A Parent-friendly State

May 19: When you think of having a child, the first thing that crosses your mind is the state of your finances.

But, if you are a German worker, you do not have to think much about juggling your expenditure heads to cater to your child’s needs.

Not only does the state pay for the child’s education, the German Constitutional Court has now ruled that workers with children should pay less for the nursing-insurance scheme, a compulsory tax levied on all workers, than childless people, The Economist magazine reported.

The nursing-insurance scheme, set up in 1995, is designed to provide for the long-term care of the elderly and the chronically sick.

The ruling, in a case filed by a father of 10 and by family associations, said that the insurance scheme is unconstitutional because it fails to promote the family and does not ensure equality among tax-payers as required by the Constitution.

The court said that people who will benefit from the scheme will depend on the premiums paid by the present generation of workers. Those who do not have children will also benefit from it. But, since they are not bringing up future contributors to the scheme, they are getting an unfair advantage. They should, therefore, pay more, said the court.

One would wonder why it is necessary to take such an extreme step against childless couples. It is important because the number of couples who are deciding to not have children is considerably more than those who do in present day Germany.

Over the past 30 years, the number of babies per woman has fallen by half to 1.3 per cent, which is one of the lowest in the European Union. In other words, one in every three women of childbearing age chooses to remain childless.

As a result, the country has a very low population growth rate.

To change this scenario, every German woman has to start having an average of 3.8 children, or large numbers of young immigrants will have to be brought into the country, the magazine report said.

What is amazing is that such a huge percentage of German women prefer to stay childless despite the fact that the state treats parents so well. If they have two children, they get a tax-free allowance of DM270 ($122) for each child every month, and DM300 ($135) for the third child and DM350 ($158) for every child after that till the child turns 18. In fact, till 27, if the child is into full-time education.

Besides benefits directed towards their children’s education, parents get other allowances too. Those who want to take time off work to look after their children are eligible for an allowance of up to DM900 ($407) a month during the child’s first year.

The court ruling on insurance scheme premiums, however, did not say what should be done to the financial and non-financial benefits already enjoyed by parents, or whether a parent with one child should pay more than someone who has 10. But, it also said that the present levy rate of 1.7 per cent of the gross wages for the nursing-insurance scheme should be maintained till 2004, by which time the ruling would be crystallized into law.