REFORMING THE GERMAN WELFARE STATE: WHY GERMANY IS SLOWER THAN ITS NEIGHBORS

Germany has been characterized as a country slow to reform its welfare system. Examining this popular conception, I find that the German efforts to cut welfare spending do not lag far behind its neighbors. The lag comes in the slower effort made in Germany to rethink the legitimizing principles of the social model and to change policies to promote the new idea of a welfare state. Combining a social constructivist with an institutionalist approach, I explain Germany’s slow progress as a function of a welfare system whose legitimizing principle is income security rather than social citizenship. For the past five years, Germany has been the villain in morality plays about welfare reform. Around the world, the popular press portrays Germany’s economy as ossified and over-regulated. The result, if one believes the dire predictions, is a country doomed to lose in the stiff competition of the global economy. There may be truth in this dire image, but it is certainly too strong. During the past two decades, Germany actually had a good record in trimming its welfare budget (Manow and Seils 2000). Especially compared to its high spending neighbors, Germany’s record is not shabby. But, spending is not the best measure of welfare reform. Across western Europe, the state-of-the-art in welfare reform is measured by efforts to reward people for staying in, or returning to the labor force. Spending cuts alone have not achieved these goals. As Josef Schmid noted in the introduction to this volume, the real heart o