The traffic light coalition cuts government spending. Family Minister Paus will also have to make do with less money next year. Now there should be cuts in parental allowance.
The number of those affected is manageable – the debate is still heated. The exclusion of the top earners from parental allowance announced by Federal Minister for Family Affairs Lisa Paus surprised families and many who want to become parents. The Greens politician explains that she has to save 500 million euros on the order of FDP Finance Minister Christian Lindner with this state transfer. The FDP parliamentary group itself reacts “not with conviction” and worries about setbacks in family policy – just like the opposition.
By mid-July, Paus is supposed to propose the new law. She has decided to shrink the group of recipients in a “social-politically balanced” manner, she says, instead of cutting back on the service itself across the board. The minister also concedes: “In terms of equality, it’s not really a highlight.”
Does this now risk a significant damper? And which group will be left out of parental allowance in the future as a result of the announcement of the cap?
objective
The parental allowance introduced in 2007 under the grand coalition of CDU/CSU and SPD is considered a central family policy measure and a paradigm shift: with the declared aim of increasing the number of mothers in the labor market and also improving the sharing of childcare and housework between partners. The then Family Minister Ursula von der Leyen, now President of the European Commission, was responsible.
Compensation for loss of earnings after the birth, which replaced the child-raising allowance that was available until then, should make it easier for qualified women to decide to have a child and – accompanied by an expansion of childcare – open up a year of sanctuary with an easier return to work. Fathers’ months were also included in order to persuade them to take a break from their jobs.
Claim
Parents are jointly entitled to a total of 14 months of basic parental allowance if both take part in childcare and the parents lose income as a result: i.e. a maximum of 25,200 euros. You can freely split the months between each other. A parent can take at least two and a maximum of twelve months for themselves, according to the Ministry of Family Affairs. Single parents who receive parental allowance to compensate for the loss of earned income can claim the full 14 months of parental allowance.
The amount of the parental allowance depends on how much income the parent caring for the child had before the birth of the child – but the payment amount was capped at 1800 euros (corresponding to a basis of around 2700 euros net income). In principle, parents are entitled to 67 percent of the average combined monthly income from employment in the calendar year before the month in which the child is born. The ElterngeldPlus – which extends the payment if you work part-time – reaches between 150 and 900 euros per month.
exclusion
So far, the upper limit of the taxable income of a couple has also provided the framework for the reference: The minister now wants to halve this 300,000 euros per year to 150,000 euros, corresponding to the previous 150,000 euros for single people. For couples who both earn, 150,000 euros in taxable household income corresponds to roughly 180,000 euros gross income, calculates Stefan Bach from the German Institute for Economic Research.
Such income would have had a good four percent of all taxable couples in 2019, and probably a little more today. The proportion of parental allowance couples in the younger age group is likely to be significantly lower – plausible if this group accounts for around two percent of all taxable couples.
In an interview with the broadcasting group RTL/ntv, the family minister herself estimated that around 60,000 families would probably lose their entitlement to state wage replacement benefits during parental leave in the future. A spokesman for the ministry had previously – with reference to a volume of just over one million recipients of parental allowance in 2020 – put the proportion of those affected at around five percent of recipients.
This figure is also quoted by the employer-related Institute of the German Economy (IW): According to a household survey by the Socio-Economic Panel (SOEP) and 435,000 couples under the age of 50 with a joint taxable income of 150,000 euros, around five percent of the couples are affected.
saving
In order to promote the compatibility of family and work, the state recently spent more than eight billion euros on parental allowance. Contrary to what was agreed in the coalition agreement, the benefit in the 2024 federal budget will not be adjusted to the purchase price development – and according to the draft, at the insistence of the Minister of Finance, the amount for the family policy transfer benefit will drop by EUR 290 million compared to 2023 to EUR 7.99 billion.
previous distribution
The Federal Statistical Office reported two figures for all income groups and for the year 2022: According to information from March of this year, almost 1.4 million women and 482,000 men in Germany received parental allowance last year. The proportion of fathers rose to 26.1 percent, compared to 20.9 percent in 2015. According to a later Destatis publication, the recipients totaled 1.24 million without ElterngeldPlus, and with a total of 1.85 million.
In the upper income group now affected by the savings plans with an average monthly income before the birth of 2770 euros net and more, the office counted a total of around 290,000 recipients for Germany in 2022 – 154,000 of them men and 136,000 women. Men dominate the top. Even in the income group below (2,000-2,770 euros), women predominate with 226.5 million in front of 163,000 male recipients.
Who are the sufferers?
Purely statistically and on average, male parental allowance users in 2022 were entitled to a monthly claim of 1,345 euros, women to 950 euros. In practice, the planned restriction will typically affect academic couples. The IW ranks these partners at the threshold of 75,000 euros for taxable income not only among the high earners, but also in the middle class.
In addition, the reduction will probably primarily affect fathers. The accusation that the Greens punish well-educated women is therefore difficult to prove. Because men who take parental leave are clearly ahead with a high previous income in the top league: Of all those who receive the highest possible parental allowance rate of 1800 euros per month, more than 60 percent are men. This is in complete contrast to all other income groups, in which the participation of men in baby care is still extremely low. On average, there are twelve “mom months” for every “dad month”.
A resourceful observer may also notice that the Greens may not have accidentally set the cap at 150,000 euros. In this way, a couple of teachers with twice the grade A14 is just below that. Since civil servants are not subject to the social security deduction, they also have a higher net income than outside the civil service – i.e. higher parental allowance.
reference period
At the same time, men continue to show very little ambition and commitment when it comes to the planned period of receipt of parental allowance. While it was 14.6 months for women in 2022 (as in the previous year), men aimed for a significantly shorter period of time with an average of 3.6 months.
Only about every tenth father takes more than the two “father months” to complete. Of almost 500,000 male recipients, more than 340,000 only planned up to two months – and mostly at the same time as their partner. Spicy: Two additional months of parental allowance are only possible if both parents receive parental allowance for at least two months.
However, the fact that fathers are the sole recipients of parental allowance is steadily increasing. In the 13th and 14th month of the child’s life, the proportion of fathers who are the only fathers is highest at around 20 percent. At the same time, many mothers continue to take unpaid parental leave after their entitlement to parental allowance has expired, which they in turn spend together with their partner.
gender equality advances
Also thanks to other family policy measures such as the expansion of the day care center, mothers have been returning to the labor market more frequently and earlier after the birth since the introduction of parental allowance, 2022 saw one analysis of the Federal Institute for Population Research (BIB). “In conjunction with other political measures, such as improving the education and care infrastructure and the situation of parents on the labor market, the parental benefit has led to a greater number of mothers working, even with small children,” was the conclusion.
More women work, more fathers get involved. According to the Federal Statistical Office, the employment rate of mothers with children under the age of three rose from 43 to 56 percent between 2007 and 2019. “Nevertheless, mothers experience a decline in professional prestige after parental leave,” it says restrictively, while fathers – even after longer periods of parental leave – tended to show increases. However, the analysis also found changes in the long-term behavior of fathers: fathers who have taken at least three months of parental leave are much more involved in care work than others – especially in childcare.