and the specific
challenges brought by German unification have made reforms ineluctable. In this
context, the rigidity of the German welfare state could prove to be a hindrance to its
necessary adaptation to new conditions. This chapter investigates the impact of
German reunification on German social policy during the years 1989/94, linked to
an analysis of the international, economic, financial and constitutional issues which
emerged in the course of reunification.1 The primary goal is to depict and analyze
the significance of the extraordinarily complex process of German unification on
the basis of both existing sources and interviews with political and administrative
actors.

1
The book Der Preis der deutschen Einheit (Ritter 2007a), now available in English as The
Price of Germany Unity. Reunification and the Crisis of the Welfare State (2011), has informed
sections 2 and 3. Section 4 is based largely on a lecture held at the Bavarian Academy of Sciences
upon receiving a prize for the book by the Munich Historisches Kolleg from the Federal President
on 9 November 2007 (Ritter 2008).

M.G. Schmidt and G.A. Ritter, The Rise and Fall of a Socialist Welfare State, 167
German Social Policy 4, DOI 10.1007/978-3-642-22528-4_3,
# Springer-Verlag Berlin Heidelberg 2013
168 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

2 The International Context of German Unification

German unification in 1990 was a crucial component of a tremendous rupture in


European and world history, the significance of which is comparable to that of the
overthrow of the ancien regime in the French Revolution of 1789 or the demise of
old Europe in the wake of the outbreak of the First World War in 1914. Its
hallmarks were the collapse of the East Bloc, the disintegration of the Soviet
Union, the end of the Cold War and the overcoming of the division of Europe
and of Germany. The decisive impulse for the breakdown of the rule of East
Germanys Socialist Unity Party (SED) came from a popular movement: mass
demonstrations and incessant mass emigration brought the political system to
collapse (Kowalczuk 2009). Initially, these demonstrators were chanting We are
the people (Wir sind das Volk) and their goals adopted from oppositional
groups were the transformation of the GDR from a dictatorship to a grassroots
democracy, the realization of human rights, and the introduction of market elements
into the countrys command economy. They had not set out to call into question the
independence of the GDR or to overthrow the socialist system; rather, they hoped to
render it more humane. Under pressure from the countrys citizens, who saw
unification with the Federal Republic as the best hope of securing their freedom
and increasing their prosperity, the demonstrators added another slogan: We are
one people (Wir sind ein Volk) and German unification increasingly became the
central goal of the popular movement. This process was accelerated by the dire
economic crisis, which had become ever more severe over the course of the 1980s,
and by the internal dissolution of the state. However, in light of the massive Soviet
presence (338,000 military and over 208,000 civilian personnel and family
members in June 1991; Kowalczuk and Wolle 2001, p. 221) and the Four Powers
rights and responsibilities in Berlin and in Germany as a whole, German unification
was also a matter for international negotiation. It was thus of the utmost importance
that German unification occurred in an unusually favorable international political
constellation. All signs pointed toward relaxation, disarmament and overcoming
the Cold war. Gorbachevs Soviet policy of comprehensive reform of the Commu-
nist system through perestroika and glasnost an attempt to combine Marx and the
market was an essential contribution to this end. In foreign policy, it was critical
that the Soviet Union dropped the Brezhnev Doctrine of hindering system change in
Communist states by force if necessary; it now gave every country in the East bloc
the freedom to choose its own political path (Altrichter 2009, pp. 330334).
The sorcerers apprentice (R odder 2009, p. 15) Gorbachev had intended
merely to replace the rigid dictatorship of the era of SED General Secretary
Honecker via a reform within the Communist system. The GDR was supposed to
remain an independent, second German state and hold fast to socialism. The course
which events took went far beyond these intentions.
The decisive driving force in this regard was the people of the GDR, whose
desire for freedom and unity as had already been evident in the popular uprising of
June 1953 could be suppressed only by means of military force. Since the Soviet
2 The International Context of German Unification 169

Union had ruled out this option and had recognized in principle the right of every
people to self-determination, it ultimately had no means by which to stop the
unification process dynamic, which had been underestimated by all sides. Still,
difficult negotiations were necessary to move the Soviet Union as well as France
and Great Britain, for that matter to accept German unity, and to get it to tolerate
unified Germanys membership in NATO and, finally, to remove its troops from the
territory of the GDR. The Federal Republics political elite, led by Chancellor
Helmut Kohl, had no master plan for German unification and indeed was not in a
position to steer the process from above. It responded, however, to the ever
changing situation with extraordinary instinctiveness and flexibility, and cleverly
utilized the opportunities which presented themselves out of the combination of the
East Germans pressure for rapid unification and the conducive international
political situation.

2.1 The Collapse of SED Rule in the GDR and Chancellor


Kohls Unification Program

In an official statement on 8 November 1989, one day before the fall of the Wall,
Kohl had expressed his willingness in light of the developments in the GDR to
support a path of change. He made unmistakably clear, however, that comprehen-
sive support could not be provided without fundamental reform of the political and
economic system in the GDR. The SED must forego its monopoly on power, must
allow independent parties and must guarantee free elections. (Deutscher
Bundestag 1989, p. 13221) After the removal of Honecker as the General Secretary
of the SED on 17 October and the resignation of the Politburo of the SED on
8 November 1989, a new government was formed under Hans Modrow, who was
considered to be an exponent of the reformist fraction within the SED. Without the
participation of the parties and groups of the opposition movement, this new
government was formed by the SED with its satellite parties CDU, LDPD, NDPD
und DBD. The government announced an election law, but did not specify an
election date. In an official statement on 17 November (Volkskammer,
Stenografische Niederschriften 1989, pp. 27282) Modrow pledged his commit-
ment to the rule of law and to economic reform. He did not, however, question
socialism as the foundation of the political-economic order of the GDR; rather, it
was to be humanized and democratized. In his policy toward the issue of German
unity he proposed deepening the mutual relations between the Federal Republic and
the GDR through a contractual community, but did not articulate a vision of
eventual unification.
Two weeks later the path was cleared for free elections in the GDR when the
GDR parliament (the Volkskammer) struck from the constitution the leadership
claim of the SED. It continued to characterize the GDR, however, as a socialist
170 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

state of workers and farmers and as a political organization of workers in cities


and in the countryside (Mampel 1990, p. 1378; Wurtenberger 1995, p. 108).2
At the beginning of December 1989, a Central Roundtable emerged in Berlin,
similar to the many roundtables which had emerged in the districts and cities of the
GDR, modeled on those from Poland. It was a competitor to the Modrow govern-
ment and the Volkskammer. The Central Roundtable emerged from a church-
supported initiative consisting of seven oppositional political groups and parties:
Democracy Rising (Demokratischer Aufbruch), Democracy Now (Demokratie
Jetzt), the Green Party (Gr une Partei), the Initiative for Peace and Human Rights
(Initiative Frieden und Menschenrechte), the New Forum (Neues Forum), the
United Left (Vereinigte Linke) and the Social-Democratic Party (Sozialdemo-
kratische Partei [SDP]). These groups had organized in opposition to the SEDs
monopoly on power, and had as their common goal the rapid and peaceful transition
to democracy. The Central Roundtable was made up of an equal number of
representatives of the new parties and groups and of the SED and the old satellite
parties. It presented itself as a public check on state power and through the media
which reported constantly on its proceedings had tremendous influence on the
citizens of the GDR (Thaysen 1990, 2000). Already at its first meeting on
7 December 1989, the Central Roundtable committed itself to 6 May 1990 as the
date for new Volkskammer election. Modrow initially attempted in vain to retain at
least some elements of the secret police (Volkskammer, Stenografische
Niederschriften 1990, p. 362), the Stasi, under the new name of Office for the
Protection of the Constitution (Verfassungsschutz a name borrowed from the far
more innocuous domestic intelligence agency of West Germany). This, however,
was prevented by the resistance of the Central Roundtable and storming of the
central office of the Stasi in East Berlin on 15 January 1990. After an initial power
struggle, Modrow succeeded in forming a Government of National Responsibil-
ity on 5 February 1990 incorporating eight oppositional forces, each represented
by one Minister without Portfolio.3 The Volkskammer election was then moved
forward, mainly in response to pressure by the Social Democrats, to 18 March 1990
(Kloth 2000).
The Central Roundtable was a transition organization on the path to parliamen-
tary democracy. It cleared the way to free elections and assisted in overthrowing the
monopoly of power of the SED and in removing the Stasi. It helped to maintain
the peaceful character of the revolution and to prevent a complete breakdown of the
state and the economy. Moreover, it allowed the former satellite parties, especially
the CDU of the East and the LDPD, to distance themselves from the SED and win a
new political profile. The Central Roundtable morphed steadily over time from a
mere veto player to an instrument of governance and to a competing legislative

2
A motion from the CDU fraction to strike the words of workers and farmers was not approved.
3
Of the original oppositional groups of the Central Roundtable, the United Left did not participate
while two new groups, the Independent Womens Association (Unabh angiger Frauenverband)
and the Green League (Gr une Liga), were added.
2 The International Context of German Unification 171

alternative to the Volkskammer. Its weaknesses were that it lacked electoral legiti-
macy, an administrative apparatus and a clear conception of the new social and
economic order it desired. For the West German government, the Roundtable
was not an acceptable partner, for the majority of its members neither wanted to
surrender the independent existence of a reformed GDR nor avowed themselves
unambiguously to a Western-style market economy. The Modrow governments
attempts to convince the FRG to provide it with massive economic support to stabilize
the GDR all ultimately foundered on disparate political objectives. The central politi-
cal issue on which they disagreed was the question of German unification.
On 28 November 1989, West German Chancellor Kohl presented to the
Bundestag his famous 10-point plan for German unification, which had been
discussed previously with neither Foreign Minister Genscher nor the Four Powers
(Deutscher Bundestag 1989, p. 13510).4 He was animated to do so by a conversa-
tion between his closest foreign policy advisor Horst Teltschik and Nicolaj
Portugalov (Teltschik 1991, pp. 4245), an advisor to the Department for Interna-
tional Relations of the Central Committee of the Soviet Communist Party, who
implied that Gorbachev and his advisors did not rule out the possibility of German
unification through a confederation as the end result of a multiyear process. In his
Ten Point Plan, Kohl picked up Modrows concept of a contractual community,
but saw this merely as the first stage of a temporally yet undefined process which
over the medium and long term would ultimately lead via confederative
structures to a federal state order, i.e. to a unified Germany. For Kohl, this was a
matter of getting German unification onto the international political agenda. He also
wanted to gain the initiative on the issue of German unity before the upcoming
West German parliamentary election scheduled for the end of 1990. He feared that
at its national party congress in Berlin 18 to 20 December 1989, the SPD would
attempt to claim the issue of German unity as its own, with reference to the memory
of Kurt Schumacher and in the hope of gaining a structural majority in Germany by
reintegration of the traditionally strong SPD states of Saxony and Thuringen. Kohl
argued in front of his parliamentary faction on 27 November 1989 that in light of
the political-tectonic quake in which completely different layers of conscious-
ness of the German people were being accessed, it was crucial to the electoral
prospects of the CDU/CSU that she assume the mantle of leadership in the German
question (Archiv f ur Christlich-Demokratische Politik, Fraktionsprotokolle 1989).
Moreover, Kohl wanted to offer the people of the GDR hope for a future.
Kohls diplomatic offensive initially sparked critical reactions in the West and in
the Soviet Union. French President Francois Mitterrand, with whom the West
German Foreign Minister Hans-Dietrich Genscher conducted his most important
of many conversations on 30 November, advised caution vis-a-vis the Soviet Union

4
On the development of the plan, its interpretation and reaction to it, see Kohl (2005,
pp. 9881000, 1002f.); and Weidenfeld et al. (1998, pp. 97173). For the initially positive, then
critical reaction by the SPD to Kohls initiative, see Sturm (2006, pp. 217230). For the policy of
the SPD on German unification see further the publication of documents: Fischer (2009).
172 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

and demanded proceeding with European integration hand-in-hand with German


integration, which he saw as an historical necessity (Genscher 1995, pp. 677681).
While Mitterrand was reserved in his official declarations and his conversations
with West German politicians in order to not endanger the close German-French
partnership, we know from the writings of his special advisor Jacques Attali (1995)5
and from the protocols of his conversation with British Prime Minister Margaret
Thatcher6 that he viewed German reunification skeptically and initially attempted
to slow the process down. His motives were the fear of the destruction of the
European balance of power and a return to the extremely precarious pre-war world
of 1913, of unified Germany turning its back on the process of strengthening the
European Community through monetary union, and of unified Germany drifting
toward the East. Further, he worried that NATO would be weakened and that
Germany might become neutral. He was also concerned that Gorbachevs position
within the Soviet Union might be weakened. His overthrow could lead to a military
dictatorship and thus spell the end to the reforms of state, economy and party in the
Soviet Union.7 Finally, he was greatly concerned over the absences in Kohls Ten
Points of a clear statement of the Federal Republic on the inviolability of western
Polish border.
In a discussion with Gorbachev in Kiev on 6 December 1989 (Attali 1995, vol. 3,
pp. 360367; Weidenfeld et al. 1998, pp. 153159) Mitterrand criticized the tempo
of the advancement of the German question and emphasized the responsibility of
the Four Powers of the United States, Great Britain, the Soviet Union and France to
protect Europe. With his Ten Points, Kohl had pre-empted the proper sequence of
events. European integration, developments in Eastern Europe and the creation of a
common European security architecture should all precede German unification.
Mitterrand was obviously disappointed by the refusal of the Soviets to pursue a
concrete policy of blocking German unification. Gorbachev refused Mitterrands
call to join him on his visit to the GDR. Mitterrands trip to the GDR 20 to 22
December 1989, the first visit to the GDR by a Western head of state, was a
demonstrative but futile attempt to stabilize the GDR (Weidenfeld et al. 1998,

5
In his posthumously published work, Mitterrand (1996) attempts to refute the thesis of Attali that
he had at first attempted to block and later to slow German unification. Schaberts (2002) account,
which is based on a broad range of previously unpublished source material, was also revisionist in
this sense. On the whole one must ascertain, however, that Mitterrand had a conflicted relationship
with Germany and his position on German unification in the first weeks after the fall of the Wall
was ambivalent. Kohl (2005, pp. 956, 1033), too, was of the opinion that Mitterrands initial
reaction was two-faced and that his attitude was at the very least non-transparent.
6
Records of the meetings on 8 December 1989 in Strasbourg and on 20 January 1990 in Paris, in:
Letters from the Private Secretary for Foreign Affairs to the Prime Minister Charles D. Powell to J.
Stephen Wall, the Private Secretary to the Secretary of State for Foreign and Commonwealth
Affairs, in: German Unification (19891990, pp. 164166, 215219).
7
In his conversation with Kohl an 4 January 1990, Mitterrand took the position that the fate of
Gorbachev depended more on Helmut Kohl than on the behavior of his fiercest domestic opponent,
Jegor Ligatchov in: Dokumente zur Deutschlandpolitik (1998, p. 686).
2 The International Context of German Unification 173

pp. 159163f.); La Diplomatie Francaise 2011, p. 180191) and to thus delay if


not block reunification.
Even stronger reservations against German unification were harbored by the
British Prime Minister Margaret Thatcher. Her critical view of Germany (Thatcher
1992, pp. 791799; Craig 1991; Jackisch 2004) was shaped by historical memories
the two countries having been enemies in World War I and II, the rule of Nazi terror
and especially by her childhood experiences during the Second World War.
Mixed in with this were traditional elements of British foreign policy, in particular
a concern for the European balance of power and its destruction by German
hegemony. She expected that Germanys economic predominance in the European
Community would be further buoyed by unification. Like Mitterrand, she feared
further that German unification would imperil Gorbachevs position and thus that of
the Soviet reform process, and that it would also threaten the special relationship
between Great Britain and the United States.
At the summit talks of the European Community in Strasbourg on 8 and 9
December, many states attacked Kohls approach, and only Irelands Prime Minis-
ter Charles Haughey and Spains socialist Prime Minister Felipe Gonzalez
supported him (Kohl 2005, pp. 10121014). In unofficial conversations during
the summit, Prime Minister Thatcher and President Mitterrand initially attempted
to reach agreement on a joint policy and hereby revive the entente cordiale they
had had prior to the First World War (German Unification, pp. 164166). These
efforts pursued further in Paris on 20 January 1990 (German Unification
1989/1990, 2010, pp. 215219) failed due to opposing interests. While France
sought a deepening and acceleration of European integration, Great Britain rejected
this. Mitterrand was now even more pessimistic about the probability of influencing
the developments in Germany. Of course the Germans had the right to self-
determination. But they did not have the right to upset the political realities of
Europe. He did not think that Europe was yet ready for German reunification: and
he certainly could not accept that it had to take priority over everything else.
However, it would be stupid to say no to reunification. In reality there was no force
in Europe which could stop it happening. None of us were to declare war on
Germany. Nor judging by his statements was Mr. Gorbachev.
The British Prime Minister did not necessarily agree there was nothing to be
done: She thought especially that the need for negotiation on East Germanys
membership of the European Community and the inevitable requirement for a
substantial transition period between a decision in principle on reunification and
its realization in practice could be used to slow down unification . . . East
Germany must take its place in the queue for membership of the Community
(German Unification 1989/1990, 2010, pp. 216217). She as Mitterrand were
therefore very disappointed about the attitude of Jacques Delors as President of
the European Commission, who in a speech to the European Parliament on 17
January 1990 had opened the door of the Community to East Germany should it so
wish, provided . . . the German nation regains its unity through self-determination,
peacefully and democratically, in accordance with the principles of the Helsinki
Final Act, in the context of an East-West dialogue and with an eye to European
174 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

integration. But the form that it will take is . . . a matter for the Germans them-
selves.8 According to Thatchers memoirs, Mitterrand was scared to change the
fundamental direction of his foreign policy: Essentially, he had a choice between
moving faster towards a federal Europe in order to tie down the German giant or to
abandon this approach and return to that associated with General de Gaulle the
defence of French sovereignty and the striking of alliances to secure French
interests. He made the wrong decision for France. (Thatcher 1992, p. 798).
Kohl had already made intensive efforts in a letter to Mitterrand on 5 December
1989 and in a long conversation at the country estate of the French President in
Latche on 4 January 19909 to allay the French concerns by emphasizing that
Germany was committed to a deepening of the European Community, was opposed
to its own neutralization, and would not call into question the German-Polish
border. Thus after initial hesitation, on 8 December 1989 Kohl ultimately agreed
in principle to Mitterrands request to call an intergovernmental conference which
would advance the European economic and monetary union (Weidenfeld et al.
1998, p. 146). Mitterrand had realized that in the last resort the Soviet Union would
not block German unification, and that there was a danger of diplomatic isolation
and of endangering the traditionally good relations between Paris and Bonn.
Margaret Thatcher, however, came out publicly in a very blunt statement of
opposition to speedy German unification in an interview with the Wall Street
Journal on 25 January 1990.10 Ultimately she, too, had to change her position.
After the establishment of the Two Plus Four process for the international
safeguarding of German unification at a conference of the foreign ministers of the
victorious Four Powers and both German states, Foreign Minister Douglas Hurd
advised his Prime Minister on 23 February 1990 that we must not appear to be a
brake on everything. Rather, we should come forward with some positive ideas of
our own (German Unification, p. 305). Accordingly, the British representatives
overseas were informed that the unification of Germany now seems virtually
certain, that Britain had long supported the principle of German unity and that
this is something for the German people to decide, in the first instance. It laid down
the conditions, including the membership of a united Germany in NATO and German
acceptance of the border with Poland, under which it could take place (German
Unification 1989/1990, 2010, pp. 319321).
In the end, British policy was decided by security concerns, in particular the
prospect of anchoring a unified Germany in NATO. Moreover, Britains Foreign
Minister Douglas Hurd, the Foreign Office and the British Ambassador to Bonn, Sir

8
Bulletin of the European Communities (1990): Bulletin. Supplement 1/90. Luxembourg: 9.
9
Letter from Kohl to Mitterrand, 5 December 1989; Gesprach des Bundeskanzlers Kohl mit
Staatsprasident Mitterrand, 4 January 1990, see Dokumente zur Deutschlandpolitik (1998, pp.
614f., 682690).
10
See for this and the German analysis of Thatchers position: Vorlage des Ministerialdirektors
Teltschik an Bundeskanzler Kohl, Bonn, 25 January 1990; see Dokumente zur Deutschlandpolitik
(1998, pp. 719720).
2 The International Context of German Unification 175

Christopher Mallaby did not share Thatchers initially strong opposition to German
unification, but argued for a moderation of Thatchers position. By mid/late February
1990 at the latest, the British Prime Minister withdrew from the operational leader-
ship in the German question which was transferred to the Foreign Office. Ulti-
mately, Great Britain played a thoroughly constructive role in the Two Plus Four
talks. In the opinion of the main editor of the official documents on German
Unification, Patrick Salmon, Britain made a distinctive and many believed,
indispensible contribution to the final outcome (German Unification, p. XXVII).
In giving up their original resistance to speedy German unification, for both
Mitterrand and Thatcher deference to the United States played a decisive role. Already
in the spring of 1989, the U.S. long before West Germany had begun to fundamen-
tally reconsider its policy toward Europe and also toward a possible unification of the
two German states.11 Already one day after Kohls 10-point declaration on 28
November 1989, U.S. Secretary of State James Baker signaled his fundamental
approval of German unification, but conditioned this approval on four demands.
First, the self-determination of the East Germans was paramount and no vision of
unification whether a federal state, confederation or something else should be
supported or excluded, so as not to pre-empt the East Germans will. Second, unifica-
tion must occur in the context of the ongoing alignment of Germany with NATO and
with an increasingly integrated European Community, and there must be no
exchange of neutrality for unity. Third, in the interest of European stability, it
must be a peaceful, gradual and incremental process. Fourth, the inviolability of the
borders of Europe a reference above all to the German-Polish border must be
recognized. However, adjustments of borders by peaceful means an obvious refer-
ence to the German-German border was acceptable (Dokumente zur
Deutschlandpolitik 1998, p. 574). A revised version of these principles which
even more strongly supported German unification was approved by President Bush
on 4 December 1989 (Zelikow and Rice 1995, pp. 132f.), and became the basis of
American policy. In close cooperation with the West German government, this policy
was conceptually further refined and flexibly implemented over the coming months.
As was to be expected, the harshest reactions to Kohls Ten Points came from the
Soviet Union. For Foreign Minister Genscher, who flew to Moscow for a meeting
with Gorbachev on 5 December 1989, this was the least pleasant of his
encounters with the leading statesman of the Soviet Union: Never before or after
have I experienced Gorbachev so animated and so bitter (Genscher 1995, pp.
683f.). Gorbachev criticized sharply the publication of the Ten Points without
previous consultation, the ultimatums ostensibly demanded of the GDR (referring

11
Zelikow and Rice (1995, pp. 2432). Knowing the subsequent turn of events, it is open to
question whether the reorientation of American policy in the spring of 1989 has not been
overemphasized. For more insight into U.S. policy see also the book by President George Bush
and his National Security Advisor Brent Scowcroft (Bush and Scowcroft 1998) as well as the
memoirs of Bushs Foreign Minister James A. Baker (Baker 1995). See also Robert Hutchings
(1997, pp. 131203).
176 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

to West Germanys conditioning of comprehensive aid to the GDR on the latters


implementation of fundamental and irreversible transformations of its political and
economic systems), the artificial acceleration of the process by the Federal Repub-
lic and the apparent tendency to ignore existing agreements. To construct the
European house, in which the relations between the two German states could then
develop, trust was required. But what would confederation mean, preconditioned
on a unitary defense and unitary foreign policy? Where will the Federal Republic
then end up in NATO, or in the Warsaw Pact? Or will she perhaps become
neutral?12 Gorbachev at that time thus rejected the unification of Germany not
only in a federal state, but also in a confederation.
Kohl attempted to calm the General Secretary of the Communist Party of the
Soviet Union in a long letter on 14 December 1989. The destabilization of the GDR
was not in the interest of the Federal Republic. Rather, it was a consequence of the
GDRs rejection and delay of reforms, which had led to a mass exodus from the
GDR into the Federal Republic. His Ten Points were intended to provide a stable
framework for subsequent developments. They were not a road map, not a stipula-
tion of a series of sequential steps, which instead should proceed parallel and
intertwined. That is why he very consciously did not specify an end date. While
the Federal Republic remained committed to the goal of regaining German unity
freely via self-determination, it would naturally respect the choice of the people of
the GDR and heed the security concerns and sensitivities of Germanys neighbors.
Indirectly taking up Gorbachevs demand for the construction of a common Euro-
pean house, he underscored as the leitmotiv of his Ten Points embedding the
future architecture of Germany in the future architecture of Europe as a whole
(Dokumente zur Deutschlandpolitik 1998, pp. 64550).
In a speech before the Political Committee of the European Parliament in Brussels
on 19 December 1989, Soviet Foreign Minister Eduard Shevardnadze emphasized
the interest of the Soviet Union in the continued existence of two sovereign German
states and the priority of the construction of the European house. A certain ambiva-
lence in the Soviet position became apparent, however, in Shevardnadzes acknowl-
edgement in principle of Germans right to self-determination and going beyond a
position of outright rejection presented a catalog of seven questions which touched
upon the foreign-policy aspects of a hypothetical German reunification. Thus,
Shevardnadze asked for guarantees against a renewed German danger and demanded
that Germany recognize existing borders. Further questions concerned the alliance
affiliation and possible demilitarization of a unified Germany, new arrangements
concerning the presence of Allied troops in Germany, and the relationship of German
unity to the future shape of Europe as a whole. Finally, he exhorted Germany to give
due consideration to the interests of other European states (Biermann 1997, pp.
368f.). The questions were intended to underscore Soviet concerns, to point to the
impediments to German reunification and to slow down the process. They also

12
Galkin and Tschernjajew (2011, pp. 258f.). See also the study of Biermann (1997), which is
fundamental for understanding the Soviet position.
2 The International Context of German Unification 177

proved, however, that the Soviet leadership was seriously engaging the idea of
German reunification and that its position had not yet been finalized.

2.2 The Path to Unification Is Paved. The Offer of Monetary


Union and the Concept of the Two Plus Four Talks

This cautious attempt by the Soviet Union to adapt its German policy to the new
conditions since the fall of the Wall was overrun, however, by the pace of
developments in the GDR. A pivotal turning point in the policy of the Federal
Republic in this regard was Chancellor Kohls visit to Dresden on 19 and 20
December 1989. The enthusiastic reception availed to him by ten thousands of
East Germans, who welcomed him as the Chancellor of the Germans, was a
defining moment for him (Kohl 2005, pp. 10201028; 1996, p. 213). Thereafter,
he was convinced that the overwhelming majority of people in the GDR were in
favor of unification, even if its tempo and diplomatic implementation remained
open questions.
In the negotiations with Modrow, Kohl agreed to the continuation of economic
cooperation in specific matters, but fiercely rejected Modrows demand for a
burden-sharing payment of DM 15 billion, emphasizing that it was up to the
GDR to create the economic framework conditions conducive to larger investments
from Western countries.13 It was agreed, however, that both sides should enter
without delay into negotiations over a treaty on cooperation and good
neighborship, whose signing was initially planned for the spring of 1990, i.e.
before the GDR election which at that time was scheduled for the 6 May.14
Modrows failed attempts to retain a core of the state security service, the Stasi,
as well as the crisis-ridden development of the GDR more generally, occasioned
Kohl by mid-January 1990 at the latest to cease any closer cooperation with
Modrow, whom he increasingly viewed as an obstacle on the path to German
unity and to far-reaching reforms. The sending of the draft version of a treaty
with the GDR which had been drawn up in the chancellery but not yet approved at
the highest levels to the relevant ministries was stopped (Jager with Walter 1998,
p. 91), and a 17 January version15 which had been given to the head of the West

13
Chronicle of a Gesprach des Bundeskanzlers Kohl mit Ministerprasident Modrow im
erweiterten Kreis Dresden, 19. Dezember 1989, see Dokumente zur Deutschlandpolitik (1998,
pp. 668673). A Joint Communique on the conversation was published in: Presse- und
Informationsamt der Bundesregierung: Bulletin, no. 148, 20.12.1989, pp. 12491252.
14
Absichtserklarung, see Bundesarchiv, B149 (Records of the Federal Ministry of Labour and
Social Order), 7924.
15
Gesprach des Bundesministers Seiters mit Ministerprasident Modrow Berlin (Ost), 25. Januar
1990; Entwurf der Regierung der DDR. Vertrag uber Zusammenarbeit und gute Nachbarschaft
zwischen der Deutschen Demokratischen Republik und der Bundesrepublik Deutschland, see
Dokumente zur Deutschlandpolitik (1998, pp. 707716).
178 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

German chancellery, Rudolf Seiters, by the GDR on 25 January 1990 was put on
ice. Serious negotiations were postponed by the Kohl Administration until after the
East German parliamentary election and the formation of a democratically
legitimated government confirmed by the newly elected parliament (Teltschik
1991, pp. 107f.).16
The real partner of the West German government in the transition period before
the election was thus no longer the Modrow government, nor the Central Roundta-
ble and the early SED-opposition groups represented therein, but rather the people
of the GDR. Only a part of the population took part in the large demonstrations for
German unity. Several hundred thousand persons fled the GDR for West Germany,
but these too were only a minority. In the opinion of the Chair of the East-CDU,
Lothar de Maiziere, two-to-three million East Germans had their suitcases
packed.17 It was clear, further, that the vast majority of East Germans saw hope
for a better life, for more prosperity, and also for an enduring guarantee of freedom
not in a reformed socialism, an independent GDR or a Third Way between
socialism and capitalism, but in unification with the Federal Republic. It was this
together with the GDRs economic demise which ultimately stood in the way of
its internal stabilization.
The policy of the Federal Republic was a precarious tight-rope act. It had to be
careful not to provoke a radicalization of the street, which could have led to violent
clashes and to Soviet intervention. It also did not want to prematurely stabilize the
Modrow government and thereby forestall the demise of SED rule, the transition to a
West German style social market economy, and the prospects of German unification.
Subsequent developments were shaped by the breakdown of authority of the Modrow
government, the ongoing mass demonstrations, the further decline of the GDR
economy and the incessant mass exodus from the GDR of mostly younger, well-
educated employees into West Germany.18 After the Hungarian border was opened for
emigrants from the GDR, and GDR citizens who had fled to the West German
embassies in Prague and Warsaw were permitted to emigrate into the Federal Repub-
lic, followed ultimately by the fall of the Berlin Wall, more than 10,000 persons per
week were streaming into the Federal Republic from the GDR. In 1989 more than
344,000 persons emigrated, and from January to March 1990 an additional 184,000,19
until after the Volkskammer election on 18 March 1990 the resettlement wave ebbed.

16
See Kohls speech to the meeting of the CDU/CSU parliamentary caucus on 16 January 1990,
in: Archiv fur Christlich-Demokratische Politik der Konrad-Adenauer-Stiftung,
Fraktionsprotokolle.
17
Die Welt, 25 January 1990, cited in: Rodder (2009, p. 189).
18
On the composition of these emigrants by age, gender and occupational qualification as well as
motive for emigration, which was primarily lack of confidence in the policies of the GDR
leadership see Meck et al. (1992, pp. 938).
19
Data based on an undated paper by Dr. Detlev Grieswelle from the Federal Ministry for Labour
and Social Order, entitled Auf dem Weg zur Sozialunion im Deutschen Einigungsprozess.
Sozialgemeinschaft versus Abschottung, see Bundesarchiv Koblenz, B 149 Bundesministerium
fur Arbeit und Sozialordnung, I a 7, 12411.
2 The International Context of German Unification 179

The GDR was at risk of bleeding to death. For the FRG too, the mass influx from
the GDR posed serious problems, which were exacerbated by the arrival of several
hundred thousand additional ethnic German emigrants from above all Poland,
Romania and the Soviet Union, 130,000 of whom were unemployed as of December
1989.20 Among these problems were housing these immigrants, integrating them
into the social insurance system and most critically, integrating them into the
West German labor market. The first refugees from the GDR received a warm
and enthusiastic reception in West Germany. This mood turned, however, and in a
representative survey in West Germany from 21 to 23 February 1990, roughly half
of respondents expressed the opinion that the resettlers enjoyed unjustified
advantages and would take away housing and jobs.21 Further, some accused
them of exploiting the West German welfare state.
This mood was taken up and fomented by Oskar Lafontaine, who after a
triumphant victory in Saarlands state parliamentary election of 28 January 1990
quickly became crowned as the SPDs chancellor candidate in the forthcoming
elections for the Federal Parliament. Lafontaine considered the nation-state to be
historically outdated and underscored the priority of social over national solidarity
and of European over German political unity. By contrast, the Honorary Chair of
the Social Democratic Party, Willy Brandt, did not want to let Germans get stuck
on a sidetrack until someday a pan-European train had reached the station (Bahr
1998, p. 579).
Lafontaine called into question the notion of common citizenship, a position
which the SPD presidency rejected. (Grosser 1998, pp. 137139). Above all, he
wanted to block resettlers from the GDR from exploiting the social insurance
systems of the Federal Republic. The citizens of the GDR should be required to
receive special permission to stay in West Germany, which could be denied in cases
where proof of housing was lacking (Vogel 1997, pp. 307f.). In essence, he wanted
to eliminate freedom of travel and erect a new Wall made up of West German legal
paragraphs and administrative rules. His policy was internally consistent: it aimed
to stabilize the GDR as a socialist state via comprehensive economic assistance not
conditioned on (social) market economy reforms, and would have perpetuated
Germanys two-state condition indefinitely. This would only have been possible
if the border between the GDR and the Federal Republic were to be closed again in
practice and the GDR were to be completely insulated from international competi-
tion as a closed economy.

20
The number of unemployed resettlers rose in December 1989 to 128,000 and in the following
months from January to March averaged around 135,000. Because of the European dimension of
the problem, Labour and Social Order Minister Bl um called upon the relevant commissioner of the
European Commission to launch a Community initiative to facilitate the occupational integra-
tion of immigrants from Eastern Europe and the Soviet Union and resettlers from the GDR. Letter
from Blum to Ms. Vasso Papandreou on 8 February 1990, see Archiv f ur Christlich-
Demokratische Politik der Konrad-Adenauer-Stiftung, Bestand Bl um I 504/60.
21
Results of a survey by the Forsa Institute from 21 to 23 February 1990, see Jager with Walter
(1998, p. 139).
180 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

Admittedly, within the CDU/CSU as well there were heated debates on the issue
of whether to maintain the emergency admissions process for resettlers from the
GDR. It was above all Wolfgang Schauble who, using his considerable prestige as
Interior Minister and as one of the leaders of the CDU, prevented the will of broad
segments the CDU (the nearly unanimous opinion of local CDU politicians, most of
its state governors (Ministerpr asidenten), a sizable share of its parliamentary
delegation and a majority of the partys presidency) from being acted upon; they
had all wanted to do away with the emergency admissions process and thereby limit
East German immigration. As he made clear in his book The Contract and in a
November 2006 interview upon the release of a book by the Green Party leader
Antje Vollmer, if he had not been successful in this regard he would have accepted
the political consequences and surrendered his office (Schauble 1993, pp. 7177).22
Administrative measures to restrict migration from the GDR would have been
perceived by its citizens as a renunciation of West German solidarity and thus
as a slap in the face. Equally important, however, was that alongside mass
demonstrations the mass exodus from the GDR was a visible expression of the
regimes lack of legitimacy and of the strong desire of the GDR citizenry to unify
with West Germany. Stopping this would thus have undermined not only an
essential driving force of the inner-German unification process, but also the sense
of ineluctability of German unification, which was critical to the negotiations on its
diplomatic facilitation.
In this political context, the unexpected offer of monetary union with economic
reform23 on 7 February 1990 was thus a signal to the people of the GDR to remain
in their country. Moreover, it was an expression of the perception that the GDR
would not manage to transform itself from a centralized command economy into a
market economy by its own devices. Above all, though, this offer was intended to
accelerate the process of German unification without detours through a contractual
community and confederative structures. Furthermore, Kohl wanted to give the
CDU-led Alliance for Germany an attractive policy platform for the 18 March
Volkskammer election. The offer of monetary union would pull the rug out from
under the idea a DM 15 billion solidarity contribution from the Federal Republic,
which Modrow had requested anew in his visit to Bonn as head of a large East
German delegation on 13 and 14 February.
In the meantime, Modrow had attempted to stabilize the situation in the GDR, to
take the initiative in the German question and to steer and brake the unification
process on its own terms. Without consulting his party and the other parties of his
coalition government, he prepared a declaration named after the GDR anthem For
Germany, United Fatherland that foresaw German unification as a possible end
result of a long-range step-by-step plan. Modrows motives were to forestall the
demise of his party (in the meantime renamed SED/PDS), to improve the prospects

22
Report on the presentation of a book by A. Vollmer, in: Der Tagesspiegel 11 November 2006.
23
For the preparation of this offer in the Federal Finance Ministry see below Sect. 4.3.
2 The International Context of German Unification 181

of his party in the upcoming Volkskammer election, to hold open the possibility of
formation of a coalition government with the SPD after the election, and if unifica-
tion was no longer preventable, to at least steer it down an acceptable path and
thereby preserve as much as possible of the socialist achievements of the GDR.
On the 29 and 30 January he flew to Moscow to win approval of his plan from the
Soviet Union. There a controversy had erupted on 26 January 1990 among
Gorbachevs closest advisors concerning his policy alternatives on the German
question.24 Due to the critical developments in the GDR, this discussion had turned
away from strict rejection of German unification, yet no clear alternatives had yet
emerged. The products of the discussion were reflected in Gorbachevs markedly
revised position in his conversation with Modrow. After he avowed himself to the
principle of self-determination, (Biermann 1997, p. 392). Gorbachev acceded to
Modrows suggestions in principle but also voiced considerable doubts (Galkin and
Tschernjajew 2011, pp. 292301; Biermann 1997, pp. 393399; von Plato 2002, pp.
223236).25 In particular, Modrow was supposed to incorporate into his plan the
demand that the Federal Republic leave NATO and that unified Germany be
neutral. Finally, he was to coordinate his plan with the SED/PDS whose presi-
dency then on 3 February 1990 clearly distanced itself from Modrows plan for
German unification (Schindler 1999, p. 3792) but also with the other parties in his
governing coalition and above all with the SPD. In his discussions with Modrow,
Gorbachev proceeded from the assumption that in the upcoming GDR election a
majority of voters would come out in favor of the continued existence of their state
(Modrow 1991, p. 121). Modrow, he said, should seek a coalition of the SED/PDS
with the SPD, which the polls predicted would win a plurality of the votes.
While Modrow took up the demand for German neutrality, he rejected the
additional demand to refrain from going it alone. Soon after returning from Moscow
he presented his plan at a press conference in Berlin on 1 February 1990. After a
contractual community and a confederation of both German states with joint organs
and institutions, his plan foresaw as the third and final stage elections in both parts
of the Confederation to constitute a unitary German state in the form of a German
Federation or German Confederacy.26 In the context of events as they were
unfolding, this would have constituted a brake on the process of unification.
For the West German government, Modrows proposal was unacceptable
(Teltschik 1991, pp. 123f.) also because it stipulated military neutrality of both
the GDR and the FRG on the path to federation, which Moscow had demanded as a
necessary precondition to such a development. This would have led to a rupture in
West Germanys relations with its NATO partners. In particular, it would have led
to loss of American support and to the Federal Republics diplomatic isolation.

24
On these consultations, which von Plato (deviating from Biermann) dates on 25 January 1990,
see Galkin and Tschernjajew (2011, pp. 286291), Biermann (1997, pp. 388392), von Plato
(2002, pp. 187199).
25
For more on their conversation, see Gorbatschow (1999, pp. 97101), Modrow (1998, pp. 110f.).
26
On the content of this plan see Modrow (1991, Appendix 6, pp. 186188).
182 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

The plan dissipated without effect in part because as in an earlier conversation


between Gorbachev and the then General Secretary of the SED, Egon Krenz, on
1 November 1989,27 the Soviet Union rejected Modrows demand to provide
economic support to stabilize the GDR, leaving the GDR dependent on the Federal
Republic for the resolution of its economic problems.
Even before Modrows visit to Bonn, a decisive breakthrough in the German
question occurred during a conversation between Kohl and Gorbachev in Moscow
on 10 February 1990, (Dokumente zur Deutschlandpolitik 1998, pp. 795811; Kohl
2005, pp. 10621070; Teltschik 1991, pp. 138142; von Plato 2002, pp. 258273)
the groundwork for which had been laid during a visit by U.S. Secretary of State
Baker to Moscow on 7 to 10 February. Gorbachev, whom Kohl had not informed of
the offer of monetary union, approved the idea of letting the Germans decide their
own fate. It was a matter for the governments of the Federal Republic and the GDR
to decide whether they want to unify, how they want to unify, how quickly they
want to unify and when they want to unify.28 This gave a green light to German
unification, even if 2 months later the path to unification via Article 23 i.e. via
accession of the GDR to the Federal Republic rather than through a new constitu-
tion ratified by the people according to Article 146 of the Basic Law would be
sharply criticized by the Soviet Union.29 Even in the question of Germanys
alignment and neutrality, there was no unambiguous position ruling out Germanys
continued membership in NATO.
The external aspects of German unification had to be resolved in collaboration
with the Four Powers. For this purpose, the U.S. State Department developed the
concept of negotiations in a body consisting of the Four Powers with the two
German states (Zelikow and Rice 1995, pp. 167172). This conception was taken
up by Genscher who apparently modifying the original idea of the Americans
placed particular emphasis on the notion that these were not Four Plus Two, but
Two Plus Four talks. He thus underscored the leadership role of the two German
states on the path to unification (Weidenfeld et al. 1998, p. 224; Genscher 1995, pp.
716718).
The limitation of the negotiating body to the two German states and the Four
Powers was clearly in the German interest. In an exclusively Four Power confer-
ence, which this solution forestalled, Germany would have been the object of the
political and policy calculations of the victorious Four Powers. Compared to other
possible alternatives such as a peace conference encompassing all states who had
participated in the war against Germany, or treating this matter in a conference of
all 35 CSCE Member States, the Two Plus Four approach was more predictable in
its outcome and rendered far less likely the danger of interminable, dilatory
negotiations.

27
Protocol of the meeting between Krenz and Gorbachev see Hertle (1999, pp. 462482).
28
Teltschik in an interview, see Kuhn (1993, p. 108).
29
Non-paper der Regierung der UdSSR from 19 April 1990, in: Dokumente zur
Deutschlandpolitik (1998, pp. 1023f.), Biermann (1997, pp. 437441).
2 The International Context of German Unification 183

The Two Plus Four mechanism as a framework for negotiations over the external
aspects of German unification was finally accepted at a conference of 23 NATO and
Warsaw Pact states in Ottawa on 13 February 1990. In response to the demand of
the Netherlands and Italy that they, like all NATO states, should be allowed to
participate in the negotiations, Genscher replied curtly that they ranked neither
among the Four nor the Two, i.e. were neither among the Four Powers responsible
for Germany nor were they one of two German states: You are not part of the
game. (Genscher 1995, p. 729). In the subsequent negotiations, however, Poland,
which had particularly adamantly requested a seat at the table, was invited to the
third foreign ministers conference on 17 July 1990 to participate in discussions on
the German-Polish border. The United States pursued a strategy of delaying
negotiations until free elections had taken place in the GDR and until the internal
unification process had surmounted its initial hurdles. The U.S. also narrowly
restricted the topics to be negotiated. Thus, the question of Germanys alliance
membership and eventual restrictions on the strength of its armed forces were not to
be on the agenda, but instead negotiated bilaterally between the powers concerned.
In the public declaration, German unification was explicitly designated to be the
goal of the negotiations (Zelikow and Rice 1995, pp. 192f.). In conversations
between Chancellor Kohl and President Bush at Camp David on 24 and 25 February
1990, the Germans and Americans closed ranks in such a way as to decisively
impact subsequent developments. The core element of this was the definitive
commitment of the Federal Republic to the maximum goal of membership of
unified Germany in NATO, whereby financial concessions by the Federal Republic
to the Soviet Union were envisaged. In return, the United States was prepared to
protect the internal unification process from external obstruction by exerting its
influence on the members of NATO and by winning the support of Prime Minister
Thatcher and President Mitterrand. It also promised to advance the Two Plus Four
talks in the realm of international and security policy.30

2.3 German Unification Is Completed. From the Volkskammer


Election of March 1990 to the GDRs Accession
to the Federal Republic on 3 October 1990

Subsequent developments were propelled by the GDRs Volkskammer election of


18 March 1990. Until early March, the polling institutes had predicted that the Social
Democrats would win comfortably (Jung 1990, pp. 315; Roth 1990, pp. 369392).
The latter had even drafted plans for a new government down to the level of state

30
Gesprach des Bundeskanzlers Kohl mit Prasident Bush; Tischgesprache des Bundeskanzlers
Kohl mit Prasident Bush Camp David 24./25. Februar 1990; Gesprach des Bundeskanzlers Kohl
mit Prasident Bush Camp David, 25. Februar 1990, in: Dokumente zur Deutschlandpolitik (1998,
pp. 860, 873f., 874877). See further Kohl (2005, pp. 10791083), Teltschik (1991, pp. 158172).
184 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

secretaries (Walter 1999, p. 420). As it turned out, however, the election ended with a
clear victory for the Alliance for Germany, which won 48% of the votes. Of this,
40.8% went to the CDU. The election results were an unmistakable plebiscite on the
issue of rapid unification. The parties that had favored this among them the Social
Democrats received over three-quarters of the votes. The PDS (Party of Democratic
Socialism), which dropped the designation SED before the Volkskammer election,
were able to win one-sixth of the votes while all the parties and groups of the civil
rights movement together garnered a meager 5% of votes cast.31
In East Berlin, a coalition government was formed with a detailed coalition
agreement (Bundesministerium f ur innerdeutsche Beziehungen 1990). This coali-
tion consisted of the CDU (which provided the Prime Minister, Lothar de
Maiziere), its partners in the Alliance for Germany (Democracy Rising [DA] and
the German Social Union [DSU], which was modeled on the Bavarian CSU), the
Social Democrats, and the League of Free Democrats, a cluster of liberal parties.
Considerable resistance had to be overcome among the East German Social
Democrats, who at a delegates conference in East Berlin from 12 to 14 January
1990 came out for a unified Germany and who by renaming themselves the Social
Democratic Party of Germany (SPD) underscored their close connection to their
West German sister party (Sozialdemokratische Partei in der DDR 1990, pp. 131,
240). Their criticism had been directed above all against the CDUs demand to
include the DSU in the governing coalition. Domestically, the new East German
government advocated the concept of an ecologically responsible social market
economy, emphasizing the ideal of social justice, which was to be achieved in part
with the aid of strong state intervention.32 In its policy on German unification, the
government came out for rapid unification with the Federal Republic via Article 23
of the West German constitution i.e. through accession to the Federal Republic
instead of through creation of a common constitution as provided for in Article 146
of the Basic Law and for swift conclusion of a monetary union. The government
also made clear, however, that it would staunchly defend the interests of the citizens
of the GDR in the unification process and that it would call on West Germany to
demonstrate solidarity. Thus de Maiziere emphasized in his governmental declara-
tion of 19 April 1990: The division can only be overcome by dividing [our
resources].33 Differences remained on the extent to which certain social policy
achievements of the GDR should be carried over into the new state. Equally
difficult to resolve were property disputes: some dated from the expropriations
during the transition period in East Germany from the capitalist to the communist
era under Soviet military rule until 1949; others related to confiscations in the
period after the creation of the GDR in 1949 of houses and other assets of citizen of

31
On the election result see Ritter and Niehuss (1991, p. 191).
32
Governmental policy statement by Minister President de Maiziere from 19 April 1990, in:
Volkskammer, Stenografische Niederschriften, 10. Wahlperiode, 3. Conference, pp. 4151.
33
Governmental policy statement by Minister President de Maiziere from 19 April 1990, in:
Volkskammer, Stenografische Niederschriften, 10. Wahlperiode, 3. Conference, p. 44.
2 The International Context of German Unification 185

the Federal Republic, often refugees from the GDR.34 Foreign policy disagreements
existed as well. The East German governmental declaration, as criticized by the
West German chancellery,35 made no mention whatsoever of a united Germanys
membership in NATO, while it reiterated the GDRs loyalty to the Warsaw Pact
and its wish for intensification of political collaboration with the member states of
this pact. The West German chancellery further lamented that the declaration failed
to clearly renounce the demilitarization and neutralization of Germany. The East
Berlin coalitions governmental declaration thus led one to expect that while it
shared the West German goal of unification, it would adamantly represent the
interests of the GDR population in this process and with regard to the future of
the European and international security architecture. East Germany had very
different conceptions.
De Maiziere was of the opinion that unification should be effectuated in an orderly
fashion, secured by means of treaties with the Federal Republic that protected the
interests of East German citizens. He did not want it to be culminated until after
the negotiations with the Four Powers on the international aspects of unification were
resolved. He was against rushing unification by effecting it through an unconditional
declaration of accession by the GDR to the FRG, as proposed in the Volkskammer by
the DSU on 17 June 1990. He was supported in this regard above all by Richard
Schroder, Chairman of the Social Democratic faction in the Volkskammer.36
In the meantime, at the first of the Two Plus Four foreign minister conferences in
Bonn on 5 May 1990, the Soviet Foreign Minister Shevardnadze made the
surprising proposal to decouple the internal and external processes of unification,
which until then had been running simultaneously along two parallel tracks.37 This
would have allowed internal unification to be accelerated, while achievement of
German sovereignty and the decision on the international alignment of united
Germany as well as the withdrawal of Soviet troops could have been postponed
indefinitely. Initially, Foreign Minister Genscher seemed sympathetic to this sug-
gestion. He was concerned with circumventing any impediments on the path to
domestic unification and with protecting Gorbachevs standing, which could have
been weakened by a brusque rejection of the Soviet initiative (Weidenfeld et al.
1998, pp. 435439; Zelikow and Rice 1995, pp. 251f.). However, in light of the
resolute rejection of such decoupling by Kohl, the CDU/CSU parliamentary faction

34
See below Sect. 4.3.
35
For an assessment of the foreign and security policy statements of the governmental declara-
tion see Vorlage des Ministerialdirigenten Hartmann an Bundeskanzler Kohl Bonn, 19. April
1990, see Dokumente zur Deutschlandpolitik (1998, pp. 10211023). Peter Hartmann was the
Head of Group 21 (Foreign Office, Federal Ministry for Economic Cooperation) in the Federal
Chancellery and a member of the West German Two Plus Four Delegation.
36
Volkskammer, Stenografische Niederschriften, 10. Wahlperiode, 15. Conference, 17 June 1990,
pp. 534543.
37
Erstes Treffen der Auenminister der Zwei-plus-Vier Bonn, 5. Mai 1990, see Dokumente zur
Deutschlandpolitik (1998, pp. 10901094).
186 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

and the Western powers, Genscher ultimately came to drop the idea. At a speech to
the German Bundestag on 10 May 1990, he proclaimed that German unification
must not be burdened with unresolved questions.38
In the ensuing weeks, the Soviet position of clear rejection of NATO member-
ship for a united Germany began to soften. At the Bush-Gorbachev summit in
Washington and Camp David from 30 May to 3 June 1990, Gorbachev discussed
the matter with Bush. He agreed with Bushs statement that in accordance with the
CSCEs Final Act, every country and thus united Germany as well had the right
to choose its alignment and that such decisions were not to be challenged, but
tolerated (Zelikow and Rice 1995, pp. 275281).39
This was an about face in Soviet policy and a significant step on the path toward
German unification. Gorbachevs concession surprised everyone, and was appar-
ently not cleared beforehand with the Soviet leadership. In the following weeks,
probably largely in an attempt to take the wind out of the sails of the critique
anticipated to come at the Soviet Communist Party Congress 2 to 14 July in
Moscow, the Soviet position stiffened. This became particularly clear at the second
foreign ministers conference of the Two Plus Four meetings in East Berlin on 22
June 1990 the 49th anniversary of the German attack on the Soviet Union. Soviet
Foreign Minister Shevardnadze proposed that after a protracted and extremely
complicated procedure based on two treaties and a transition period of at least
5 years, the existing international treaty obligations of the GDR including its
membership in the Warsaw Pact remain intact, and the troop stationing rights of
the Four Powers be maintained as well, albeit in somewhat smaller numbers.
Germany would become a nuclear free zone. The West Germany Bundeswehr
and the East German Nationale Volksarmee (NVA) would continue to exist along-
side one another, each confined to its respective territory. Not until after the
transition period would unified Germany have the freedom to make a determination
on its subsequent alignment.40 Shevardnadzes proposal was completely unaccept-
able to the Federal Republic as well as to the Western powers.
The GDRs representatives also deviated from the common Western position in
essential points. The Social Democratic Foreign Minister of the GDR, Markus

38
Governmental policy statement by Genscher in: Deutscher Bundestag (ed.): Auf dem Weg zur
deutschen Einheit II. (1990, pp. 218225).
39
The significance of Gorbachevs acceptance in principle during his discussions with the U.S.
President from 30 May to 3 June 1990 of unified Germanys right to freely choose its alignment is
overemphasized by R odder (2002, pp. 113140, 1998, pp. 223260). As important as Gorbachevs
concession was, it still had to be implemented in the Soviet Union. Moreover, with Soviet troops in
East Germany, he had an additional trump in his hand. He would not surrender it until he received
signals that NATO would change its character and assurances of massive economic support of the
Soviet Union by the Federal Republic.
40
On this proposal, see: Zweites Treffen der Auenminister der Zwei plus Vier Berlin-
Niederschonhausen, 22 June 1990 with annexes 13. See Dokumente zur Deutschlandpolitik (1998,
pp. 12491256), see further Weidenfeld et al. (1998, pp. 473476), Zelikow and Rice (1995,
pp. 295298).
2 The International Context of German Unification 187

Meckel, a clergyman, and his three closest advisors the East German clergyman
from the civil-rights movement and Social Democratic Volkskammer deputy Hans-
Jurgen Misselwitz, the Free University of (West) Berlin peace researcher Ulrich
Albrecht, and the West German psychotherapist Carlchristian von Braunmuhl were
all close to the peace movement. Their contact to the West German Social Demo-
cratic party ran primarily through Wolfgang Wiemer, who was thrust from the Bonn
headquarters of the SPD into Meckels senior staff. Although the West German Egon
Bahr, one of the architects of Chancellor Brandts new policy of detente toward the
East since 1969, numbered among his advisors, Meckel rejected Genschers offer of
West German diplomats as advisors, for he feared intervention into his ministrys
work by the Foreign Ministry in Bonn. East Berlins Foreign Minister and his senior
staff took the position deviating from that of the Federal Republic that prior to
reunification a border agreement with Poland should be signed, or at the very least
initialed. Moreover, they advocated expanding the CSCE into a European-wide
peace architecture, advancing disarmament efforts and working toward eventual
dissolution of bloc alignments. Until then, they argued that the alliance blocs should
fundamentally change their character by expanding their political and reducing their
military efforts, and by forgoing basic elements of existing NATO strategy. Foreign
Minister Meckel and his staff did not rule out Germanys twin membership in both
military blocs. They called for the removal of all nuclear weapons stationed on
German territory by the victorious powers, and for the retention of the NVA
alongside the Bundeswehr as a territorial army, at least during a longer transition
period. Further, Meckel and his staff called for an expansion of the European
Community to encompass the GDR and the other Eastern European reform countries.
Meckels foreign policy was guided by a vision of the GDR as an intermediary
between the two blocs and thus between the East and the West.41
Meckels foreign policy initiatives were cleared and coordinated neither with the
Federal Republic nor with de Maiziere. Meckel had attempted to implement his
basic political strategy by means of concrete foreign policy initiatives and to show
an independent GDR face to the international community. At first, together with
Poland and Czechoslovakia, he advocated not only expanding the CSCE into an
instrument of a European-wide security policy, but also endowing it with a far
stronger institutional presence than hitherto by creating a Council for Security
and Cooperation and an independent CSCE Center (Weidenfeld et al. 1998,
pp. 329333; Albrecht 1992, pp. 2935). A further proposal by Foreign Minister
Meckel was to create a special security zone in Central Europe. Here, the concept of
interlocking the two alliances was supposed to pull the rug out from under the
conflict between the Western powers and the Soviet Union concerning the bloc
alignment of united Germany (Weidenfeld et al. 1998, pp. 333336). These ill-
prepared initiatives failed, and they discredited the new GDR foreign policy, which

41
On the GDRs foreign policy during the period of the de Maiziere Administration and its
leadership team see Weidenfeld et al. (1998, pp. 316336), Misselwitz (1996, pp. 4069), Albrecht
(1992), Lehmann (2010, pp. 103280).
188 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

was perceived by the diplomats of the Federal Republic and the Western powers as
largely dilettantish.
At the foreign ministers conference on 22 June Meckel to the horror of the
representatives from the Federal Republic and the Western powers declared that
the GDR did not want to get up from the table of the Two Plus Four talks until
agreement on principles and a road map was reached concerning a European
security organization. Specifically, he proposed a denuclearization of Germany, a
unilateral German declaration to halve the troop strength of the NVA and
Bundeswehr, a special agreement on the security status of the territory of the
GDR and a declaration of an unspecified nature by the member states of NATO
and the Warsaw Pact.42 In the interpretation of Teltschik, these demands would
have meant a singularization of Germany, a weakening of the NATO alliance and
a strengthening of the position of the Soviet Union, which was otherwise becoming
increasingly isolated. Hence the Western powers ignored the GDR proposals. The
latters unconditional subordination of the unification process to the construction
of a European security organization would have risked a delay in the completion
of German unification.(See Dokumente zur Deutschlandpolitik 1998, p. 1281).
They also would have contradicted the U.S. and West German strategy to not
overload the Two Plus Four process, but to instead seek the solution to the issues
unresolved with the Soviet Union in bilateral negotiations and treaties.
The path to this end was paved by Gorbachevs victory over his opponents at the
Soviet Communist Party Congress 2 to 14 July 1990. After dramatic exchanges
concerning Gorbachevs reform project of perestroika and the planned transition to
a market economy, but also on German and other foreign policy questions,
Gorbachev was re-elected General Secretary of the party by a vote of
2,4111,116. At the same time, his main opponent, Ligachev, suffered a major
defeat in the election for a newly created post of Deputy General Secretary.43
Herewith, Gorbachevs position was stabilized at least for the ensuing months,
and he had more room for maneuver in foreign policy.
During Kohls visit to Moscow and to the Caucasian home town of Gorbachev
from 14 to 16 July 1990,44 the foreign policy dimension of German unification was
at least in principle resolved. Gorbachev finally accepted united Germanys mem-
bership in NATO. However, the territory of the former GDR was to be in a
transition status for the duration of the presence of Soviet troops, during which

42
Vorlage des Ministerialdirektors Teltschik an Bundeskanzler Kohl Bonn, 28. Juni 1990, see
Dokumente zur Deutschlandpolitik (1998, p. 1281).
43
On the party Congress of the CPSU see Biermann (1997, pp. 665676).
44
Gesprach des Bundeskanzlers Kohl mit Prasident Gorbatschow Moskau, 15. Juli 1990;
Delegationsgesprach des Bundeskanzlers Kohl mit Prasident Gorbatschow Moskau, 15. Juli
1990; Gesprach des Bundeskanzlers Kohl mit Prasident Gorbatschow im erweiterten Kreis
Archys/Bezirk Stawropol, 16. Juli 1990, see Dokumente zur Deutschlandpolitik (1998, pp.
13401348, 13521367), Teltschik (1991, pp. 316342), Gorbatschow (1993, pp. 161177),
Kohl (2007, pp. 162183).
2 The International Context of German Unification 189

time no NATO units could enter. Only territorial German troops not integrated in
NATO were to be allowed in. Moscow agreed to the surrendering of the special
rights of the Four Powers, so that united Germany could receive its full sovereignty.
For the 34 years during which Soviet troops would remain in eastern Germany, a
separate treaty was negotiated. During these negotiations, it became clear that the
duration of the stay of the Soviet forces was highly dependent on the size of German
payments for the withdrawal and housing of the soldiers and their family members
after their return to the Soviet Union. A simultaneous withdrawal of Western forces
from the Federal Republic, which the Soviet Union previously had demanded as a
concession for their troops withdrawal, was no longer made a condition. The upper
limit for Germanys army was set at 370,000.
There is no clear evidence why Gorbachev made these concessions.
Gorbachevs fear that German unification might occur without Soviet involvement,
however, which would have resulted in his countrys international isolation, must
have played an important role. Moreover, Kohl and the Western powers
accommodated Gorbachev in several key points. The Federal Republic, which in
January had already fulfilled Soviet requests for subsidies for food purchases in the
West, (Teltschik 1991, pp. 100f.) had assumed a guarantee for a credit of over DM 5
billion for economic aid to the Soviet Union (Teltschik 1991, pp. 220f., 231235;
Biermann 1997, pp. 647650). Furthermore, Kohl undertook massive efforts
mostly in vain to engage the international community in an economic assistance
program for the Soviet Union.
At a foreign ministers conference in Turnberry, Scotland on 7 and 8 June and
especially at a summit meeting of heads of state in London on 5 and 6 July NATO
gave clear signals to the Soviet Union that it was prepared to shift its bloc orienta-
tion from confrontation to collaboration. NATOs political component, the defen-
sive character of which was emphasized, was to be expanded. The Warsaw Pact
states were given the right to maintain permanent diplomatic relations with NATO,
and their military contacts were to be strengthened as well. At the same time, the
prospect of a revision of NATO strategy was held out, stressing the defensive
character of the alliance. Furthermore, in accord with a longstanding Soviet request,
the CSCE was to be expanded and institutionalized (Weidenfeld et al. 1998, pp.
525f.).45 The declaration from London marked in a sense the end of the Cold War
and the acceptance of the Soviet Union and of the other members of the Warsaw
Pact as partners, not opponents. This NATO signal was immediately very positively
received in Moscow.
In the framework of this new policy of cooperation, the Federal Republics offer to
put its relationship with the Soviet Union on a new footing via a treaty on Good

45
On the careful preparation of the London summit by the United States, and the summit itself, see
Zelikow and Rice (1995, pp. 303324). On the position of the Federal Republic see: Gesprach-
sunterlagen des Bundeskanzlers Kohl f ur das Gipfeltreffen der Staats- und Regierungschefs der
Mitgliedstaaten der NATO London, 5./6. Juli 1990. See Dokumente zur Deutschlandpolitik
(1998, pp. 13091323).
190 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

Neighbour-hood, Partnership and Cooperation also seems to have influenced the


General Secretarys position (Teltschik 1991, pp. 205207).46 Ultimately
Gorbachevs priorities played a role as well. Decisive for him was the continuation
of his newly introduced policy of perestroika and the prevention of a collapse of the
Soviet empire, which at the time was already threatened in particular by the
independence ambitions of the Baltic states. In this situation, the opportunity to
shed burdens was advisable.
A further diplomatic impediment on the path to unification was resolution of the
German-Polish conflict over a border treaty (Weidenfeld et al. 1998, pp. 479509).
The Polish government had always demanded the signing or at the very least the
initialing of such a treaty prior to German unification Kohl, on the other hand,
argued that only a united Germany could make such a legal commitment. Kohls
maneuvering in this question sparked mistrust above all among the French and the
British. President Bush, too, communicated to Kohl during a conversation at Camp
David on 24 February 1990 that clarity on the border question would make it much
easier to achieve German unification.47 In particular, Kohls attempt to link resolu-
tion of the border question both with Polish renunciation of reparations claims and
with the issue of the rights of German minorities in Poland was greeted even within
Germany with sharp critique. This was expressed not only by the Social Democrats,
the PDS and the Green Party, but also by Kohls coalition partner, the FDP, and by
the Bonn Foreign Ministry. Kohls opposition to initialing a border treaty prior to
unification was predicated on a legally questionable position, for if the GDR
acceded to the Federal Republic along the lines of Article 23 of the Basic Law,
the treaty obligations of the Federal Republic would continue to remain valid. One
of the reasons for his position was the need to assuage opposition within his own
ranks and among the expellee organizations. He was of the opinion that the issue of
German unification had to be tied to that of the Oder-Neie border and that one
needed to confront the people of Germany with the alternatives of either forgoing
claims to the German eastern territories or risking the failure of unification.48
Poland eventually modified its position. After President Bush mediated an informal
agreement between Bonn and Warsaw concerning the wording of the resolution of
the border question and both German parliaments agreed to incorporate this lan-
guage into corresponding resolutions passed on 21 and 22 June (Rodder 2009, pp.
243f.), Poland accepted that the border treaty not be signed and ratified until after
unification and the establishment of full German sovereignty, but then without

46
On the position of the Soviet Union see its Uberlegungen ber
zum Inhalt eines Vertrages u
Partnerschaft und Zusammenarbeit zwischen der Union der Sozialistischen Sowjetrepubliken und
Deutschland given to Kohl on 15 July 1990. See Dokumente zur Deutschlandpolitik (1998,
pp. 13481352).
47
Gesprach von Bundeskanzler Kohl mit Prasident Bush, Camp David, 24. Februar 1990, see
Dokumente zur Deutschlandpolitik (1998, p. 887).
48
Statement in an interview with Ekkehard Kuhn, see Kuhn (1993, pp. 172f.).
2 The International Context of German Unification 191

delay. On 14 November 1990, Germany and Poland then signed the treaty, in which
they confirmed the border existing between them, declared this border to be
inviolable and assured that they each have no territorial claims against the other,
nor will they raise such claims in the future.49
New difficulty emerged ultimately from the demand of the Soviet Union for
considerable financial support from the Federal Republic for the stay, return
transport and retraining of the Soviet troops and their family members who had
been stationed in the GDR, as well as for the construction of housing for them in the
Soviet Union. These differences could only be resolved via the intervention of Kohl
who, going far beyond the original offer of the Federal Republic, ultimately
guaranteed the Soviet Union aid in the amount of DM 12 billion in addition to a
5-year, interest-free credit for DM 3 billion.50 Another problem concerned the
military status of the former GDR territory. The Soviet Union was able to secure
a provision stipulating that after the removal of the Soviet troops, the German
troops stationed in the former East Germany could not be equipped with nuclear
weapons and that no foreign forces could be either stationed in or transferred to this
territory (Weidenfeld et al. 1998, pp. 593602).
With the ceremonious signing of the Treaty on the Final Settlement with
Respect to Germany in Moscow on 12 September 1990,51 Germany regained
sovereignty over its domestic and foreign affairs. The borders of unified Germany
were defined and Germany promised that neither now nor in the future would it
stake territorial claims against other countries.
In anticipation of this result, and still before the signing of the Unification Treaty
on 31 August 1990, the Volkskammer held an emotional all-night session from 22 to
23 August and concluded by voting of 294 to 62 (with 7 abstentions) to declare the
GDRs accession to the Federal Republic effective 3 October 1990.52 After the
announcement of this result, Gregor Gysi, chairman of the SED and later the PDS
since December 1989 and leader of its faction in the Volkskammer, characterized it
in a speech in front of the latter as follows: The Parliament has resolved to do no
more and no less than usher in the demise of the German Democratic Republic on
3 October 1990.53 Upon hearing this, the CDU, DA and DSU factions broke out in
ebullient applause, as did some members of the SPD faction. The date was chosen
so that the CSCE foreign ministers conference in New York on 1 October could
confirm the result of the Two Plus Four negotiations and Foreign Minister Genscher
could travel back from this meeting in time for the Unification celebration in Berlin.

49
Text of the treaty in: Europa Archiv (1991: pp. D 310f.); see further Kempen (1997, pp. 139150).
50
Telefongesprach des Bundeskanzlers Kohl mit Prasident Gorbatschow 7. September 1990, see
Dokumente zur Deutschlandpolitik (1998, pp. 15271530), Teltschik (1991, pp. 359363).
51
A detailed summary and analysis of the treaty can be found in: Brand (1993, pp. 254265).
52
Volkskammer, Stenografische Niederschriften, 10. Wahlperiode, 30. Conference 22 and 23
August 1990, pp. 13711385.
53
Volkskammer, Stenografische Niederschriften, 10. Wahlperiode, 30. Conference 22 and 23
August 1990, p. 1382.
192 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

Even before the ratification of the treaty, which would not occur until after
considerable quarrels on 4 March 1991 in Moscow (Biermann 1997, pp.
757767), the Four Powers suspended their rights and obligations (Weidenfeld
et al. 1998, pp. 613615), so that upon the consummation of unification on
3 October 1990 unified Germany would be a sovereign state from the very
beginning.

2.4 German and European Unification: An Assessment

How did it happen that the Soviet Union conceded so much and the Federal
Republic was able to achieve its goals with regard to the foreign and security policy
dimensions of unification so completely? In renouncing the Brezhnev Doctrine, the
Soviet Union had recognized the right to self-determination of every people.
Thereafter, it could not stand in the way of the freedom and unity movement in
the GDR. Getting it to surrender its rights in Germany as one of the Four Powers,
however, as well as to accept unified Germanys membership in NATO and
withdraw its own troops from the territory of the GDR without simultaneous
withdrawal of Western forces from the FRG, could only be achieved through
lengthy and arduous negotiations. The ultimate willingness of the Soviet Union to
make concessions had multiple causes.
First, the fact that the Western bloc countries were able to overcome initial
differences and ultimately close ranks.
Second, the position of the Warsaw Pact states. Already in January, the most
important Eastern European states of Poland, Hungary and the Czechoslovakian
Republic, as well as Romania, had accepted German unification. By July 1990, as a
consequence of their need for security against a renewal of Soviet or Russian
imperialism or possible aggression of a powerful Germany not bound by NATO
membership, they had all come to prefer unified Germanys membership in NATO
to its neutralization.54
Third, the economic weakness of the Soviet Union and its resulting desire for
financial assistance from the Federal Republic and other Western states. One cannot
say that the Soviet Union sold Germany its unification, but the material benefits
provided to it by the Federal Republic certainly made it easier for Gorbachev to
accept German unification and unified Germanys membership in NATO. When
one adds up Germanys loan guarantees (which to a large extent did not result in
German payments), its subsidies for exports from the new federal states to the
Soviet Union, and the federally secured Hermes Credit Insurance Companys loan
guarantees for German deliveries to the Soviet Union, German support payments to
the Soviet Union totaled DM 57.3 billion by the spring of 1991, according to a

54
On developments among the members of the Warsaw Pact see above all the account of
Biermann (1997, pp. 264280, 780).
2 The International Context of German Unification 193

calculation by Germanys Ministry of Finance on 12 April 1991 (see the accounting


in Grosser 1998, pp. 432f.). Of critical importance was, further, that due to its own
economic weakness, the Soviet Union was not in a position to offer the GDR
assistance during the decisive months from October 1989 to March 1990.
Fourth, the USSRs hope of domestic political relief. For Gorbachev, the
German question was overshadowed by two more urgent priorities: continuing
his policy of economic and party reform and forestalling the danger of the dissolu-
tion of the Soviet Union through the splintering off of the Baltic republics and the
ever more virulent nationalist conflicts.
Fifth, the ever more apparent looming dissolution of the Warsaw Pact made the
maintenance of a Soviet military outpost on the territory of the former GDR
untenable over the long term.
Sixth, fear of international isolation and of imperiling the processes of disarma-
ment and of transcending the Cold War. Here, the Soviet Union placed special
emphasis on maintaining good relations with the United States as the leading
superpower, but also to the Federal Republic as an especially important trade
partner and in its view the most significant European power.
Finally, seventh, the importance of Gorbachevs good personal relationships
with President Bush and with Chancellor Kohl to whom he made decisive
concessions in February and July 1990 should not be underestimated.
The Soviet position was also weakened by its failure to develop a clear concep-
tion of its German and European policy. Gorbachevs notion of the creation of a
Common European Home remained vague and was never operationalized. On the
alignment issue, the Soviet Union vacillated between the neutralization of unified
Germany, its membership in both military blocs and the minimal requirement that
NATO not be expanded to encompass East Germany. Overall, Soviet policy gave
the impression that it was driven by events; it never made a serious and
conceptually consistent attempt at steering them.
The opposite was true of the United States. With astonishing consistency, since the
spring of 1989 it pursued the twin goals of liberating Eastern Europe from Soviet
domination and reunifying Germany. By being careful not to undermine Gorbachevs
position within the Soviet power structure, it managed to avoid endangering
the meticulously calculated policy initiatives aimed at reducing the US and Soviet
nuclear arsenals, reforming NATO and transcending the Cold War. Since November
1989, but especially since the meetings between Kohl and Bush at Camp David on 24
and 25 February, 1990, the determination and implementation of U.S. policy in these
matters, which had been the work primarily of President Bush and his Foreign
Minister James A. Baker, had been taking place in close coordination with the Federal
Republic. Ultimately, the United States was able to achieve the maximum goal of
its German policy the Western alignment of unified Germany. The U.S. was clearly
the leading power in the Western alliance, and as such, despite initial difficulties,
was able to oblige Great Britain and France to support its approach. The mechanism
of the Two Plus Four talks played a critical role in this process.
Great Britain and France, especially Prime Minister Margaret Thatcher and
President Francois Mitterrand, were initially skeptical of German reunification,
194 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

for they feared that it would destabilize the international order and that a unified
Germany would dominate Europe. Moreover, they feared that rapid German unifi-
cation would critically weaken Gorbachevs position within the Soviet Union and
could thus imperil the domestic reform process in the Soviet Union. However,
Britain and France never developed a concrete policy in opposition to German
reunification. They shied away from going it alone due to the risk of international
isolation. A joint approach, which could have possibly included the Soviet Union,
did not materialize in part due to fundamentally opposing interests. For Great
Britain, security interests were paramount. It rejected in particular Gorbachevs con-
ception of the replacement of the two blocs by a European-wide peace architecture
an idea which won some sympathy from President Mitterrand and was concerned
not to endanger its close relationship with the United States. For France, the
primary objectives were continuation of European integration through the prepara-
tion of a European economic and monetary union, which Great Britain opposed,
and an even greater embedding of Germany in the European Community. Both
powers realized that the process of German unification was ultimately unstoppable,
that the Soviet Union would ultimately not attempt to veto German unification, and
that under these conditions the policy which best satisfied their security interests
was the integration of unified Germany in NATO.
German unification was a catalyst of the European integration process
(Weidenfeld et al. 1998, p. 420). Perceiving this opportunity, the French European
Commission President, Jacques Delors, early and unambiguously supported
German unification and the incorporation of the GDR into the European Commu-
nity. Already in early January 1990 he stated in an interview that as soon as East
Germany becomes a pluralistic democracy with an open market economy, it
would assume its place in the Community.55 Soon thereafter, in a speech to the
European Parliament, he declared East Germany to be a special case (Weidenfeld
et al. 1998, p. 385). This meant that the existing policy, which had given priority to
deepening and integrating the Community before expanding it, and according to
which no new members were to be accepted before the end of 1992, was being
changed. At the same time, supported by the German Vice President of the
European Commission, Martin Bangemann, Delors attempted to assuage the
concerns of Commission members and Member States that Germany would assume
a hegemonic position in Europe.
Already on 13 March 1990, before the Volkskammer election, the European
Community had initialed a trade and cooperation agreement with the GDR, which
was then signed on 8 May. By the time of its signing, the EC-GDR treaty was
already outdated only a few weeks later the Federal Republic and the GDR would
sign a treaty to create a monetary, economic and social union effective 1 July 1990.
Since the European Community, like the West German government, favored the

55
Interview in The Irish Times on 6 January 1990, cited in Teltschik (1991, p. 102). Delors
support of German unification and his full incorporation of the new federal states in the EC are
underscored strongly in Kohl (2005, pp. 1015f.).
2 The International Context of German Unification 195

GDRs accession based on Article 23, Brussels proceeded from the assumption that
no formal accession negotiations between the EC and the GDR would be necessary;
eastern Germany would simply be incorporated into the Community via united
Germany. Unification according to Article 146 would have probably forced the EC
to decide on united Germanys entrance into the E.C. after arduous and protracted
negotiations. Avoiding this was in the interest of both the West German govern-
ment and that of the GDR. On the other hand, accession according to Article 23 also
made numerous interim arrangements necessary. The elaboration of these
regulations became the collaborative work of the Bonn ministries, the government
in East Berlin, and the European Commission (which hereby acquired an opportu-
nity to make its mark on the process).56 At a special meeting of the prime ministers
and presidents of the Member States of the European Community in Dublin on 28
April 1990, the closing document greatly welcomed Germanys unification and
expressed confidence that unification will become a positive factor in the devel-
opment of Europe in general and of the Community in particular. However, the EC
also staked a claim to be informed about all important measures undertaken by both
German governments with regard to harmonization of policies and legislation and
to be included in these discussions to the fullest extent.57 At the same meeting, a
German-French initiative was approved to call a second conference simultaneous
with the planned governmental conference on the European economic and mone-
tary union. The new conference would focus on realization of European political
union.
This reinforced the link constantly underscored by Kohl between German and
European unification. The initiative stemmed from a compromise between the
French government, which was concerned primarily with rapid achievement of
European economic and monetary union, and the German government, which
wanted to strengthen the democratic legitimacy of the Community by expanding
the competencies of the European parliament and also wanted to advance the goal
of the development of a common foreign and security policy. The theory often put
forward that to win Mitterrands approval for German unification, Kohl had to more
or less pay the price of accepting European monetary union and hence forsake the
D-mark, is not grounded in fact, for in 1988 Kohl had already expressed his
fundamental support for monetary union, and did so again in 1990 (Grosser 1998,
p. 403). It is, however, correct, that the timing had changed. The original German
position foresaw monetary union as the icing on the cake of political integration.
But the latter was not only opposed vigorously by Britain, but also met with
considerable reserve by France, which was reluctant to surrender further sover-
eignty rights and strengthen the European Parliament. It was now becoming ever

56
See the excellent account in Grosser (1998, pp. 399401, 405408).
57
Schlussfolgerungen des Vorsitzes des Europaischen Rates zur 83. Ratssitzung (Sondertagung)
am 28. April 1990 in Dublin, printed in: Weidenfeld and Wessels (1991, pp. 402407, esp.: 402f.)
On the extraordinarily positive assessment of the special summit of the EC in Dublin see Kohl
(2007, pp. 9597).
196 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

more clear that political union was not achievable prior to monetary union, nor
would it be possible to make the latter conditional on the former. Thus, European
political unification became decoupled from the goals of economic and monetary
union.
In incorporating the GDR, a number of fundamental problems emerged
concerning the transition period and beyond. If the GDR was to be incorporated
into the customs area of the EC already as a result of the German-German monetary
union of 1 July 1990, how could one ensure that it on the one hand upheld its trade
treaties with the COMECON states, as Bonn and East Berlin both wished in the
interest of maintenance of trade with the East but also as a concession to the Eastern
European countries and the Soviet Union, and on the other hand that the EC was not
flooded with goods from the East? How could the generous national subsidies that
the Federal Republic was providing to East Germanys agricultural and other
economic branches to support the transition from a command to a market economy
be reconciled with the competition law of the EC? The Federal Republic was able to
resolve all these issues in close collaboration with the European Commission. The
Commission was involved in the negotiations on the German-German State Treaty
not until the last minute, but in those on the Unification Treaty from the very
beginning (Grosser 1998, pp. 403f., 407f.).
A particularly thorny problem resulted from the European Commissions desire
to give the GDR solidarity assistance before its accession to the Federal Republic,
and thereafter to give it transfers in the form of a Special Structural Fund for the
new states in the East of Germany. Chancellor Kohl argued vehemently against this
plan because for foreign-policy reasons he wanted to avoid at all costs the impres-
sion that German unification was occurring at the expense of the weaker Member
States of the European Community. Moreover, for domestic political reasons the
incessant criticism at home of the degree of German net transfers to the EC he
opposed an increase in the level of contributions of EC Member States, including
Germany, to the EC. He ultimately accepted a measure, however, whereby the new
German states would receive a billion ECU annually from the EC from 1991 to
1993, without the revenues of the EC being increased or the funds for the previously
supported regions being reduced (Grosser 1998, p. 403; Weidenfeld et al. 1998,
pp. 401411).
The principal international actors in the process of German unification were the
Soviet Union, the United States and the Federal Republic. The GDR, which played
an oft-underestimated role in the internal unification process and was able to
preserve at least some of its interests in the State Treaty and Unification Treaty,
had no appreciable influence on the external dimensions of German unification with
the exception of the negotiation of transition regulations with the EC. This was
because of its leaders lack of professionalism and isolation in the Two Plus Four
negotiations. Following the United States, Great Britain and France had
collaborated in the elaboration of the details of the concluding treaty of 12 September,
but were not involved in making key decisions. Since January 1990, the
European Community and in particular the European Commission had been
extraordinarily constructive in their support of the unification process and thus to
2 The International Context of German Unification 197

a certain extent had involved even the smaller Member States of the European
Community in this process.
In Germany, the chief actors were the people of the GDR. Without their desire
for freedom and self-determination, unification would never have occurred. Their
shaking off of SED hegemony was spurred on decisively by the successful example
of the reform movement in Poland. Since its founding as an independent union
movement in 1980, Solidarity had become the bearer of the hopes of Eastern
Europeans for freedom and democracy throughout the entire Soviet sphere of
influence. Poland was the model for the roundtables. Moreover, in the aftermath
of its partially free elections on 24 June 1989, Poland saw the formation of the first
non-communist government in the East bloc on 24 August 1989. It was headed by
Tadeusz Mazowiecki, a Solidarity advisor, as Prime Minister. The developments in
Czechoslovakia, too, whose Charter 77 became the manifesto of the civil rights
movement, and Hungary, which had opened its borders to the West even before
the fall of the Wall, had encouraged the forces which were forming in opposition to
the power monopoly of the SED. In the GDR opposition, too, the civil rights
movement which was splintered among many groups played a decisive role
early on, during which time it was able to take advantage of the safe haven provided
for dissidents by parts of the Protestant churches. It focused its efforts on achieving
freedom and democratic reforms, but for the most part not on the overthrowing of
the GDR. It came into the open more and more in the late summer and autumn of
1989, establishing new organizations, the most important of which were the New
Forum and the Social Democratic Party. It soon became overshadowed, however,
by the emergence of a grass-roots movement among the broader populace which
did seek the toppling of the GDR, the abolition (not mere reform) of socialism, and
finally economic and political unification with the Federal Republic. The West
German government and the newly forming parties in the GDR, which as the East
German CDU, a former bloc-party, were massively supported by their counterparts
in the Federal Republic, attempted to politically channel this populist movement. In
this regard, it was critical that the unification process coincided with the West
German parliamentary election scheduled for the end of 1990. It soon became clear
that policy toward German unification was to become the decisive issue in this
election. This had been true of the Volkskammer election, whose outcome had been
justifiably viewed as a plebiscite on reunification, and it was true of the subsequent
Bundestag election as well. As a result, partisan jostling for position became
unavoidably linked with unification policy. This made an all-party coalition or
even a grand coalition around the unification question attractive to neither the
governing parties nor the opposition parties not only because of divergent
emphases in matters of content and timing, but also because of the purported
electoral effects. Still, this did not preclude the Social Democrats ultimate assent
to the State Treaty and Unification Treaty. But the playbook was in the
governments hand.
This was very cleverly exploited by Chancellor Kohl, in particular in his
Ten Points at the end of November 1989, and in his offer at the beginning of
February 1990 of monetary union. Indeed, in securing German unification on the
198 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

international stage, Kohl became the predominant figure in German politics and it
was as the Unity Chancellor that he and his coalition government of CDU/CSU
and FDP won a clear majority in the first elections to the unified German parliament
(Bundestag) on 2 December 1990.58 Kohl was supported in this endeavor by the
chancellery staff in general, and with particular skill and loyalty by his closest
foreign policy advisor, Horst Teltschik. Kohls opponent and partner in the foreign
policy of unification was Hans-Dietrich Genscher, Foreign Minister and the most
prominent FDP politician, and the Foreign Office over which he presided.59 Both
shared the goal of achieving German unification while maintaining Western align-
ment. Kohl and Genscher had different points of emphasis in this process, however.
Genscher, for example, was sooner and more willing than Kohl to accommodate the
Poles desire for permanent, unqualified recognition of the existing German-Polish
border. Further, Genscher as initially his US counterpart Baker was prepared to
accept a more generous special military status for the former GDR territories and a
greater reduction in the German armed forces after unification than was ultimately
agreed to in the treaty of 12 September 1990. Further, in the interest of sounding out
the Soviet position, he gave greater consideration to the Soviet proposals. More-
over, Genscher not only had some substantive disagreements with Kohl, he also
needed to establish a clear public profile for the role of himself and his Free
Democratic Party in shaping unification.
Kohls political style was characterized by a personal touch. He built trust with
foreign heads of state and government in countless telephone conversations, semi-
personal letters and one-on-one conversations. In so doing, he consciously sought
quasi-private contact via friendship and male bonding in order to achieve decisive
political breakthroughs. Typical in this regard were his encounters with Gorbachev
in which he was able to mend their relationship, which had originally been severely
damaged by his untoward comparison of Gorbachev to Nazi propaganda minister
Joseph Goebbels.60 The personal character of the relationship became particularly
clear during a walk of the two men of state on the bank of the Rhine during
Gorbachevs visit to Bonn in June of 1989, during which they exchanged memories
of their youths. Kohl remembered that he made reference to the Rhine to express his
conviction that Germany would ultimately be unified. The water of the river flows to
the sea and when you dam up a river, it floods the banks and destroys them, but the

58
On the election results for Germany as a whole and separately for the western and eastern parts
of the country, see: Ritter and Niehuss (1991, pp. 104f.).
59
Existing accounts of West German foreign policy on the German question suffer from the
differential availability of source material. In the extensive edition from the files of the Federal
Chancellery for 1989/90, the undoubtedly significant role of the chancellor is clearly evident,
while the activities of the Foreign Office are less well-known due to the fact that its materials
became available to scholars only since 2009. Genschers memoirs mitigate this gap in the sources
to some extent, although some passages are clearly burnished out of consideration for Germanys
allies, particularly France.
60
Interview of Chancellor Kohl with the American magazine Newsweek in October 1986. On this
and the Soviet reaction see Biermann (1997, p. 101).
2 The International Context of German Unification 199

water still goes to the sea and so it is as well with German unification.61 Kohl also
gave a personal touch to his visit of Gorbachev at his dacha in the Caucasus village of
Archys in mid-July 1990 following the final Soviet acceptance of unified Germanys
NATO membership. With President Bush, too, whom Kohl visited several times in
Washington and at Camp David and with whom he remained in regular contact by
telephone and letters, he was able to develop close personal trust and a friendship on a
first-name basis. Kohl mitigated the original tensions with France in the question of
German reunification via letters to and personal encounters with Mitterrand, with
whom he was also on a first name basis. Only his relationship with Britains Prime
Minister Thatcher remained official and cool in tone, characterized by her mistrust. In
a different way, Foreign Minister Genscher also pursued highly personal diplomacy.
Particularly vis-a-vis his Soviet colleague Shevardnadze, whom he met 13 times 1990
for negotiations often lasting five hours (Hilger 2011, p. 9), he was able to cultivate a
close personal relationship. Their meeting in the Belorussian city of Brest had an
especially emotional character, for it was the place where the latters elder brother had
fallen during the first days of the German attack on the Soviet Union in 1941. Their
shared visit to the cemetery where his brother was buried was an expression of an ever
more intimate friendship, with political implications (Genscher 1995, pp. 805815).
Finally, we must also consider the role of timing in German unification. In a
conversation with President Bush on 17 May in Washington, Kohl compared his
situation with that of a farmer who provisorily, because a storm is looming, wants
to bring in his hay harvest.62 Genscher, too, was of the opinion that a Damocles
sword on a silk thread was hanging over them and that the process of unification
could be thwarted or even reversed by unforeseen circumstances (Genscher 1995,
p. 813.) The notion that the window in time was very small was predicated above all
on the fear that Gorbachev could be assassinated or overthrown in a coup by his
domestic opponents. This could result in a military dictatorship in the Soviet Union
which could be expected to reject any concessions to the West or to even try to halt
by force the democratization of Eastern Europe and German unification. Concern
over Gorbachevs standing went both ways. First, it supported Thatchers and
Mitterrands case for slowing if not blocking the unification process. But one
could also draw from Gorbachevs precarious situation the opposite conclusion,
namely that one must urgently consummate German unification and thereby create
an irreversible fait accompli.
Teltschik had later posed the question of what would have happened if Iraq had
marched into Kuwait and thus unleashed the Gulf War not in early August but

61
Interview by Kuhn with Kohl, see Kuhn (1993, pp. 3234). The Soviet interpreter present at this
talk however denied that the remark was made and that the subject of German unity was
mentioned. See Heumann (2012, p. 253).
62
Delegationsgesprach des Bundeskanzlers Kohl mit Prasident Bush Washington, 17. Mai 1990,
see Dokumente zur Deutschlandpolitik (1998, pp. 11261132, quotation, p. 1127).
200 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

2 months earlier.63 The attention and energies of the United States would be
consumed by this war in the ensuing months. Moreover, in view of this invasion,
the U.S. had to be particularly accommodating vis-a-vis the Soviet Union. In early
June the internal process of German unification would have likely been unstoppa-
ble, but it is highly doubtful whether the parallel process of negotiations over the
external aspects of unification, particularly unified Germanys alignment with
NATO, the surrendering of Allied rights and privileges in Germany, and the
withdrawal of Soviet troops from eastern Germany would have still come to
fruition. Taking advantage of the opportunity for German unification within this
narrow time frame was without doubt a work of statesmanship.

3 Social Policy in the Process of Unification

German unification was not only a central component of a critical juncture in the
history of world affairs, it also represented a major turning point in the history of the
German welfare state.64 Of course, the deeper problems which underlie the current
crisis of the German and European welfare state pre-date German unification. To
list a few: the aging of the population due to the dramatic drop off in the birth rate,
the decline in the significance of the family as an institution protecting against life
crises, the explosion of health care costs, and changes in the work world. Among the
latter are the reduction in full-time work covered by social insurance due to the
structural transformation of the economy, the inflexibility of labor law, the sharp-
ening of competition through the Europeanization of labor markets and the globali-
zation of European business and financial markets, the struggle over the
maintenance of Germany as a production site in light of increased competition
from low-wage countries in the wake of the Eastern expansion of the European
Union. Until 2005 the consequences of these developments were tepid economic

63
Interview with Teltschik in: Kuhn (1993, pp. 174f.). See further Teltschik (1991, pp. 350354).
The significance of the rapid resolution of the most critical foreign-policy dimensions of German
unification prior to the outbreak of the Iraq war, and the role of time more generally, is also
strongly underscored in Zelikow and Rice (1995, pp. 345f., 366).
64
The German term Sozialstaat is translated throughout this essay with the established English
term welfare state, even though in German the meaning of the concepts Sozialstaat (literally,
social state) and Wohlfahrtsstaat (welfare state) are not completely identical. The term
Sozialstaat was coined in the mid-19th century by the public administration scholar Lorenz von
Stein. Today it refers above all to the constitutional obligation of the state to support the right of all
human beings to live a humane existence by guaranteeing a set of social rights and benefits. By
contrast, the German term Wohlfahrtsstaat has long had a negative connotation due to its conceptual
association with antipoverty programs and the cradle-to-grave welfare state. In the English-speaking
world, the term welfare state emerged during the Second World War in opposition to the authoritar-
ian state, particularly that of Nazi Germany and Stalinist Russia. Today, the term welfare state refers
above all to the institutions of social security and social protection, and in its broader sense also
encompasses the states responsibility to provide education. For a more thorough account of these
distinct concepts and their historical origins see Ritter (2010, pp. 416) and Kaufmann (2013a).
3 Social Policy in the Process of Unification 201

growth and high structural unemployment, which had persisted since the mid-
1970s. In times of solid economic growth this unemployment declined only mar-
ginally, while during economic crises it reached an ever higher base level, with a
large segment of long-term unemployed. Probably due to wage restraint, which
improved the competitive position of the German economy, as well as to a more
flexible labor market and social policy reforms, unemployment declined signifi-
cantly from an annual average of 4,861,000 in 2005 to 3,268,000 in 2008. Contrary
to expectations, during the severe financial and economic crisis following the
autumn of 2008 it rose only to 3,643,000 by February 2010. This better than
expected outcome was partly due to the widespread use of short-time allowance
(Kurzarbeitergeld), a wage-replacement benefit for workers in companies that need
to reduce employees working hours due to lack of orders. Primarily due to an
export boom in the German economy, as of September 2011 unemployment has
now fallen below its 2008 level.
However, many of the new jobs created since 2005 are precarious and not
covered by social insurance. To ensure an adequate level of social protection, an
employee needs to have been employed long-term, full-time in a job covered by
social insurance and protected by labor law against unfair dismissal. This standard
employment relationship became ever more widespread since industrialization, but
has been experiencing a crisis since the 1970s and is now in danger of eroding ever
further. There are many reasons for this. The structural transformation of the
economy and the near elimination of entire branches of industry by competition
from low-wage countries rendered some forms of skilled labor such as that
performed by miners or textile workers less necessary and led to the displacement
from the workforce of entire occupational groups as well as of unskilled workers
and of those too inflexible to adapt. The increasing labor market participation of
women, which in the GDR included mothers of small children, gave rise to a desire
for more individualized forms of work which were more compatible with childcare
responsibilities. Men too desired more flexible work forms, primarily to accommo-
date their leisure and consumption needs. The tendency toward individualization of
employment relations was buoyed by technological change computer work can,
for example, be performed in ones own home. But it has also been furthered by the
desire by many employers to by-pass the standard employment relationship, which
they view as burdened by legal regulations, above all dismissal protection and the
payment of large redundancy payments. From this there have resulted myriad forms
of pseudo self-employment, whereby employers can avoid actually hiring an
employee and paying social insurance contributions. Time-limited work contracts,
part-time jobs (desired by many women in the old German states but viewed as a
makeshift option by most women in the new states), less-than-part-time jobs,
labor leasing and also clandestine employment have all gained in significance. All
these forms of employment, as well as telecommuting, independent contracting,
and finally also holding multiple part-time jobs simultaneously have served to
loosen the traditionally close attachment particularly in Germany of workers
to the occupation in which they were trained, to their employer and to the job
availed them by that employer. The increase in such precarious work arrangements
is a by-product of the growing demand for deregulation and flexibilization of the
202 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

labor market. This has weakened the productive factor labor vis-a-vis the factors
capital, management and also knowledge.
Because the financing of the social insurance system is particularly closely
related to employment, the German welfare state is especially hard hit by these
changes in the world of work.65 Efforts to reform the German welfare state and its
adaptation to these dramatically changed conditions, however, must also cope with
the very high degree of path dependency of fundamental norms and institutions.
Despite increased constraints on the sovereignty and governance capacity of nation-
states in the wake of Europeanization and globalization in the 1980s, some attempts
at reforming the German welfare state were made. The number of gainfully
employed persons in the old Federal Republic increased 1983 to 1990 by over
two million, unemployment sank from 9.1% to 7.2%, and social expenditure as a
share of GDP shrank from 30.0% to 26.9% (Bundesministerium fur Arbeit und
Sozialordnung 1999, vol. West, pp. 22, 120; Bundesministerium fur Gesundheit
und Soziale Sicherung 2005, p. 192). The rise in health care costs was also slowed,
and the public pension system was put on a stronger foundation by a major pension
reform passed by the Bundestag on 9 November 1989, the day on which the Wall
fell. It had been agreed to by all the large parties and the social partners. This reform
took effect on 1 January 1992. Pensions were herewith based not on gross but net
wages, and the crediting of non-contributory years was made far more restrictive
than hitherto. These reforms yielded a steep reduction in expenditures. At the same
time, other reforms in particular through the crediting of child-care years in the
public pension scheme enhanced benefits for families, while still others relaxed
dismissal protection regulations. It thus seemed possible that in the structural
transformation from an industrial to a modern information and service society,
the German model of Rhenish capitalism or a social market economy could
protect workers from this transformations social consequences through the close
cooperation of the state and the social partners.
When reunification occurred, these tendencies toward consolidation of the
Federal Republics welfare state (Bundesministerium fur Gesundheit und Soziale
Sicherung and Bundesarchiv 2005; Alber 2000, pp. 235275) and public finances
came to an abrupt halt. Unemployment, non-wage labor costs, the ratio of social
expenditures to GDP, and public debt all increased dramatically (Bundesmi-
nisterium f ur Arbeit und Sozialordnung 1999, vol. West, pp. 120f.; Bundesmi-
nisterium f ur Gesundheit und Soziale Sicherung 2005, pp. 192f.).66 Hence the first
proposition I espouse is that unification exacerbated decisively the latent crisis of
the German welfare state. Closely related to this is a second proposition, namely
that in light of the economic problems and constellation of political forces, there
was ultimately no alternative to extending the West German welfare state to the
East. This is not to deny several grave errors in the social policy of unification,
which will be treated below.

65
On changes in the world of work see Zacher (1999, pp. 147).
66
Die Entwicklung der Staatsverschuldung seit der deutschen Vereinigung, in: Deutsche
Bundesbank 1997, pp. 1732.
3 Social Policy in the Process of Unification 203

Finally, third, it cannot be overlooked that the prospect of the first free elections
in GDR history and above all the Federal Republics Bundestag election sched-
uled for the end of 1990 cast a shadow on the foreign, domestic and especially the
social policy of unification. These policies were driven to a large extent by
this upcoming election and by the behavior of political actors who soon realized
that reunification would become the central election issue, and that the outcome of
the election would depend heavily on the mood of the new citizens in the East. The
timing both of Kohls famous Ten Point Plan of 28 November 1989 and of the offer
of monetary union on 7 February 1990 were heavily influenced by Kohls desire to
take the political initiative on the German question.67 The favorable exchange rate
of one-to-one for pensions, wages and salaries for the transition from East
Germanys Ostmark to the D-mark as well as the generous conversion rate for
pensions were aimed directly at the new voters in the East.
In what follows, I will first sketch the positions of Germanys main social,
political and economic actors on social policy during unification. Then, I will
outline the problems and controversial issues of unification in the central realms
of social policy: pension insurance, veterans care, social assistance and charitable
social services, women and family policies, health and long-term care, labor law,
labor relations, and labor market policy. Finally, I will consider the consequences of
reunification for the German welfare state as a whole, and explore whether funda-
mental alternatives to this policy were available.

3.1 The Positions of the Germanys Main Political and Social


Actors on Social Policy During Unification

Let us first observe the positions of the main political and social actors. Social
policy integration was not part of the Federal Republics original offer to the GDR
on 7 February 1990, namely that of a monetary union with economic reform.
Hans Tietmeyer, who served for many years as State Secretary in the Federal
Ministry of Finance and later as the President of the Bundesbank, and who headed
the West German delegation in the negotiations on the first State Treaty of 18 May
1990 on monetary union, later regretted that his idea of deferring social policy
integration of the GDR or at least not applying some parts of West Germanys
highly developed labor and social legislation during a transition period in order
to ease the process of economic transformation in the East was politically
untenable (Tietmeyer 1994, p. 66). His position was shared by some West German
ministries and by the Bundesbank as well. In particular, the Ministries of Economy
and Finance wanted a gradual process of adaptation in order to both ensure the
survival and competitiveness of East German firms and to reduce the costs that the

67
See above Sect. 2.1 and 2.2.
204 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

Federal Republic would have to bear. Further, they advocated applying a simplified,
more flexible version of West German labor law to the East, so as to attract private
investment and give relief to firms. This approach found a great deal of support,
particularly in the FDP, which was part of the governing coalition.
In the GDR, the Coalition Agreement of 12 April 199068 spelled out the basic
position of the coalition government, which was made up of the CDU, SPD,
Democracy Rising, DSU, the Liberals and some independent ministers. The
passages concerning social policy reflected the positions of East Germanys Social
Democratic Party, which had been counseled intensively by its West German
counterpart.69 Following this counsel, any curtailments in the labor law and social
protection provisions existing in the Federal Republic in the course of their transfer
to the GDR were rejected. Moreover, the Coalition Agreement called for the
maintenance of the more advanced social achievements of the GDR, i.e. in
dismissal protection, maternal leave and family policy. Further, the GDR wanted
to anchor the basic social right to work in a shared constitution, to preserve the
GDRs system of minimum pensions and its universal compulsory social insurance
coverage, and if at all possible to adopt neither West Germanys pluralistic health
insurance system nor its health care system, which was seen as in need of significant
reform. The GDRs position was supported by the German Federation of Trade
Unions (Deutscher Gewerkschaftsbund, DGB), by most West German unions, and
by the West German Social Democratic Party. The latter used the GDR much like
one uses the bank in billiards: it hoped to shape regulations in the East in such a way
as to create biases in favor of its own social-policy goals in the West.70
A third, intermediate position was represented by the Federal Ministry for
Labour and Social Order under Norbert Bl um, who from the very beginning had
advocated social integration of the East (Ritter 2007a, pp. 196f.), and also by other
West German ministries related to social policy. Blum wanted as smooth and as
complete a transference of the West German welfare state to the GDR as possible.

68
Grundsatze der Koalitionsvereinbarungen, see Bundesministerium f ur innerdeutsche
Beziehungen (1990).
69
See e.g. the letter from 26 April 1990 from the SPDs Deputy Chair and social policy
spokesperson of its parliamentary faction, Rudolf Dreler, to Regine Hildebrandt, Social Demo-
cratic Minister for Labour and Social Affairs in the de Maiziere Administration, with the
attachment Anderungsvorschlage zum Bereich Sozialunion in the draft BRD/GDR State
Treaty (final version from 24 April, in the Archiv der sozialen Demokratie der Friedrich-Ebert-
Stiftung, Bestand: Sozialdemokratische Partei Deutschlands Fraktion in der Volkskammer der
Deutschen Demokratischen Republik, Mappe 5).
70
See the suggestions for SPD tactics in negotiations on monetary, economic and social union
made by Dietrich Stobbe, Bundestag delegate and former mayor of Berlin, in an annotation from
17 April 1990: Betr. Entscheidungs- und Handlungsbedarf f ur die Sozialdemokratie in der
Bundesrepublik und in der DDR nach Bildung der Koalitionsregierung in Berlin (Ost), see Archiv
der sozialen Demokratie der Friedrich-Ebert-Stiftung, Bestand: Sozialdemokratische Partei
Deutschlands - Fraktion in der Volkskammer der Deutschen Demokratischen Republik, Mappe
113. Stobbe was sent to Berlin after the Volkskammer election of 18 March 1990 as the represen-
tative of the Social Democrats party chair, Hans-Jochen Vogel.
3 Social Policy in the Process of Unification 205

In particular, he advocated quickly raising the standard of living of the GDRs


pensioners and veterans, the latter of whom had been greatly disadvantaged in the
GDR. Interim transition provisions would do justice to the special conditions and
traditions of the GDR. On decisive points such as the immediate improvement of
pensioners and veterans incomes, Bl ums position was supported by Kohl and
with minor exceptions was ultimately implemented as the compromise, lowest-
common-denominator position. Still, it would be wrong to underestimate the
influence of the GDR in the negotiation process, even if this decreased over time
due to the pressure by the people of the GDR for rapid reunification and the SPDs
exit from the East German governing coalition on 19 August 1990.

3.2 The System of Social Security

Let us now come to the specific realms of social policy. The system of social
security in the GDR,71 as in the Federal Republic, rested primarily on the system of
social insurance. In contrast to the West German social insurance system, which
was structured by risk pools and occupational groups, East Germanys building on
older demands of the German workers movement was organized in a single
insurance plan for all white and blue collar workers. In 1956 this unitary social
insurance scheme was placed under the authority of the unions central organiza-
tion, the FDGB, which administered it forthwith. The scheme was, however,
directly subject to the political will of the SED (Hoffmann 1996). Additionally,
there was a state insurance plan for members of cooperatives and the few self-
employed, who amounted to roughly 9% of the population in 1989 (Frerich and
Frey 1996, vol. 2, p. 285; Eggenkamper et al. 2010, pp. 8895). Pensions were not
inflation-adjusted, but rather increased from time to time by resolutions of the
leading organs of the SED. The insurance elements stemming from German
tradition were displaced increasingly over the course of the GDR by the principle
of welfare. Accordingly, pensions were strongly leveled. In this system, minimum
pensions, ranging from 330 to 470 Ostmark depending on duration of employment,
played a central role. The leveling of pensions was also a consequence of the
decision to retain the income cap for assessment of social insurance contributions
of 600 Ostmark, which was much too low. Thus state subsidies of social
insurance had to be continually increased and ultimately reached 48% of total
expenditures of the social insurance of blue and white collar workers (Frerich and
Frey 1996, vol. 2, p. 291f.).
The public pension together with subsidies for food staples, housing, public
transportation etc. availed retirees of a secure, basic standard of living, albeit at a
level far below that of wages and salaries. This insufficient income protection in the

71
On the basic features of the social system of the GDR see Ritter (2005a, pp. 1129).
206 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

case of old age, disability or a spouses death was the Achilles heel of the GDRs
system of social protection. This is related to GDR social policys extreme reliance
on gainful employment, which strongly disadvantaged those social groups among
the adult population which had to leave the employment sphere i.e., besides
retirees also wounded veterans, widow(er)s (especially those who had no substan-
tial earnings history of their own), and the disabled.
The introduction of voluntary supplementary insurance since 1968/71 had
brought only a modest improvement to pension levels by the time of unification,
due to the programs long accrual period. Roughly 7080% of the workforce had a
supplementary insurance as of 1989 (Hockerts 1994b, p. 528). Men were receiving
106, women 36 Ostmark from this retirement insurance on average (Schmahl 1991,
p. 70). Since 1950, however, for professional elites and persons closely linked to the
political and economic system a web of supplementary state pension schemes was
erected alongside the public insurance scheme. In addition, there were four special
benefit systems targeted respectively to members of the army, the police with
firebrigades and prison warders, the customs and the employees of the Ministry
of State Security. Taken together, at the time of German unification circa 350,000
people were receiving benefits and 1.6 million or about 10% of the population had
claims to future benefits from these supplementary and special systems of provision
(Hockerts 1994b, p. 529). This breached the fundamental principle of one insurance
scheme for all, however, and created a classist separation of society into the masses
who received only standard pensions and the privileged beneficiaries of enhanced
old-age provision.
Already in first contacts with representatives of the GDR during the administra-
tion of SED Minister President Modrow from November 1989 to March 1990, it
was evident that the GDR was prepared to remove the social insurance scheme from
the authority of the FDGB and to separate its budget from that of the government.
The Modrow Administration also saw the need for an unemployment insurance
scheme lacking hitherto in the GDR, and was prepared to model it on the West
German system. It was ready as well to accept the support of the Federal Republic
in constructing a labor administration as the administrative agency of the unem-
ployment insurance program, and in developing a state labor market policy. It also
accepted the basic principles of the West German social insurance system, i.e. its
financing predominately via contributions from employers and employees, the pay-
as-you-go mechanism, and in the pension insurance scheme the generational
contract, as well as the basing of pension benefits on the duration and level of
contributions. It was particularly interested in assuming the West German practice
of adjusting benefits to rising wages. However, in the intensive discussions within
West Germany on the offer that it wanted to make to the GDR in the State Treaty
with regard to monetary union, significant differences of opinion within the West
German government became apparent. Bl um called for a 1:1 conversion of wages,
salaries and pensions, because otherwise the standard of living of millions of people
in the GDR would sink below social assistance levels, reunification would occur via
migration from the East to the West, and to prevent this one would have to rebuild
3 Social Policy in the Process of Unification 207

the Wall all over again.72 He was successful in getting his position implemented
over the resistance of the Federal Republics Ministry of Finance, which advocated
a 2:1 conversion rate (Grosser 1998, pp. 245251),73 in part because he had the
support of Chancellor Kohl.
West German officials were in agreement in their opposition to minimum
pensions and in their support for a revision of the law on foreign pensions,
according to which until that time resettlers from the GDR, like the ethnic German
immigrants from Eastern Europe, had been given pensions according to the inte-
gration principle, i.e. the much more generous West German pension formula was
applied to the work histories they had accrued in their country of origin. The
integration principle like West Germanys clinging to common citizenship,
which had been harshly criticized by the GDR regime was an essential material
element of German unity. There was now consensus that this integration principle,
which exerted an undesired pull on pensioners from the GDR to emigrate to West
Germany, should be terminated at a cut-off date and then replaced by the export
principle, according to which pensions would be calculated based on the criteria of
the country of origin. The Ministry for Labour and Social Order called for a
broadening of this new principle to apply also to ethnic-German immigrants from
East Central Europe, Eastern Europe and the Soviet Union, which would have
required amendments to the social-insurance treaties with Poland and other
countries. This was rejected, however, by the Ministry of the Interior, which was
able to prevail on the matter.74 Not until after 1991 would the pensions of ethnic
German immigrants also be considerably reduced.
Concrete differences remained in the question of whether pensions should be
raised only gradually, as the Ministry of Finance desired,75 or as the Ministry for
Labour and Social Order advocated raised immediately to 70% of the average net
earnings of pensioners with 45 years of insurance in the GDR. Further, the Ministry
of Finance, contrary to the Labour Ministry, argued against start-up funding for the

72
Bundesarbeitsminister Bl um to Bundeskanzler Kohl, 27.3.1990 with the annex: Zum
Umtauschverhaltnis fur L ohne und die Folgen f ur die soziale Sicherung, in: Archiv f ur
Christlich-Demokratische Politik der Konrad-Adenauer-Stiftung, I-504 Bundesministerium f ur
Arbeit und Sozialordnung, Dr. Norbert Bl um, 62; Interview of the author with Bl
um on 8 Febr.
2000.
73
See further below Sect. 4.3.
74
Der Bundesminister des Innern VtK I 6 vom 1.3.1990: Stellungnahme zur Frage der

rentenrechtlichen Gleichbehandlung von Ubersiedlern und Aussiedlern, Bundesarchiv Koblenz,
B 136 Akten des Bundeskanzleramtes 20251; Bl um to Kohl from 15 March 1990 with the annex:
Positions- und Entscheidungspapier zu Anderungen im Fremdrentenrecht und in der Arbeitslo-

senversicherung fur Aus- und Ubersiedler, Bundesarchiv Koblenz, B 136 Akten des Bundeskanz-
leramtes 20251.
75
Bundesminister der Finanzen, Referat IIc 1: Vertrag
uber die Schaffung einer Wahrungsunion,
Wirtschaftsunion und Sozialgemeinschaft D/DDR (Stand 4.4.1990), here: Kapitel IV/Sozialge-
meinschaft, 3.4.1990, Bundesarchiv Zwischenarchiv Dahlwitz-Hoppegarten, B 126 Akten des
Bundesministeriums der Finanzen 114048. The paper lists the points of disagreement between
the Ministry of Labour and Social Order and the Ministry of Finance.
208 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

East German pension system, and also against a state subsidy of the program, which
in the West amounted to 18.8% at that time. It called for a financial union between
the West and East German retirement insurance programs,76 which would have led
to a financing of the expected deficits in the East by the West German retirement
insurance fund.
Particularly controversial was the question whether East Germanys supplemen-
tary insurance systems and the special systems for professional elites and groups
particularly close to the regime should be incorporated into the Federal Republics
general statutory retirement insurance scheme, or whether they should continue to
be institutionally distinct and hence financed largely from general revenues. The
Ministry of Labour and Social Order opposition to incorporating these into the
statutory pension scheme met with concerted resistance from the ministries of
Finance, Interior and Defense (Ritter 2007a, pp. 206f.). Indeed, the State Treaty
of 18 May 1990 foresaw discontinuing all supplementary and special benefit
schemes and integrating them into the statutory pension scheme. The additional
costs incurred by this were to be recompensed from general revenues (Art. 20). The
State Treaty also articulated the principle that unjustified benefits should be
eliminated and excessive benefits should be lowered. Implementation of this prin-
ciple was extremely controversial, and it made the process of conversion of these
supplementary and special benefit programs one of the thorniest problems in the
reconfiguration of pensions in the East. East German members of these schemes
repeatedly sued the government to achieve abrogation of what they called the
criminalization of pensions. The courts ruled often at least partially in their favor,
and resulting legislation raised their pension benefits considerably. It would have
certainly been wiser to keep these systems, which were analogous to the West
German civil servant pensions and the supplementary pensions of state employees,
outside the statutory retirement insurance scheme.
The GDR, which in the Coalition Agreement had been demanded at first only a
step-by-step increase in retirement benefits, accepted all of the essential elements of
the positions of the Ministry for Labour and Social Order and raised more far-
reaching demands as well. In order to compensate for the discontinuation of
previous subsidies, for example, they called for increasing wage and pension levels
prior to the conversion of wage and pension levels at a 1:1 ratio by a per-capita
allowance of about DM 280 for all citizens. They later reduced the scope of this
demand to encompass only those at the lower end of the earnings spectrum and to
pensioners.77 This additional allowance would have further burdened the state and
economy of the GDR, and was rejected by the Federal Republic out-of-hand.
The GDR accepted the separation of the insurance branches. Due to differences
among the GDRs coalition parties, its government did not make any demand for

76
Ibid.
77
Uberlegungen zur Notwendigkeit eines personenbezogenen Preisausgleichs f
ur die unteren
Einkommensgruppen, vor allem Rentner vom 29.4.1990. See Bundesarchiv Berlin, DC 20 Akten
des Ministerrates der DDR - B
uro Krause Arbeitsstab Deutsche Einheit, 6007.
3 Social Policy in the Process of Unification 209

the merging of the Federal Republics distinct insurance schemes for white- and
blue-collar workers. Instead, they pressed strongly for the retention of minimum
pensions, which should be adjusted to rising wages, as well as only a very gradual
increase in the GDRs very low pension insurance contributions. Further, it sought
to maintain universal mandatory pension insurance for all population groups and
the continued recognition of the GDRs relatively generous insurance crediting of
additional pensionable years, especially for women.
The solution ultimately achieved entailed start-up funding for the pension
insurance scheme, as the FRGs Ministry for Labour and Social Order and the
GDR had both desired. It also entailed an immediate and more than gradual
increase in pension benefits, as well as retention of a functional equivalent of
East Germanys minimum pensions in the form of a monthly social allowance
(albeit not adjusted to rising wages) of up to DM 165 on low pensions. This latter
provision was to be maintained for a lengthy transition period until an effective
social assistance program was established in the East. Blue-collar workers and soon
also white-collar workers with low incomes were given subsidies for the signifi-
cantly higher social insurance contributions. Further, pensions would be regularly
adjusted to the rising level of incomes in the East. In response to pressure from the
FDP, the self-employed and those in the liberal professions had to be legally freed
from the obligation to contribute to the general social insurance system when they
could prove some other form of sufficient insurance, and were given the right to
form their own insurance schemes.78
The Unification Treaty of 31 August 1990 promised that pensioners and those
nearing the retirement age would have their vested rights and benefits protected,
although this did not apply to the benefits of the special and supplementary
schemes. The monthly allowance for those with low pension benefit levels, which
contrary to the wishes of the GDR negotiators was not adjusted to rising wages, was
limited to those retiring by 31 December 1991 and was to expire on 30 June 1995.79
The financial integration of the western and eastern German pension insurance
schemes, which had been vehemently demanded by the Federal Republics Finance
Ministry, was able to be forestalled one last time. It was approved, though, in the
Coalition Agreement of the government formed after the 2 December 1990 elec-
tion, and took effect on 1 January 1992, as previously with regard to unemployment
insurance.80 In both cases, this led to a massive burden on the solidarity community
of insured members of these schemes, who ended up bearing a substantial share of
the costs of unification.

78
Vertrag uber eine Wahrungs-, Wirtschafts- und Sozialunion 1990a: Article 20. The social
allowance was introduced with the consent of the federal government by the Pension Equalization
Law (Rentenangleichungsgesetz) of the GDR of 28 June 1990. Gesetzblatt (GBl.) der DDR 1990 I,
pp. 495500.
79
Vertrag uber die Einheit Deutschlands Einigungsvertrag - 1990b: Article 30, pp. 899f.
80
Koalitionsvertrag fur die 12. Legislaturperiode des Deutschen Bundestages, in: Union in
Deutschland. Informationsdienst der CDU, no. 2 vom 17.1.1991, p. 22.
210 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

Setting up a new pension insurance system in eastern Germany and recalculating


eastern pension benefits was also difficult due to the lack of infrastructural capacity
and qualified personnel. The majority of those employed in the social insurance
system in the GDR mostly women moved into the statutory health insurance
system, which had taken shape sooner and whose administrative offices were more
decentralized and hence in most cases closer to where people lived.
After very intensive negotiations between the government and the Social-
Democratic opposition, whose consent was necessary for the passage of the law in
the Bundesrat, a pension transfer law was passed with the broad majority of the
CDU/CSU, SPD and FDP on 25 July 1991, to take effect 1 January 1992 the time at
which the pension reform law of 1989 was to take effect as well.81 This law brought
complete adoption of the benefit law of the Federal Republic and a recalculation of
vested pensions. It foresaw among other things a considerable improvement in
disability and occupational disability pensions as well as in survivors benefits.
Furthermore, the allowance for those with low pension benefits was now extended
to cover those entering retirement by the end of 1993, and it would not expire until
31 December 1996. It was also agreed that this social allowance would be
increased in accordance with average increases in social assistance benefit levels
in the new federal states. However, only singles earning less than DM 600 and
married couples earning less than DM 960 were now eligible for the social allow-
ance. This disqualified roughly 460,000 pensioners. This, as well as the discontinu-
ation of supplemental allowances for children, was harshly criticized in the East.
Furthermore, nursing allowances, special nursing allowances and allowances for the
blind, for which now to some extent claims could be made on other funding sources,
were also discontinued. To protect vested benefits, so-called top-up amounts were
paid. This was the case in about 2.5 million of the 3.6 million pensions revalued on
1 January 1992. They were applied to 55.6% of mens and 96.7% of womens
pensions, to 120,000 widow(er)s pensions, and to 80,000 orphans pensions
(Schmahl 2007, pp. 604f.). These top-up payments were not inflation-adjusted and
dwindled away in five stages of pension adjustments from 1996 on. That the pension
insurance institutions were able to recalculate benefits and inform beneficiaries
within a period of only a few weeks as some changes in the law were made as
late as December 1991 was an administrative tour de force.82
Absorbing East German pensioners into the solidarity community of the West
German retirement scheme would not have been possible if instead of using a pay-
as-you-go system in which benefits are paid directly from incoming contributions,
West Germany had had a funded scheme in which as for every private insurance
plan in Germany contributions had had to be saved for future benefits. In a funded
system, pensions for the new scheme members from the East would have had to be

81
On the development of the law, its provisions and its immediate effects, see Schmahl (2007,
pp. 588606).
82
According to Blum in a meeting of the Bundesrat on 14 February 1994, cited in: Verband
Deutscher Rentenversicherungstrager, Geschaftsbericht f
ur das Jahr 1994, p. 21.
3 Social Policy in the Process of Unification 211

paid directly by the state for a transition period until sufficient funds had been paid
in. By requiring Germanys social pension insurance scheme to pay benefits to
pensioners in the East which far exceeded its revenues there, however, it was made
to bear a significant share of the costs of unification. It was further burdened by the
strong impulse to use the extant West German practice of early retirement to
mitigate the unemployment burden in the East. After the Modrow Administration
had introduced a relatively favorable early retirement provision,83 Article 30 of the
Unification Treaty allowed male workers at age 57 and women retiring before 31
December 1990 at the age of 55 under certain conditions (which were almost
always met) to draw an old-age transition benefit amounting to 65% of final average
net wages84 until the earliest possible receipt of a pension at age 60. This provision,
introduced initially on a temporary basis until 31 December 1991, was extended
due to the poor condition of the labor market. In addition, the age of eligibility was
lowered generally to 55, and the maximum duration of receipt was generally
increased to 5 years (Frerich and Frey 1996, vol. 3, p. 611).
The accident insurance scheme, which will not be discussed in detail here, was
reformed along the same lines. The financial burden of these reforms, however,
which in some cases included the payment of a social allowance to those with low
pensions, was borne entirely by employers. In the initial draft of the Federal
Republics State Treaty on monetary union the East deviating from West German
practice was to fund the scheme via equal contributions by employers and
employees. This funding modus was ultimately rejected, however. The Pension
Equalization Law of 28 June 1990 raised accident pensions by at least 90%, i.e.
much more than retirement pensions (Sokoll 2007a, pp. 181187, here p. 185). The
main difficulty in the accident insurance program lay in cultivating a network of
Employers Insurance Associations (Berufsgenossenschaften) and as well as a
technical surveillance authority to enforce the implementation of occupational
safety provisions.85 Very soon and without significant financial assistance from
the federal government on 1 April 1991 the new institutional agents of the accident
insurance scheme had to take on the pre-existing cases. These inherited cases
entailed the high costs associated with provision and medical care for the
500,000600,000 persons who had worked in the GDR from 1945 to 1991 in the
Wismut AG, which had had its own distinct social insurance system. From 1946 to
1954 in particular, its workers were subjected to extremely hazardous working
conditions in the uranium mining industry. In this special case, the Federal Govern-
ment participated to the tune of 400 million D-mark for the care of the workers

83
Verordnung uber die Gewahrung von Vorruhestandsgeld v. 8.2.1990, GBl. der DDR 1990 I, p. 42.
84
For workers whose claim arose before 1 April 1991, their Pensioners Transition Assistance was
even raised by 5 percentage points modelled on the early retirement provision of the Modrow
Administration for the first 312 days.
85
Sokoll (2007a, pp. 181187, here p. 185). For more on the extension of the Accident Insurance
scheme to the East and the problems which arose in the process, see Sokoll (2007b, pp. 719740).
212 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

conscripted to the Wismut AG in the early post-war years, which was viewed as a
cost stemming from the Second World War.
The GDR did not have an unemployment insurance scheme as, due to full
employment, this had been formally abolished in 1977. The Federal Republic
introduced one based on the model in the West, and the latters Federal Labour
Office helped develop a labor administration to run the program (Franke 1993,
pp. 59; Kinitz 1997). In the Federal Republic, many complained that without
consulting the federal government, a minimum benefit was paid in the East in the
unemployment insurance and unemployment assistance programs via a social
allowance similarly as had been done in the retirement and accident insurance
schemes without means-testing.86 Further, the Wests Ministry of Labour and
Social Order criticized that according to East German law in line with the
positions of the FRG unions and the SPD, but against the practice of the FRG
even workers indirectly involved in strikes could be paid unemployment insurance
benefits.87
Compensation for war victims was minimal in the GDR, and provided in the
context of the general social insurance scheme. The FRG Ministry of Labour and
Social Order wanted to increase compensation immediately and lobbied for the
introduction of West Germanys relatively generous veterans compensation in the
new German states effective already on 1.1.1991. The Finance Ministry preferred a
very lengthy adjustment period and could ultimately accept at best a transition
period beginning in 1992.88 The Finance Ministry was concerned about reducing
the cost, which for 1991 alone was estimated at DM 1.65 billion.89 With the
apparent support of Kohl, the Ministry of Labour and Social Order approach
prevailed.90 Attempts to institutionalize an administrative apparatus to quickly

86
Protocol of Department IIb2 (Unemployment Insurance) of the Ministry for Labour and Social
Order: Zur Problematik der Einf uhrung einer Mindestsicherung bei den Lohnersatzleistungen des
Arbeitsforderungsgesetzes in der DDR, Bundesarchiv Koblenz, B 149 Bundesministerium f ur
Arbeit und Sozialordnung 78844.
87
Bundesministerium f ur Arbeit und Sozialordnung, Abteilung. I: Umsetzung des
Staatsvertrages durch die DDR v. 29.6.1990, Bundesarchiv Koblenz, B 136 Bundeskanzleramt
21666.
88
Ergebnisvermerk uber eine Sitzung v. 14.2.1990, Bundesarchiv Koblenz, B 149 Bundesmi-
nisterium fur Arbeit und Sozialordnung 78960; KOV/KOF (Kriegsopferversorgung/Kriegsop-
ferfursorge), Stellungnahme des BMF zum BMA-Papier v. 22.2.1990, 23.2.1990, Bundesarchiv
Zwischenarchiv Dahlwitz-Hoppegarten, 126 Bundesministerium der Finanzen 114047; Waigel to
Blum v. 16.8.1990, Bundesarchiv Koblenz, B 149 Bundesministerium f ur Arbeit und
Sozialordnung 78915.
89
Bundesministerium f ur Arbeit und Sozialordnung, Abteilung I: Inhalt des Einigungsvertrages
(Stichwortliste), 5.9.1990, Bundesarchiv Koblenz, B 149 Bundesministerium f ur Arbeit und
Sozialordnung VIII/Ia1-15105.2.
90
Mitteilung des Sprechers der Bundesregierung Bundesminister Hans Klein uber einen Empfang
des Prasidenten des VdK (Verband der Kriegs- und Wehrdienstopfer, Behinderten und
Sozialrentner Deutschlands e. V.) Walter Hirrlinger durch Kohl am 6.9.1990, Bundesarchiv
Koblenz, B 136 Bundeskanzleramt 21660.
3 Social Policy in the Process of Unification 213

fulfill the claims of war victims encountered considerable difficulties.91 While in


the GDR at the beginning of 1990 only about 5,000 persons were receiving a very
low War Victims Pension, by 1 July 1994 212,425 eligible persons received
compensation based on the Federal War Victims Relief Act (Bundesministerium
f
ur Arbeit und Sozialordnung, Sozialbericht 1994a, p. 82).
The lowest rung of the system of social security is provided in the Federal
Republic by social assistance (Sozialhilfe), in the GDR by social provision
(Sozialfursorge). The latter, however, was completely marginalized, providing
benefits to only 5,553 recipients in 1989 (Frerich and Frey 1996, vol. 2, p. 369).
Based on the first State Treaty, though, the GDR introduced a Social Assistance
Law on 21 June 199092 on the West German model: it was means-tested, and
included a test of whether close family members could provide support. It gave
social assistance claimants who met eligibility criteria a legal right to state support.
Borrowing directly from } 1 of the West German Social Assistance Law of 1961,93
it was supposed to enable beneficiaries to live a life which meets the standards of
human dignity. In the Unification Treaty, centralized funding was replaced by a
communal and state financing system. However, some provisions of the FRG Social
Assistance Law, in particular with regard to Assistance for Special Circumstances
(Hilfe in besonderen Lebenslagen), continued to be delayed in the East until such
time as the administrative apparatus needed to implement them was developed.94
Even more difficult than the institutionalization of communal social services
offices proved to be the development and expansion of the independent welfare
associations (freie Wohlfahrtsverb ande). In the Federal Republic, such welfare
associations served as important alternative agents of social assistance provision
by the communal authorities. Except for the GDRs Catholic and Protestant
charities, Caritas and the Diakonisches Werk, respectively, and to a lesser extent
the Red Cross (which had to manage the transition from a state-sponsored mass
organization to a non-state welfare association) and the Peoples Solidarity
(Volkssolidaritat), there were no existing services or other institutions on which
to build. The Workers Welfare Association (Arbeiterwohlfahrt), which had existed
long before the division of Germany, and the German Non-Denominational

91
Letter from the President of the Verband der Kriegs- und Wehrdienstopfer, Behinderten und
Sozialrentner e. V. Hirrlinger to Bundesarbeitsminister Bl
um 12.6.1991, Bundesarchiv Koblenz, B
149 Bundesministerium f ur Arbeit und Sozialordnung 400155; Bundesministerium f ur Arbeit und
Sozialordnung, Referat VIa1, Aufbau der Versorgungsverwaltung in den neuen Bundeslandern,
9.8.1991, Bundesarchiv Koblenz, B149 Bundesministerium f ur Arbeit und Sozialordnung 40006;
Blum to Kohl, 19.11.1991 with an annex from 14 November 1991: Aufbau der Versorgungs-
verwaltung sowie der Hauptf ursorge- und F ursorgestellen, Verfahrensbeschleunigung.
Bundesarchiv Koblenz, B 149 Bundesministerium f ur Arbeit und Sozialordnung VIIIa1-17490/1,
vol. 1.
92
Gesetz uber den Anspruch auf Sozialhilfe/Sozialhilfegesetz, GBl. der DDR 1990 I, pp. 392397.
93
On its emergence and significance see the excellent monograph F ocking (2007).
94
Vertrag uber die Einheit Deutschlands Einigungsvertrag - 1990b: Anlage 1, Kap. X,
Sachgebiet H, BGBl. 1990 II, p. 1095.
214 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

Welfare Association (Deutscher Parit atischer Wohlfahrtsverband), which had been


founded as an umbrella body representing various associations in the field of social
services in the West after the Second World War, both had to be constructed anew
in the East out of thin air. The Peoples Solidarity, which in the GDR had primarily
served the elderly, became a member of the German Non-Denominational Welfare
Association. Together with the SED, which morphed into the PDS, it is one of the
few East German organizations that survived unification without merging with a
West German partner organization. The Peoples Solidarity was decentralized. It
remained a membership organization with local chapters with ties to the GDR and
with a routinized local culture and understood itself to be an interest group
representing the elderly in the East.95
On the whole, independent welfare associations (Neumann and Brockmann
1997)96 have not achieved a role of the same prominence as in the West. This
was due to a lack of support by the communes, which were accustomed to the
decades-old practice of the state providing support for the elderly, disabled and
poor. But it was also due to the absence or weakness of the Catholic, Protestant and
Social-Democratic milieus, in which many of the independent welfare associations
in the West are rooted.
A dramatic rise in the costs of retirement and nursing home places, which
admittedly had not been available in sufficient quantity before unification,
presented a major problem. From June 1990 to the following year, the cost rose
from 105 to 120 Ostmark respectively to circa DM 1,800 (Schwitzer 1993, p. 207),
followed by further cost increases thereafter. Home residents unable to muster such
sums now had to disclose their financial status and spend down their assets, as well
as fear that family members legally required to support them would be obligated to
do so before they would be granted support from social assistance.
Overall, social assistance was claimed less often in the East than in the West,
especially in the first years after unification. This was due to a wide range of factors:
the widespread belief that social assistance constituted charity; the better benefits
offered by the social insurance system (especially given the high rate of female
labor market participation); the topping up of pensions by a social allowance in
the early post-unification period; the comparatively lower rents in the East despite
several increases; insufficient information among potential social assistance
recipients concerning social assistance benefits; and the lack of institutions and
services for the provision of Assistance for Special Circumstances.

95
On the Peoples Solidarity see Angerhausen (2003).
96
On the problems associated with the development of the social assistance system and the
independent welfare association sector in the new federal states see: Beitrag des Bundesmi-
nisteriums fur Familie und Senioren zur Bestandsaufnahme in den neuen Landern zur
Arbeitsmarkt- und Sozialpolitik, undated, probably from summer 1991, Bundesarchiv Koblenz,
B 149 Bundesministerium f ur Arbeit und Sozialordnung VIII/1a7 17700 (1).
3 Social Policy in the Process of Unification 215

3.3 The Health Care System, Introduction of Long-Term Care


Insurance, and Family and Womens Policy

Fundamental differences distinguished the health care system of the Federal


Republic from that of the GDR. The West German health care system was
extremely complex, characterized by a mixture of predominately public financing
through non-profit health insurance organizations from which high earners, civil
servants and the self-employed were exempted and private health care providers.
The health care system of the GDR, on the other hand in part building on the
health care policy ideas of the socialist workers movement of the Weimar Republic
(Manow 1997, pp. 101131) was essentially nationalized, despite the retention of
a minimal private sector. Based on their contributions to the social insurance
scheme, individuals had a claim to basic medical care. The outpatient sector
consisted of the occupational health care system as well as polyclinics and ambula-
tory care centers. Among the virtues of this system, acknowledged in the West as
well, were the coordination of ambulatory and stationary care, the emphasis on
prevention and early diagnosis of illnesses as well as the close coordination of
prevention, treatment and after-care, e.g. in the care of pregnant women with the
dispensary method.97 The cost of the health care system as a whole was also much
lower than that of the Federal Republic.
The disadvantages of this system, which as the pension system of the GDR was
strongly employment-based, were that in allocating health cures and scarce
medicines and medical supplies it tended to overlook older and disabled persons
who had exited the workforce, and that it provided insufficient prevention of typical
old-age diseases. Further weaknesses were the dilapidated physical condition of
many medical care facilities, the inadequate supply of modern medical equipment,
which was typically available only for Western currency, and the scarcity of
pharmaceuticals.98 Here, as with pensions, alongside the regular system there was
a privileged one for elites and other social groups close to the regime. It had better
equipped hospitals for the government and the state security service. A difficult
problem was the tremendous dissatisfaction of doctors, nurses and other medical
personnel with low pay and often poor working conditions. Thus before the erection
of the Wall in 1961 and again in 1989/90, there was a mass exodus above all of
doctors into the Federal Republic (S u 1998, p. 89).99 In 1990, life expectancy for

97
The dispensary method was used above all to fight widespread chronic diseases. It entailed
attempts to better understand the root causes of illnesses and groups of illnesses and thereby to
better treat them by means of targeted supervision of certain groups of at-risk individuals. This
included investigations into the working and social conditions of patients, one-on-one education,
and the conduct of surveys. See Frerich and Frey (1996, vol. 2, pp. 206f.).
98
For an analysis of the strengths and weaknesses of the health system of the GDR, see:
Sachverstandigenrat f
ur die Konzertierte Aktion im Gesundheitswesen (1991, pp. 102151).
99
Informationen uber die Arbeit des Ministeriums fur Gesundheits- und Sozialwesen seit Novem-
ber 1989 v. 14.3.1990, see Bundesarchiv Berlin, DQ1 Ministerium f ur Gesundheitswesen der
Deutschen Demokratischen Republik 14119.
216 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

both men and women influenced of course by other factors as well, e.g. environ-
mental hazards was about 3 years less in East Germany than in the Federal
Republic (Sachverstandigenrat f ur die Konzertierte Aktion im Gesundheitswesen
1991, p. 113).
Many observers assumed that in the course of unification, in order to maintain
continuity of care for the population in the East, the existing system would be
adapted only gradually to that of the Federal Republic. While the chamber system
(allowing professional associations a privileged role in the running of the system)
was introduced immediately for doctors, dentists and pharmacists, there were plans to
make the right to open a practice in the East conditional on demand, and to restrict
accreditation within the public health insurance plan to doctors with a permanent
residence in the East100 (see also Manow 1994a, pp. 149151). This demand planning
aimed to secure the continued existence of communal, state and occupational
health clinics, who would receive a flat-rate payment. These ideas, supported by
the Social Democrats and for some time by the Federal Ministry for Labour and
Social Order, did not prevail, however, over the resistance of parts of the CDU/CSU,
the FDP (whose clientele included many doctors and pharmacists), and interest
groups representing doctors, the pharmaceutical industry and pharmacists. After the
de Maiziere Administrations Health Insurance Contract Law of 13 September
1990101 abstained from planning for outpatient demand and supported doctors
right to freely establish a practice, the Unification Treaty stipulated that ambulatory
care centers, polyclinics and employer-based health facilities would be authorized
only until 31 December 1995.102 Even though this time limitation would later be
nullified in the Law on the Stabilization and Structural Reform of the Statutory Health
Insurance System (Gesundheitsstrukturgesetz) of 21 December 1992,103 thereafter
such institutions played only a marginal role. By the end of 1994 only 3% of
outpatient physicians were working in such institutions (Wasem 1997, pp. 85f.).
Ambulatory care was taken over predominately by doctors in private practice. After
the turn-of-the-century, as (private) outpatient care centers emerged, elements of the
GDR health care system were revived in modified form.
The Unification Treaty had stipulated that in the interest of cost containment and
in light of the lower wage levels in the new German states, doctors and dentists
compensation as well as prices for prescription drugs would be limited to 45% of

100
See the draft submitted by the FRG Ministry of Labour and Social Order and the GDR Ministry
of Health: Verordnung u ber die vertraglichen Beziehungen der Krankenversicherung zu den
Leistungserbringern Kassenvertragsverordnung, printed in excerpts in: Dienst f
ur Gesellschaft-
spolitik 2590 (1990, p. 5).
101
GBl. der DDR I 1990, pp. 15331537.
102
Vertrag uber die Einheit Deutschlands Einigungsvertrag - 1990b: Anlage I, Kap. VIII,
Sachgebiet G, Abschnitt II, BGBl. 1990 II, p. 1050.
103
Gesetz zur Sicherung und Strukturverbesserung der gesetzlichen Krankenversicherung
(Gesundheitsstrukturgesetz), BGBl. 1992 I, pp. 22662334.
3 Social Policy in the Process of Unification 217

West German levels.104 Ultimately, however, this proved politically infeasible. The
medical and pharmaceutical lobbies protested vehemently, and the latter even
threatened to boycott the sale of drugs to the East. After difficult negotiations a
compromise was reached whereby in place of the price discounts the pharmaceuti-
cal industry, pharmaceutical wholesale trade and pharmacies agreed to help cover
the deficits of the non-profit health insurers in the East from prescription drug
expenditures by 31 December 1991 (Frerich and Frey 1996, vol. 3, pp. 614f.).
Between the system of health insurers and the national statutory physician and
(later) dentist associations, codicils to the existing federal framework agreement on
wages were negotiated for the new federal states which to at least some extent did
justice to the interests of doctors and dentists in the East (Frerich and Frey 1996,
vol. 3, pp. 572f.). In West Germany, the financing of East German health care costs
and the organization of health insurers there was controversial. In vein, the Federal
Republics Ministry of the Economy sought relief for the companies doing business
in East Germany by advocating retention of the GDR provision according to which
in case of illness, health insurers pay 90% of a workers net wages, instead of
implementing the West German practice whereby the employer continues paying
wages for 6 weeks. The FRG Ministry of Finance vehemently opposed a proposal
by the GDR, supported by the FRG Ministry for Labour and Social Order, for start-
up funding for the non-profit East German health insurance system. Instead, much
as in the retirement and unemployment insurance systems, the FRG Ministry of
Finance proposed a financial partnership among all the non-profit German health
insurers. Their insured members were to bear the burden of paying for the expected
deficits stemming from insuring those in the East.105 The German non-profit health
insurance system did not allow the new states to participate in such an all-German
risk adjustment mechanism until 1999, and the Finance Ministry was able to block
the proposal for start-up funding. Nonetheless, health insurers in the East were
granted an operational loan of DM 3 billion in the second half of 1990 a loan
which has never been repaid.106
The GDR attempted in vain to resist the dismantling of those health-insurance
benefits in the East which were superior to those in the West. These included,
among others, the absence of co-payments for orthodontic work, prescription drug
purchases, hospital stays, stationary preventive and rehabilitative care, or the
payment of benefits for a considerable share of lost income in the case of leave

104
Vertrag uber die Einheit Deutschlands Einigungsvertrag - 1990b: Anlage I, Kap. VIII,
Sachgebiet G, Abschnitt II, BGBl. II, 1990 II, pp. 1049f.
105
Bundesministerium der Finanzen, Referat IIc1: Gesetzliche Krankenversicherung v. 23.2.1990,
Bundesarchiv Zwischenarchiv Dahlwitz-Hoppegarten, B 126 Bundesministerium der Finanzen
114047.
106
Bemerkungen des Bundesrechnungshofes 1992 zur Haushalts- und Wirtschaftsf uhrung
(einschlielich der Feststellungen zur Jahresrechnung des Bundes 1990), Deutscher Bundestag
(19922007), Bundestagsdrucksache 12/3250 from 21 September 1992.
218 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

from work e.g. to care for a sick child or to receive stationary care up to
26 weeks.107 These benefits were phased out over various time frames.108
Still, the federal government was ultimately called upon to help finance the
renovation and modernization of hospitals in the new German states. In the
negotiations on the Unification Treaty, the FRGs Ministry of Labour and Social
Order and Ministry for Youth, Family, Women and Health, with the support of the
GDR, sought to oblige the federal government to put aside funds in a joint federal-
state plan to invest in the health and social sectors, but this was blocked by the
Ministry of Finance, which clung to the notion that state governments bore sole
responsibility for these policy realms.109 What remained was a vague directive to
the unified German parliament to improve the quality of inpatient care in the
East.110 In the Law on the Stabilization and Structural Reform of the Statutory
Health Insurance System of December 1992, the federal government then ulti-
mately did declare itself willing to co-finance investments to modernize hospitals in
the new states to the tune of DM 7 billion over the period from 1995 to 2004. The
same sum was to be provided by the states. The non-profit health insurers had to
come up with the same amount, albeit over a 20-year time span (Bundesmi-
nisterium fur Arbeit und Sozialordnung 1994a, p. 64).
Positions also differed on the proper organization of the statutory (non-profit)
health insurance system. While the General Local Insurance Association
(Allgemeine Ortskrankenkasse, AOK), understood its role as being that of a basic,
no-frills insurer for the new German states, in clear distinction from the principle of
a statutory health insurance system characterized by many types of non-profit
insurers with myriad contribution levels and benefits, the other insurers also
succeeded in expanding into the East. There was strong competition to win
territory (Landnahme), (Windhoff-Heritier 1992, p. 305) whereby the AOK
had the advantage of being there first. It was thus able to achieve a much better
market share there than in the West (55.5% vs. 41.3% in 1994), (Hauser et al. 1996,
p. 76). In contrast to the old Federal Republic, a uniform contribution level was set
in the new German states, initially at 12.8%.
Unification with the GDR finally got the FRGs longstanding need for health-
care and health-insurance reform on the policy agenda. In the Law on the Stabili-
zation and Structural Reform of the Statutory Health Insurance System, which after
intensive negotiations was finally passed in December 1992 by an overwhelming

107
Bundesministerium f
ur Arbeit und Sozialordnung, Abt. V b: Ubersicht ber Leistungsun-
u
terschiede in der gesetzlichen Krankenversicherung, 8.6.1990, Bundesarchiv Koblenz, B 149
Bundesministerium f ur Arbeit und Sozialordnung 78845.
108
Vertrag uber die Einheit Deutschlands Einigungsvertrag - 1990b: Anlage I, Kap. VIII,
Sachgebiet G, Abschnitt II, BGBl. 1990 II, p. 1049.
109
Finance Minister Waigel to Labour Minister Blum, 16.8.1990, Bundesarchiv Koblenz, B 149
Bundesministerium f ur Arbeit und Sozialordnung 78915.
110
Vertrag uber die Einheit Deutschlands Einigungsvertrag - 1990b: Anlage I, Kap. VIII,
Sachgebiet G, Abschnitt II, BGBl. 1990 II, pp. 1053f.
3 Social Policy in the Process of Unification 219

majority of CDU/CSU, SPD and FDP Members of Parliament, several fundamental


changes were legislated. Among these were the introduction of fixed budgets for
pharmaceuticals, medical supplies and doctors fees, plans to create a list of
reimbursable pharmaceuticals, restrictions on approval of new doctors practices
in overstaffed areas, and a reform of the system for financing non-profit health
insurers. Of particular note was that on 1 January 1994, as the first step in this
reform of the organization of the health insurance system, a risk adjustment among
the statutory health insurance funds was introduced. This was supposed to balance
out the differences in the financial burdens which befell insurers due to their gender
and age composition and to the number of freely insured family members among
their membership. By so doing, it also balanced out contribution levels. This as well
as an expansion in the freedom of choice of insurer from 1996/7 onward was
designed to enhance competition among non-profit insurers. The risk adjustment
mechanism effected a major redistribution of resources across insurers. In 2007, for
example, twice as much money (Euro 14.5 billion) was redistributed herewith as via
the cross-state Financial Equalization Scheme (L anderfinanzausgleich) (Euro 7.3
billion), (Betriebskrankenkassen 2008, p. 1).
Of particular note was that for the first time on the issue of health reform, the
governing coalition and the opposition were able to agree on a common course. The
law was backed by the SPD-led states in the Bundesrat.111 It restricted the power of
physicians organizations and other medical providers, while strengthening the
ability of the non-profit health-insurers and the government to shape the health-
care system (Manow 1994b). These reforms were difficult to accept for the FDP, for
whom doctors were a key constituency, but did not cause it to abandon the
governing coalition.
The goal of cost control was achieved for the time being. In 1993 and 1994, the
health insurance funds ran surpluses and contribution levels in the old federal states
were lowered slightly. Due in part to the failure to fully implement some elements
of the law, however, already in 1995 and 1996 the system began running deficits
again. Contributions were increased and some benefits were cut,112 such that in the
future additional structural reforms of both the health care and health insurance
systems would be unavoidable.
The granting of improved nursing care had been in discussion since the mid-
1970s due to the aging of the population, the growing number of geriatric persons
and the increasing difficulty of families to provide home care to their members
given that more and more women were in the labor force. The social assistance
system was particularly burdened by this development and thus also local

111
In the Bundestag on 9 December 1993, the social policy spokesperson for the SPD parliamen-
tary faction, Rudolf Dreler, noted that this was nearly a first, Deutscher Bundestag (1993),
Stenographische Berichte, 12. Wahlperiode, p. 10933.
112
Bundesministerium fur Arbeit und Sozialordnung 1998a, pp. 6069, 226f.; on changes in the
financial condition of the statutory health-insurance system from 1995 to 2003, see Deutsche
Bundesbank 2004, pp. 1532.
220 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

governments, which provide most of the public funding to persons in need of


institutional care (Bl
um 1993, pp. 59). With reunification, the political discussion
and activity on this issue received a new impetus from the fact that in the GDR
those in need of nursing care could be admitted to publicly funded nursing homes
(Frerich and Frey 1996, vol. 2, pp. 376378). Although the importance and urgency
of the problem was clearly acknowledged, there were massive reservations in the
business community, the FDP and the business wing of the CDU/CSU. Spurred by
Labour and Social Order Minister Bl um, the task of providing better nursing care to
those in need of it was ultimately incorporated into the coalition agreement of 16
January 1991 and into the governmental declaration of Kohl of 30 January 1991. To
realize this goal, fundamentally distinct paths were available: public financing,
supported at first by the unions and the Social Democrats; a non-profit long-term
care social insurance scheme; a voluntary private insurance plan subsidized by tax
deductions; a mandatory private insurance plan; or a two-component model, as
advocated by the business community. The latter proposal foresaw for the circa
1.65 million persons then in need of nursing care and the roughly 16.4 million
persons over the age of 60 the creation of a fund financed by contributions from
those nearing old age supplemented if a funding gap remained by a subsidy from
employers. This fund would pay modest benefits only to those truly in need, as
determined by a means-test which encompassed relatives legally responsible for
support. The remaining population would be required to join a private long-term
care social insurance plan from the age of 25 onward (Schraa 1994, pp. 511).113
Over the next several years, bitter debates on this issue ensued within the CDU/
CSU, in the governing coalition between the CDU/CSU and the FDP, and between
the coalition and the Social-Democratic opposition, whose approval was required
because of its majority in the Bundesrat. After the measure was twice referred to the
Mediation Committee of the Bundestag and Bundesrat, Blums original model of a
non-profit long-term care social insurance scheme funded on a pay-as-you-go basis
was finally passed on 26 May 1994.114 Institutionally, it was administered by the
non-profit health insurers as the fifth pillar of the social insurance system.
Key features of the law were that employers were compensated for their provi-
sion of matching funding for long-term care insurance contributions by the elimi-
nation of one paid public holiday,115 that home nursing care was to be given priority
over institutional care, and that only a portion of care expenses would be
compensated. Using the budget principle, expenditures were tied to revenues.
Revenues stemmed from contributions, which were fixed at 1.7% of wages and
salaries up to an earnings cap. Novel was the requirement that even those whose

113
The highly critical view of the employers vis-a-vis care insurance is reflected in the Confeder-
ation of German Employers Associations press service, PDA.
114
Gesetz zur sozialen Absicherung des Risikos der Pflegebed urftigkeit (Pflegeversicher-
ungsgesetz) v. 26.5.1994, BGBl. 1994 I, pp. 1014ff.
115
In Saxony, where no public holidays were eliminated, employees had to assume the entire
financing burden.
3 Social Policy in the Process of Unification 221

high incomes exempted them from the statutory non-profit health insurance system,
about 10% of the population, still had to insure themselves against the risk of
requiring long-term care. The private long-term care insurers were obliged to enter
into a contract with applicants and had to offer identical benefits even for those
with pre-existing conditions. The non-profit long-term care insurers ran consider-
able surpluses in the first years of the program and built up reserves which they have
been drawing down since 1999. As a result, despite the introduction on 1 January
2005 of a special contribution of 0.25% for childless individuals, contributions had
to be raised by 0.25% for all insured persons. At the same time, benefits have been
enhanced to include those suffering from dementia.
In family and womens policy, during unification the GDR was concerned with
retaining its social achievements in this realm and with taking additional steps
toward equal treatment of men and women and toward greater compatibility of
work and family.116 The GDRs family law code stemmed from 20 December 1965
and was notably modern in its strictly equal treatment of men and women and in
the legal equality of children born in and out of wedlock. On 20 July 1990117 this
family law code was stripped of any remnants of socialist ideology. Replacing the
GDR family law statute with those of the West, argued GDR representatives, would
entail a step backwards in certain respects away from the development of modern,
partnership-oriented family law. With regard to abortion, the GDR wanted to retain
its time provisions. Particular value was placed on retaining the generous supply of
child-care institutions, which was of value especially to single parents. Here, the
federal government was to be called upon to supplement local government funding.
The GDR had expended considerable sums to facilitate female labor market
participation, but also to effect familial burden-sharing so as to combat the decline
in the birth rate since the 1970s. They were at least partially successful in the latter
regard. East German labor law provided comparatively strong protections for
pregnant women, mothers with small children and lone parents. Motherhood was
made more compatible with work by the provision of a baby year, i.e. paid leave
for mothers during the year following birth (which was extended to 18 months
following the birth of a third child). There was also one paid day of leave per month
for housework for married women and unmarried women who had children under

116
The differences between the GDR and the FRG in the benefits and statutory provisions for
families and women are juxtaposed in a detailed synopsis of the SPD Volkskammer delegation.
Undated protocol: Vergleichende Betrachtungen DDR/BRD. See: Archiv der sozialen Demokratie
der Friedrich-Ebert-Stiftung: Frauen und Familie, SPD-Fraktion der Volkskammer, Mappe 74. On
the negotiating position of the GDR see the 24-page catalog which the GDR Ministry for Women
and Families issued to the team coordinating German unification negotiations for the East:
Ministerium fur Familie und Frauen, Parlamentarischer Staatssekretar Dr. Hans Geisler:
Koordinierungsstab Deutsche Einheit, Bericht zu Punkt 1.5 des Verhandlungskatalogs zum
Einigungsvertrag (Stand 26.7.1990), 26.7.1990, Bundesarchiv Berlin, DC-20 Ministerrat der
Deutschen Demokratischen Republik 6043.
117
Gesetz zur Anderung des Familiengesetzbuches der DDR (1. Familienanderungsgesetz) v.
20.7.1990, GBl. der DDR 1990 I, pp. 10381042.
222 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

18 or were responsible for the care of someone in the household. A paid day
of leave was also given for lone fathers or those caring for their spouse. Child-
care credits toward pensions were introduced into the GDR social insurance system
15 years earlier than in West Germany and counted more generously. Further, as
an offset for the lower retirement age of 60 for those with long work histories, the
pension system credited women up to 5 years.118 As a result of these measures,
female labor market participation was indeed much higher in the GDR than in
the FRG. This gap was particularly salient among married women with children. In
the GDR in 1988, 74% of wives with two minor children living in their household
were employed full-time and 17.5% part-time, compared to barely 16% and 24%
respectively in the West (Ritter 2000, p. 173). The high female employment rate,
however, was not merely a consequence of the expansion of child-care institutions
and other family and womens policy measures and of the high demand for labor,
but also a consequence of both the lack of social policy support for widows who
were capable of working, and of the inability of a retired couple to get by on only
one pension, meaning both partners had to earn pension benefits during their
working lives.
In the unification negotiations it soon became clear that the Federal Republic did
not seriously consider adopting the GDRs family law code and its lengthy catalog
of measures to support women and families. To the contrary, the new federal states
were obliged with a few exceptions and transition provisions, e.g. concerning
alimony119 to accept West German family law. The federal government agreed to
subsidize day care only until 30 June 1991. The special protections for pregnant
women, mothers with small children and lone parents were phased out. The same
fate befell extended leave to care for sick children, which had been funded by health
insurers. The housework day for women and lone fathers employed full-time also
expired on 31 December 1991. With regard to abortion, after fierce debates between
the CDU/CSU and the SPD, they finally agreed to retain the time provisions in GDR
law until a new unified German rule could be agreed upon, which was to occur by
31 December 1992. West German women who had abortions performed in the new
federal states could take advantage of this provision as well.120 The GDR was also
able to achieve that Article 31 of the Unification Treaty instructed the unified
German parliament to further develop legislation that enhances the legal equality
of men and women and in light of the differential legal and institutional points of
departure of women and men with regard to labor market participation, to shape the

118
Because of the strong leveling of pensions in the GDR as a result of its minimum pension
provisions, the crediting of additional periods towards social insurance benefits in the GDR didnt
have nearly the same effect as it did in the Federal Republic. An additional insurance year in the
GDR increased ones pension by 6 Ostmark at the most.
119
Vertrag uber die Einheit Deutschlands Einigungsvertrag 1990b: Anlage II, Kap. 10,
Sachgebiet H, Abschnitt II, BGBl. 1990 II, p. 1220.
120
On the political fights over abortion and the measures taken see Schauble (1993, pp. 229250).
3 Social Policy in the Process of Unification 223

legal framework so as to render work and family more compatible.121 This


resulted in one of the few changes to the Basic Law (the FRG constitution)
occasioned by unification: on 27 October 1994 Article 3, which concerns equality
before the law was amended to include that the state supports the implementation
of equal rights for men and women and works to eliminate existing discrimina-
tion.122 In family policy, it was particularly in the support of maternal labor market
participation that unified Germany later adopted some elements of East German
social policy. A legal entitlement to a pre-school slot was thus introduced, as was
the comprehensive expansion of nursery schools for children under 3 years of age.

3.4 Labor Law, Labor Relations and Labor Market Policy

Labor law in the GDR was codified in the Labour Law Code of 1977,123 which also
encompassed social law. In the Federal Republic, on the other hand, while social
law was predominately contained in various Social Law Codes, labor law was
scattered among a confusing plethora of laws and rulings. Moreover, its distinction
between blue and white-collar workers was antiquated. The GDR thus repeatedly
sought in vain to retain in the East until passage of a new, unified German Labour
Law Code its own labor law,124 which it had stripped of its socialist command-
economy orientation in a law passed on 22 June 1990.125 All that remained from
these efforts was the directive to the German legislature, inscribed in the Unifica-
tion Treaty, to codify labor contract law as soon as possible uniformly anew, as
well as public working-time law, including the permissibility of Sunday and
holiday work and the special protection of female labor.126 To this day, however,
many aspects of this directive have yet to be implemented.
During the Modrow Administration until the first free East German parliamen-
tary election on 18 March 1990, the GDR unions were still seeking to strengthen
their legal standing via a law on unions and changes to the GDR constitution. In
particular, they sought a guarantee of the retention of unions and of their leadership
in firms, the maintenance of unions administrative hierarchies, and the codification

121
Vertrag uber die Einheit Deutschlands Einigungsvertrag - 1990b: Article 31, BGBl. 1990 II,
p. 900.
122
Introduced by the law passed on 27 October 1994, BGBl. 1994 I, p. 3146.
123
GBl. der DDR 1977 I, pp. 188227.
124
Zwischenbericht uber die Ergebnisse der Fachgesprache zwischen dem Ministerium f ur Arbeit
und Soziales (MfAS) und dem Bundesministerium f ur Arbeit und Sozialordnung zum
Einigungsvertrag vom 20.7.1990, Bundesministerium f ur Gesundheit, Akten, pp. 221-48123-5/3,
vol. 1.
125
Gesetz zur Anderung und Erganzung des Arbeitsgesetzbuches, GBl. der DDR 1990, pp. 371381.
126
Vertrag uber die Einheit Deutschlands Einigungsvertrag - 1990b: Article 30, Par. (1) 1, BGBl.
1990 II, p. 899.
224 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

of their sole authority to represent workers. Furthermore, they called for expanded
rights of codetermination of union representatives in companies as well as the right
of initiative and veto power on all legislation and regulatory decrees which
concerned the working and living conditions of workers such as compensation,
social and pension law, prices and taxation, occupational health and safety and
environmental protection.127 Even though the unions ultimately surrendered their
request for veto power (but not for right of initiative), if these measures and
constitutional amendments128 which, after the threat of a general strike, were
ultimately adopted by the Volkskammer had actually been implemented, they
would have hollowed out the legislative sovereignty of the East German parliament
and effectively transformed the GDR into a union state. The law and the constitu-
tional amendments were ignored by the de Maiziere Administration and abolished
in the State Treaty of 18 May 1990.
By contrast, the GDR continued to try retain the right to work. This crown
jewel of its social policy was anchored in its constitution and valued by its citizens
(Ritter 2000, p. 150). The only remnant of it which survived was the vague
recommendation by both governments to unified Germanys legislative bodies
inscribed in Article 5 of the Unification Treaty that when they considered changes
and additions to the Basic Law, they also consider incorporating designated state
goals into the Basic Law.129 In fact, neither a right to work nor rights to housing or
education were added to the Basic Laws designated state goals. This was due to the
fear that such general state goals would foster expectations among the citizenry
which could not be fulfilled. This, in turn, might lead to the kind of disillusionment
which prevailed in Weimar when the comprehensive fundamental rights of the
constitution deteriorated into mere constitutional lyric. It is telling, however, that
social rights made it into the new state constitutions in the East (von Mangoldt
1997).
In the negotiations on the State Treaty and on the Unification Treaty it became
clear that the GDR was prepared to adopt West German labor law with its
cornerstones of freedom of association, collective bargaining, employee rights in
the workplace (Betriebsverfassung) and co-determination. The original treaty
proposals of the Federal Republic, however, contained some curtailments of worker
rights. Among these were the requirement that employers give due notice before
mass layoffs, as well as regulations concerning redundancy programs. Furthermore,
a draft of the general guiding principles of the treaty stipulated that as long and to
the extent that unions capable of collective bargaining do not exist [. . .] agreements

127
Text of the draft for a law on trade unions and of amendments to the constitution of the GDR,
adopted by a congress of the trade unions of the GDR on 31 January and 1 February 1990 in:
Schwarzer (1995, pp. 477484).
128
Gesetz zur Anderung der Verfassung der Deutschen Demokratischen Republik v. 6.3.1990,
GBl. der DDR 1990 I, p. 109; Gesetz uber die Rechte der Gewerkschaften in der Deutschen
Demokratischen Republik v. 6.3.1990, GBl. der DDR 1990 I, pp. 110f.
129
Vertrag uber die Einheit Deutschlands Einigungsvertrag - 1990b: BGBl. 1990 II, p. 891.
3 Social Policy in the Process of Unification 225

on wages and other working conditions can be made by employers and works
councils.130 This was sharply criticized by the leadership of the German Federa-
tion of Trade Unions (DGB) and was struck from the treaty following the latters
interventions with the Federal Republics Chancellor and the Ministry for Labour
and Social Order (Tietmeyer 1994, pp. 106f.). The same sequence of events
unfolded with regard to the general guiding principle concerning strikes in the
draft of the State Treaty, which alongside strikes explicitly permitted defensive
lockouts. After virulent protests by the DGB the status quo was retained, namely
that it was up to the courts to decide whether defensive lockouts were permissible.
Further deviations from West German labor law contained in the draft treaty
were similarly criticized by both the FRG Social Democrats and the GDR
negotiators, and were dropped. With regard to regulations of redundancy plans to
mitigate the effects of mass layoffs in the new federal states, a problem existed in
that most employers in the East lacked the means to offer generous redundancy
payments; this endangered the desired privatization and restructuring of firms. After
in 1990 redundancy plans were granted that contained excessive benefits charged to
the Trusteeship Agency (Treuhandanstalt), the Labour and Social Order Ministry
intervened. After lengthy negotiations, on 13 April 1991 the Trusteeship Agency,
the DGB and the German Union of White-Collar Employees (Deutsche Angestell-
tengewerkschaft, DAG) issued a Joint Declaration.131 The latter recommended that
in the case of mass layoffs, employers with sufficient means should, as a rule, grant
workers redundancy payments amounting to 4 months of gross wages. Employers
without sufficient means were given access to funds from the Trusteeship Agency
for this purpose in the amount of DM 5,000 per laid off worker. The distribution of
these funds was left to the recipient firm and its works council, however, and was to
be guided by the varying socio-economic needs of the laid-off workers. This
guideline was later supplemented by agreements with individual unions. Beyond
the standard payment of DM 5,000, redundancy payments were increased in the
first quarter of 1992 by 30% and in the two ensuing quarters by 25% and 10%
respectively.132 Still, these payments were far lower than the average redundancy
payments in the old federal states, which in the mid-1980s averaged DM 13,360 per
laid off worker (Biedenkopf 1994, pp. 160f.). Already in the first year following the
Joint Declaration, 1.2 million laid-off workers received payments and by mid-1992,

130
Arbeitspapier fur die Gesprache mit der DDR f ur einen Vertrag u ber die Schaffung einer
Wahrungsunion, Wirtschafts- und Sozialgemeinschaft zwischen der Bundesrepublik Deutschland
und der Deutschen Demokratischen Republik, 24.4.1990, Archiv der sozialen Demokratie der
Friedrich-Ebert-Stiftung: SPD-Volkskammerfraktion, Mappe 26.
131
Richtlinien zu Sozialplanen in den neuen Bundeslandern (1991, pp. 289293).
132
Bundesministerium f ur Arbeit und Sozialordnung, Referat VIIIb3, Probleme im

Zusammenhang mit der Ubertragung der bundesdeutschen Arbeitsrechtsordnung auf die
ehemalige DDR, 1.7.1992, see Bundesarchiv Koblenz, B 149 Bundesministerium f ur Arbeit und
Sozialordnung 401615.
226 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

of the DM 10 billion made available by the federal government, DM 7.5 billion had
already flowed.
While the GDR was able to forestall the FRGs attempts to water down the legal
standing of workers in the draft treaty, its own attempts to achieve some
improvements in this regard for its citizens vis-a-vis workers in the Federal
Republic had only minimal prospects of success. For example, the coalition treaty
of the GDRs governing parties foresaw accepting co-determination only with some
modifications. Apparently, they wanted to extend the fully equal co-determination,
which in the West obtained only in the coal and steel industries, to all large firms. In
the transition legislation of the GDR, the regulations on works councils omitted
special committees made up of managerial employees, which were sharply
criticized by West German unions.133 We have already mentioned the GDRs
attempts to retain its existing dismissal protections for pregnant women, fathers
and mothers with children less than a year old and lone mothers with children up to
the age of three, as well as the relatively generous leave provisions to care for a
newborn or sick child. These protections stayed in place initially, but were phased
out after the Unification Treaty and ultimately pared down to West German
standards.
In the transition legislation of the GDR, in the final vote on a law based on the
West German employment promotion law, a surprise effort was launched by the
East German Social Democrats to get a provision accepted according to which in
contrast to the Federal Republic, even workers indirectly engaged in a strike could
receive unemployment compensation.134 This measure did not prevail in the Unifi-
cation Treaty. However, the GDR was able to retain its in contrast to that of the
FRG uniform regulation for blue and white-collar workers concerning dismissal
protection terms and sick pay. Changes to the outdated West German regulations
had already been called for by the Constitutional Court.135 However, on economic
and employment policy grounds, the East did not adopt the Wests bans on women
working at night and on women working on construction sites, nor for a transition
period until the end of 1992 its restrictions on Sunday and holiday work.
The FRGs legal system had evolved and been adapted to West German social
conditions by four decades of jurisprudence. After unification, its transference onto
the conditions of the shattered command economy of the GDR brought a series of
difficult problems.136 In particular, the lack of codification of the FRGs labor law
made it very difficult for Eastern workers and employers to orient themselves.

133
Gesetz uber die Inkraftsetzung von Rechtsvorschriften der Bundesrepublik Deutschland in der
Deutschen Demokratischen Republik, GBl. der DDR 1990 I, pp. 357363.
134
Volkskammer, Stenografische Niederschriften, 10. Wahlperiode, 16. Conference 21 and 22
June 1990, p. 678f. For the statute itself see GBl. der DDR 1990 I, pp. 403445.
135
Ruling of the Constitutional Court of 30 May 1990, in: Bundesverfassungsgericht,
Entscheidungen, vol. 82, 126156.
136
See the telling protocol of the Ministry of Labour and Social Order from 1 July 1992, cited in
footnote 132.
3 Social Policy in the Process of Unification 227

The FRG Labour Ministry was repeatedly asked for a binding interpretation, and its
legal interpretations were often misunderstood to be binding interpretations/
decisions. In particular, the FRGs system of dismissal protection was commonly
misunderstood. The GDR did indeed have the legal concept of dismissal, even
though it was seldom used. A dismissal was considered to be a blemish on the
employee, and so upon employment termination a cancellation agreement was
often used instead. This practice did not account for the fact that it often resulted
in a waiting period delaying unemployment compensation, and also precluded any
opportunity for the worker to appeal the dismissal, e.g. the requirement that the
main welfare office had to approve dismissals of severely disabled workers or that
the works council had to be involved in dismissal decisions. Often workers did not
understand why they had been dismissed, for they had done nothing wrong.
Financial settlements upon dismissal were problematic as well. Among workers
in the new federal states there was a widespread view that such settlements were a
reward for many years of loyalty to the company, and that workers had a legal right
to them. Provisions in this area which differed across employment sectors or which
took into account other entitlements to social protection were thus criticized as
unfair.
On the whole, the transference of FRG labor law brought tremendous adaptation
problems in the East, led to a massive increase in litigation before the newly
developed Labor Courts, (Deutscher Bundestag 1995, pp. 314316) endangered
Eastern acceptance of the new order and later contributed to the nostalgic romanti-
cization in the GDR of conditions prior to unification having been so much simpler.
It was clear from the outset that in light of the pivotal importance of collective
bargaining, to implement FRG labor law a new system of labor relations would
need to be developed in the East. The actors in this system the free trade unions
and employer organizations, but also the works councils in place of the earlier
company union boards had first to be formed, however. Initially the DGB and the
FRG unions tried to work together with the unions in the East, which they hoped to
help rebuild and democratize. Ultimately, however, as it became clear that these
unions and their central organization (the FDGB) were discredited among Eastern
workers, such attempts ceased. Instead, the FRG unions extended their
organizations to the East. They either accepted all members of the Eastern unions
en masse, or recruited them individually. To varying degrees the Western unions
also hired lower and mid-level eastern trade union officials, although some most
consistently the big metalworkers industrial union, IG-Metall refused to do so
(Schroeder 1996a, pp. 26f.). With the exception of Saxony (which formed the new
district of Dresden), the organizations of the IG-Metall in the new federal states and
East Berlin were assigned to the existing West German districts. To head its 35
administrative offices in the East, the IG-Metall employed with only one excep-
tion exclusively union officials from the West (Schmid and Tiemann 1992, pp.
134138). The DGB, on the other hand, set up distinct regional districts in each of
the five new federal states (Schmid and Tiemann 1992, p. 139). Because of the
massive layoffs in the East, the DGBs early work there was centered on legal
protection. In the DGBs 33 offices newly created in the East, as of mid-1991 230 of
228 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

its 290 officials worked in the sphere of legal protection and only 60 as
administrators. For unions not affiliated with the DGB, building up organizations
in the East was even more difficult. The white-collar union, the DAG (Deutsche
Angestelltengewerkschaft), had to construct its organization out of thin air and in so
doing encountered stiff competition from the DGB and its affiliated unions, who
were by no means willing to surrender to the DAG the organizing domain of white-
collar workers without a fight.137
The staking out of organizing domains proved problematic, not only among the
DGB, DAG and the civil servants union (the Deutscher Beamtenbund), but also
among the member unions of the DGB, because the organizational domains of the
old GDR unions often did not correspond with those of the unions of the DGB.
Particularly bitter contestations occurred between the West German mining and
industrial union (IG Bergbau und Industrie) and the public employees union OTV
(Offentliche Dienste, Transport und Verkehr). The former staked claim to all
members of both the East German mining, energy and water management union
(IG Bergbau-Energie-Wasserwirtschaft) and of IG Wismut, while the latter had
traditionally organized those employed in public utilities in western Germany.138
Over time, it became clear that the high union density of East Germany could not
be maintained in the new environment. Well over one-third (Niedermayer 1996,
p. 223) in IG-Metall more than half (Schroeder 1996a, p. 28) of new members
left their union by 1994/95. This loss of members, which considerably exceeded
Western rates, can be attributed to both the dramatic decline in employment and
disillusionment after initially high expectations concerning the power of unions to
shape the process of economic transformation and to provide job security. More-
over, a large share of members in IG-Metall in the East nearly half (Schroeder
1996a, p. 28) were retired or unemployed and hence paid only nominal dues. As a
result, and even more so given the tremendous need for intensive counsel in matters
of labor law and social law (Keller 1996, p. 98), these unions were dependent upon
help from their central offices in the West.
Employers, who had no comparable organization in the East on which they could
draw, had to (re)build their associations in the East completely anew. This process
(Hoffmann 1997, pp. 89136; Henneberger 1993, pp. 329357) was complicated by

137
Letter from Peter Seideneck from the Berlin office of the DGB to Peter Pletsch in the
Organization division of the head office of the DGB, 17 September 1990, Archiv der sozialen
Demokratie der Friedrich-Ebert-Stiftung, DGB-Archiv 5/DGAi, Abteilung Vorsitzender, no
volumne given.
138
In the end, an arbitration ruling of the DGB stipulated that the Federal Republics demarcations
among different unions in the recruitment of members should be the guideline for the
organizations in the East. In this case, this meant that the German mining and industrial union
had to surrender about two-thirds of the membership in dispute, while the two trade unions should
agree upon the rest. This led to further conflicts which repelled East German members, reduced the
ability of the unions to bind their members, and led together with other factors to a large loss of
members in the East. Hans-Peter M uller, Gewerkschaftsvereinigung, in: Eckhardt et al. (1998,
pp. 537559).
3 Social Policy in the Process of Unification 229

the fact that apart from a few small entrepreneurs and master craftsmen the state
had been virtually the sole employer in the East and employers in the capitalist
sense did not emerge until the combines were broken up and enterprises privatized.
In the transference of the West German organizational structure of membership
in trade associations and of cross-sectoral associations on the state level of the
Confederation of German Employers Associations, the Western division on the
local and state level between economic and employer associations was not
maintained with the exception of Saxony, where separate regional organizations
were formed (Keller 1996, p. 97).
The main problems of unions and employer organizations in the East were in the
field of collective bargaining policy. They faced the dilemma that even though
low wages constituted an incentive for private investment and an opportunity for
producers to improve their competitiveness, they also motivated the most productive
workers to go to the West. Western state actors hope at the time of the offer of
monetary union that wages and salaries would not rise faster than productivity proved
illusory. Despite an initial decline in productivity, wages increased sharply even
before the monetary union of 1 July 1990, and this trend continued thereafter. The
unions had two motives for these political wage rounds. First, they wanted
to prevent the emergence of a low-wage zone in the East, which certainly would
have depressed wages in the West as well. Second, they sought to win the loyalty of
their new members in the East through high wage settlements which would also
increase wage replacement benefits to help the unemployed and pensioners. On the
employers side, in the first wage rounds, East German managements legitimacy
deficit and lack of experience with wage negotiations was pivotal. Later, when often
former functionaries of West German employer associations led negotiations, the
interests of West German firms were paramount and, as with the unions, little
consideration was given to regional disparities. Strengthening the demand of workers
in the East would support the sale of West German products. High wages made it more
difficult for low-wage competition to emerge in the new federal states. Germanys
East was viewed by most West German firms as primarily a market for sales, not a
production site. Both sides unions and employer associations had, moreover, an
interest in cultivating a uniform economic area. Rapid assimilation of East German
wages to West German levels met, further, the expectation of East German workers
that, for reasons of equity, equal work be compensated with equal pay.
In collective bargaining policy from 1991 onward, two distinct strategies were
pursued. Either agreements of short duration were reached, or agreements of long
duration whereby after multiple stages a complete assimilation to Western wage
levels would be achieved. Particularly important was a collective bargaining
agreement reached in March 1991 covering 1.2 million workers in the metalwork-
ing and electronics industries. It stipulated successive wage increases on April 1st
of each year, such that by 1 April 1994 eastern German standard wages would reach
western German levels (Clasen 1991, pp. 58; 1992, pp. 510; 1993, pp. 1419).
Productivity advances in the East, however, remained far less than expected.
Moreover, a deep recession began in the fall of 1992. As a result, for the first
time in the history of German collective bargaining, the metalworking employers
230 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

association had to abrogate the agreement extraordinarily on 18 February 1993 (Keller


1996, p. 100). This symbolized a reversal of collective bargaining policy in the East,
which until then had been characterized by a consensus orientation toward reconstruc-
tion. After fierce disputes which after a failed arbitration attempt culminated in a large
strike in the metalworking industry of Saxony from 3 to 14 March 1993, an agreement
was reached which delayed assimilation to Western wage levels until the middle of
1996. Moreover, it allowed wages to sink below collectively bargained levels if
conditions were such that a hardship clause applied (Bispinck 1993; Schroeder
1996b). Far more important in practice than such hardship clauses (which were also
negotiated in other sectors) were so-called revision, opt-out and SME (small and
medium-sized enterprise) clauses which from 1992 onward were increasingly
incorporated into collective bargaining agreements.139 These weakened the institution
of the regional collective bargaining agreement which had been typical in the Federal
Republic hitherto, and paved the way for firm-level agreements on wages and working
conditions, particularly in the East.
Another increasingly common exit pathway, above all for SMEs in light of the
ongoing gap between relatively high wages and subpar productivity, was to simply
quit the employer association or abandon the collective bargaining agreement. Both
the erosion of the collective bargaining agents employer associations as well as
unions and the unbinding nature of collective bargaining agreements (Keller
1996, p. 98; Hartwich 1997, p. 125) were a sign of the decreasing hold that
employer associations in particular had on their members. One of the deeper causes
of this trend was the insufficient degree to which the interests of eastern Germans
were represented in the unified German peak associations. Moreover, a unique
feature of collective bargaining policy in the East was that the state and thus the
taxpayer (via wage replacement benefits, in particular redundancy programs
financed from government funds) as well as the solidarity community of insured
persons (through the unemployment and pension insurance schemes that had to help
fund generous active labor market and early-retirement policies) became in essence
additional (silent) parties to collective bargaining agreements.
A central role in the cushioning of social problems in the transition from a socialist
command economy to a capitalist market economy was played by a strongly devel-
oped active labor market policy. While there was disagreement neither between the
ministries and political actors in West Germany nor between the FRG and GDR
about the need to develop an unemployment insurance scheme and a West-German
style labor administration to implement it, or on the need to support this development
with initial funding, there was considerable controversy within the Federal Republic
concerning the extent to which active labor market policy should be pursued in the
East. In contrast to the BMAs position, the Finance Ministry and the Economy

139
Bundesministerium f ur Arbeit und Sozialordnung, Referat III a 1, Lohn- und Tarifwesen, an
den Minister, die Staatssekretare des BMA und die Abteilungen I und VIII, 14.7.1992: Aktuelle
Lohn- und Tarifsituation zur Jahresmitte 1992, Bundesministerium fur Arbeit und Sozialordnung,
Akten: VIII a 1/17305, vol. 1.
3 Social Policy in the Process of Unification 231

Ministry thought that introducing an expensive employment promotion system in the


East should take a back seat to the more urgent establishment of an unemployment
insurance scheme there. Moreover, they were opposed to promising the East the
entire palette of employment protection supports available to those in the West. In
particular, the Finance Ministry opposed granting short-time allowance in the first
year after monetary union for fear of the great danger that this would delay the
resolution of the adaptation problems of individual economic branches and would
conserve the existing structure.140 The BMF also rejected the idea of a comprehen-
sive continuing education program backed by the federal government, for training
was primarily the responsibility of firms and, moreover, training would neither
hinder nor end the anticipated unemployment. Moreover, the infrastructure neces-
sary to provide vocational education was lacking in the East. A job creation scheme
would not make sense, it was thought, because the vast majority of its participants
would likely be unemployed upon completion of their government funded job.
Further, there was a chance that employers would take advantage of the scheme,
creating the danger of a quasi wage subsidy.141
In the end, however, in accordance with the position of the BMA and the wishes
of the GDR, Article 19 of the first State Treaty inscribed adoption of employment
promotion on the basis of the Employment Promotion Act of the Federal Republic.
The Treaty stipulated that active labor market policy measures such as vocational
education and retraining should have particular importance and policies should
take into account the concerns of women and the disabled.142 After intensive
consultation with officials from the West German Ministry for Labour and Social
Order, the de Maiziere Administration passed an Employment Promotion Act on
22 June 1990 which was closely modeled on its West German counterpart, but also
foresaw more favorable provisions for workers in the GDR. With the consent of the
West German authorities, this East German law gave short-time allowance
(Kurzarbeitergeld) a wage-replacement benefit for workers in companies that
need to reduce employees working hours due to lack of orders (63% of net wages
for the reduced hours, or 68% for those with children) a completely new meaning.
In contrast to the Federal Republic, in the East it could now be paid even when the
position had to be eliminated, or when working hours were reduced to zero. Under
certain conditions, the labor administration could even reimburse the employer for
its pension and health-insurance contributions. Further, recipients of short-time
allowance were allowed to take part in retraining measures and coursework and

140
Bundesministerium der Finanzen, Referat IIc 1: Arbeitspapier Arbeitslosenversicherung v.
24.2.1990, in: Bundesarchiv Zwischenarchiv Dahlwitz-Hoppegarten, B 126 Bundesministerium
der Finanzen 114047.
141
Bundesministerium f ur Arbeit und Sozialordnung, Referat II c 1: Vertrag uber die Schaffung
einer Wahrungsunion, Wirtschaftsunion und Sozialgemeinschaft: Kapitel IV/Sozialgemeinschaft,
3.4.1990, in: Bundesarchiv Zwischenarchiv Dahlwitz-Hoppegarten, B 126 Bundesministerium der
Finanzen 114048.
142
Vertrag uber die Schaffung einer Wahrungs-, Wirtschafts- und Sozialunion (1990a, Art. 19, pp. 85f).
232 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

thereby receive a higher allowance.143 However, this opportunity was seldom taken
advantage of, because many collective bargaining agreements had already boosted
the short-time allowance to 90% of net wages.144
Central goals of these generous provisions were to give employers time to catch
their breath before making a decision about firing or retaining a worker, to relieve
pressure on the newly created labour offices, to give the human resources personnel
of the dissolved state combines an administrative role in coming to terms with
structural unemployment, and to forestall the emergence of socially and politically
pernicious long lines in front of labour offices.145 In the first four quarters after the
beginning of the monetary union of 1 July 1990, between 1.7 and 2 million workers
received short-time allowance one quarter of whom for jobs where the hours had
been reduced to zero (Frerich and Frey 1996, vol. 3, p. 598. Schmid and
Oschmiansky 2007, pp. 435489). Short-time allowance thus became, at least
during the early years, the most important tool for containing the social
consequences of the economic transformation.
A further provision which differed from West German practice was that the
labour office could support apprenticeship applicants who were disadvantaged not
individually due to educational deficits or their socio-economic status, but simply as
a result of the labor market situation by placing them in secondary labor market,
supra-firm institutions. In the case of jobs created in government job-creation
schemes, the labour office could reimburse up to 100% of wage costs (Frerich
and Frey 1996, vol. 3, pp. 512514).
At first, it was difficult to find suitable sponsors for jobs created via government-
funded job creation schemes. Ultimately it was either local governments or publicly
funded employment associations, either spun-off from firms or newly formed,
which became the most prevalent hosts of these jobs (Knuth 1994, pp.
172184).146 This development was supported by the fact that from 1.4.1991
onward, a special program provided potential sponsors of such jobs allowances

143
GBl. der DDR 1990 I, }} 6372.
144
Bundesministerium f ur Arbeit und Sozialordnung, Bestandsaufnahmen der Aufbauhilfen zur
Angleichung der Arbeits- und Sozialordnung in Deutschland v. 30.11.1990 und 8.2.1991, see
Bundesarchiv Koblenz, B 149 Bundesministerium f ur Arbeit und Sozialordnung 74934.
145
Protocol of Department II b 2 (Arbeitslosenversicherung) of the Ministry of Labour and Social
Order: Zur Einfuhrung einer Arbeitslosenversicherung einschlielich der Arbeitsforderung in der
DDR, 25.5.1990, in: Bundesministerium f ur Gesundheit: Akten 22248120, vol. 1; Klaus Leven,
Fur weniger als 100 Tage. Unpublished paper. The author thanks Klaus Leven for making this
paper available to him. Klaus Leven was delegated in 1990 by the FRG Ministry for Labour and
Social Order as an adviser to the Ministry of Labour and Social Affairs in the GDR, where he
significantly shaped the crafting of their Employment Promotion Act. Thereafter, Leven was Vice
President of the Federal Labour Office from 1990 to 1998.
146
Government job creation schemes (ABS companies) are publicly funded corporations for the
purpose of employment promotion, employment and industrial development.
3 Social Policy in the Process of Unification 233

for their material costs.147 This was a labor market policy innovation. Ultimately in
December 1992 a new paragraph (249h) was added to the Employment Promotion
Act of the Federal Republic which foresaw the possibility of granting wage
subsidies of an amount equal to the average unemployment compensation or
unemployment assistance benefit to encourage the productive employment of the
unemployed, those on short time, and those employed through job creation
schemes. These subsidies served to employ such individuals in environmental
clean-up projects and in social and youth services in the East.148
On the whole, a shift occurred in active labor market policy from short-time to
retraining and continuing education as well as to job creation schemes.
Expenditures by the Federal Labour Office on active labor market policy in the
East rose by 1993 to DM 41.9 billion out of a total of DM 50.5 billion spent there, or
18% of eastern German GDP (Buttler and Emmerich 1995, p. 62). Thereafter,
spending on active labor market policy in the East declined increasingly. By 1997,
though, it still amounted to DM 18.6 billion (Bundesministerium fur Arbeit und
Sozialordnung 1998a, p. 25). The generous expansion of active labor market policy
either by creating new or adapting existing instruments to the specific situation in the
East contributed decisively to the cushioning of the economic and social transfor-
mation. Active labor market policy did not, however, succeed in serving as a bridge
to the regular labor market. Supporting continuing vocational education often led
people to stockpile qualifications without the prospect of finding a new job. The
employment associations often became competitors to local tradespeople. Local
governments, too contrary to the spirit of employment promotion policy often
employed persons funded by job creation schemes to carry out municipal tasks, e.g.
in the processing of applications for a housing allowance, simply because they were
cheaper than regular employees. Through active labor-market policy open unem-
ployment which since the end of 1991 has remained over a million, with a rate
roughly twice as high as that in the old Federal Republic has been greatly reduced.
But it has also delayed rather than accelerated the necessary structural transforma-
tion of the economy. It was not an effective tool to combat low productivity, the
Achilles heel of the East German economy.

147
Bundesarbeitsminister Blum an die Ministerin f
ur Arbeit, Soziales, Gesundheit und Frauen des
Landes Brandenburg Regine Hildebrandt, 26.6.1991, Archiv f ur Christlich-Demokratische Politik
der Konrad-Adenauer-Stiftung, Bestand I 504/81 Bl um.
148
Gesetz zur Anderung der F
ordervoraussetzungen im Arbeitsf orderungsgesetz und den anderen
Gesetzen v. 18.12.1992, BGBl. 1992 I, pp. 20442057. In 1994, after positive experiences in East
Germany a similar employment promotion instrument, } 242a of the Employment Promotion Act
was created also in West Germany, albeit only for the hard-to-place unemployed (Bundesmi-
nisterium fur Arbeit und Sozialordnung 1998a, pp. 22f.).
234 The Politics of German Unification. Social, Economic, Financial, Constitutional. . .

3.5 Conclusions

After this overview of some of the central problems inherent in the social policy of
reunification, this section takes stock of the development of social policy during
reunification and its consequences for the German welfare state. Further, it inquires
whether alternatives to transferring the West German system existed, which
mistakes were made in this transference and how the German welfare state after
reunification ranks in comparison to other national systems.
The president of the German Bundesbank, Axel A. Weber, stated in an interview
in mid-September 2005 that the enormous costs of reunification explain roughly
two-thirds of Germanys underperformance during the last decade.149 Even though
the impact of reunification on the crisis of the German welfare state cannot be
quantified precisely, I agree with his general assessment. The conversion of wages
and salaries on a 1:1 basis given the unpublicized exchange rate for GDR exports
of 4.4:1 amounted to an abrupt revaluation of 340% (Kloten 1996). The GDR was
thus forced to do a cold start (Sinn and Sinn 1993), and unlike its Eastern and
Central European neighbors could not improve its international competitiveness via
lower exchange rates and low wages. The offer of monetary union contradicted
the advice of most economists and was ultimately a political decision.150 In light of
the danger of a mass exodus from the East to the West and the expectant mood of
the East Germany population, however, it would have been nearly impossible to
proceed otherwise. Moreover, the decision had an electoral motive as well, for the
Volkskammer election was only 6 weeks away.
It is improbable, though, that a gradualist policy of staged transition would have
prevented or even substantially mitigated the economic transition costs most
notably the loss of 3.5 million jobs that resulted from the chosen course of shock
therapy.
The policy of fiscal consolidation and welfare state retrenchment pursued in the
preceding years broke down with reunification. Social insurance contribution levels
not counting accident insurance rose from 35.5% in the old federal states in 1990
to 42.1% in unified Germany in 1997.151 From 1991 to 1996 social spending as<