The state of the welfare state: German social policy between macroeconomic retrenchment and microeconomic recalibration

Germany's welfare state has been exposed to severe challenges since the mid-1970s. This article takes stock of the state of German social policy. It sketches the development and patterns of social expenditure since the 1980s and provides an overview of the social policy reforms enacted by the Kohl and Schroder governments. No comprehensive short or medium term recalibration of the German welfare state has taken place that is likely to overcome its structural problems; but the various reforms may, in the long run, bring about a substantial policy shift. In the social policy reforms carried out over the last two decades, there was both retrenchment and expansion. Overall, however, benefit provision has become fully dependent on the state of the budget, rather than being led by demand.