Welfare state reform / Poverty should be tackled over the short term by the introduction of new control instruments and, in the longer term, through early childhood education
In the light of the most recent discussions relating to social and employment market reform in Germany, economist Professor Klaus Wälde is proposing that the introduction of new control instruments should be considered. "People in the lower income bracket need a higher net income," said Wälde, Professor of Economics at Johannes Gutenberg University Mainz (JGU), setting out specific ways of achieving this objective. He also warns against adopting purely short-term measures and insists that a medium-term approach is essential if poverty is to be tackled successfully. One option would be to make it compulsory for children to attend kindergarten from the age of 3 years at the latest. "Early child education should not only be reserved to children from the middle and upper classes but must also be available to those children who would benefit most from it." The recommendations are related to the "Ways out of poverty in Germany" research project, which is being assessed by Wälde's doctoral student Steffi Hahn.
More than ten years after the introduction of the Hartz concepts relating to the labor market in Germany, discussions on how and whether to reform these measures are now taking place across the political spectrum. Whether the views are from those who advocate or oppose reforming the concepts, the debate is mainly centered around the use of traditional social market and labor market policies: Should the benefits introduced with Hartz IV be increased or kept at the same level? Should the minimum wage be increased or reduced? Should there be a guaranteed basic income but also a requirement to prove the need for financial support? "The considerations revolve around instruments that could potentially reduce one problem but are also associated with other problems," Wälde pointed out. For example, the concept of a minimum wage aims to reduce poverty but also involves the risk of creating unemployment.
"If we want to reduce unemployment without creating poverty or reduce poverty without generating unemployment, we must think about using other instruments," emphasized Wälde and Hahn in a position paper. Net income in the lower income brackets must be increased, for example by means of employing a negative income tax concept for those on lower wages, by providing assistance for the payment of social security contributions, or by introducing an unconditional basic income guarantee. This would increase the incentives for people to find paid work.
Tackling poverty in the medium term as a key challenge
However, such an approach would only be beneficial in the short term. "Redistribution of wealth is certainly a good idea," said Wälde. "But future generations must also be made capable of escaping from poverty by themselves." Poverty is a vicious circle and should therefore not be treated as an individual problem but rather as a factor that needs to be dealt with across generations and longer periods. Recent studies undertaken in the USA have confirmed that this can be achieved through early childhood education.
Taking the concept of reform of the welfare state to its logical conclusion and with a view to the need to combat poverty over the medium term, both authors believe that making kindergarten attendance compulsory from the age of 3 years at the latest should be an essential requirement. "The introduction of compulsory kindergarten attendance may seem at first glance to be something that you would expect from the nanny state at its worst and a measure that would extensively impact on families and social structures. However, our society must make good education accessible to all social classes and, in principle, compulsory kindergarten attendance would be no different to the existing compulsory school attendance. It would just be imposing the same requirements at an earlier age," explained Wälde, addressing the pros and cons of the proposals.
Two aspects need to be considered with regard to Germany's endeavors to modernize its welfare system. "On the one hand, we need new instruments that can help to reduce poverty immediately and directly without generating unemployment. On the other hand, we also need instruments that are able to deal with poverty over the medium term," concluded Wälde and Hahn. Children and adolescents must receive a better education to be able to find their own route out of poverty, and the introduction of compulsory kindergarten attendance from the age of 2 or 3 years would seem to be the logical consequence.
Weighing up economic arguments and the ethical and legal aspects
Apart from purely economic considerations, the authors also acknowledge the moral and legal challenges associated with the proposal. In principle, compulsory kindergarten attendance is no different from compulsory school attendance. Yet even if we accept that the latter is legitimate, this does not mean this justifies making attendance at kindergarten compulsory. Under constitutional law, there is a fundamental conflict between the concept of equality, which is in favor of the notion of compulsory kindergarten attendance, and the concept of freedom, which is in favor of parental autonomy. The state is responsible for children's welfare but must also guarantee civil liberties. Hence, when more than the purely economic factors supporting the notion of equality and education are taken into consideration, the proposal of making kindergarten attendance compulsory becomes a very complex issue.
Professor Dr. Klaus Wälde
Gutenberg School of Management and Economics
Johannes Gutenberg University Mainz
55099 Mainz, GERMANY
phone +49 6131 39-20143
https://www.macro.economics.uni-mainz.de/ – Macroeconomics at JGU
http://www.uni-mainz.de/presse/16797_ENG_HTML.php – press release "Hartz IV reform did not reduce unemployment in Germany" (7 Nov. 2013)
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