Helmut Schmidt - Domestic Reforms

Domestic Reforms

Although Schmidt did not feel that he was in a position to substantially extend the social reforms of the Brandt Administration, due to the economic problems he encountered during his time as chancellor, a wide range of reforms were nevertheless carried out under his administration. These included:

• The introduction of employment creation schemes to help young workers.
• Major improvements in welfare provision for the elderly.
• The introduction of special benefits to compensate for wages not paid as a result of bankruptcy for a maximum of up three months (July 1974).
• The Training Opportunities Act (1976) which, over a four-year period, helped to increase the number of vocational training places from 450,000 to 630,000 a year.
• The replacement of tax allowances by child benefit as well as payment for the first child (1975).
• Increases in income-limits for housing allowances together with housing allowance rates.
• A new declaration of social rights (1976).
• A marriage and divorce law (1976), which instituted the principle of maintenance obligations of each economically stronger partner.
• A Sex Discrimination Act (1977).
• The introduction of a "parity" system (although in a weakened form) on the supervisory boards of all companies employing over 2,000 workers, a reform which West German trade unions had long fought for. This law improved employee representation on the supervisory boards of companies outside the steel and coal industries. The main provision of this new piece of legislation was that in the 650 major companies that accounted for 70% of West Germany’s output, employee representation on the supervisory boards rose from one-third to one-half.
• The 1976 Act for the Promotion of Urban Development and the 1977 Housing Modernisation Act, which (together with the 1971 Act for the Promotion of Urban Development passed by the Brandt Administration) by the end of the Seventies had enabled most West German cities to introduce programmes aimed at renovating their pre-war residential areas.
• Improvements in family allowances, with monthly subsidies for children increased by over 100% (1975).
• The introduction of additional tax reforms that lowered the tax burden on low-income households, and which played an important role “in pre-empting a real decline in the income and purchasing power of workers”.
• The introduction of social policy legislation in the late seventies which increased family allowances (though by a smaller amount than in 1974) and maternity leave benefits.
• The passage of a reformed food law, which aimed to safeguard consumers from physical harm (June 1974).
• A tax relief act, which reduced income taxes and provided additional tax benefits for housing allowances.
• The introduction of several policy changes between 1976 and 1982, such as tax credits and family allowances, which compensated unions for wage restraint and “guaranteed the maintenance of a constant income level for employed persons and their families”.
• A substantial increase in the child allowance (1979).
• The introduction of a special tax credit (1978) in cases of particular financial burden due to children.
• The launching of an experimental retraining programme on the shop floor (lasting from 1979 to 1981), which benefited 45,680 people.
• The Law to Improve Occupational Old Age Pensions (1974), which extended coverage of occupational pensions whilst also “co-ordinating them more closely with state pensions and setting minimum standards as regards benefit levels and the preservation of pension rights.” By 1976, as a result of this legislation, 65% of private sector employees were covered by occupational schemes and over two-thirds of these workers were eligible for benefits equal to more than 15% of their earnings at retirement. This legislation also acquired that entitlements to occupational pensions must not expire after leaving a form and that occupational pensions must not be reduced as a result of receipt of benefits under the public insurance system.
• Improvements in invalidity and old-age pension provision for the unemployed, who (from 1977 onwards) were technically insured free of charge under the old-age pension and invalidity scheme. Previously, there had only existed partial and restricted coverage for the unemployed.
• The Social Insurance Law for the Handicapped (1975) which extended compulsory coverage to handicapped persons working in special establishments for the handicapped (medical benefits and cash benefits to replace earnings from work).
• A reform of naming for partners after marriage (1976).
• A reform of marriage law, which eliminated “moral guilt” as a criterion for alimony payment obligations (1976).
• Increases in child benefits, which rose on a regular basis (particularly for families with more than one child) for most of the years that the Schmidt Administration was in office.
• The introduction of a provisional law (1976) to boost the number of apprentices, which reduced the numbers of young people out of work.
• The First Marriage Reform Law (1976), which stated that pension entitlements acquired during marriage must be shared with the economically weaker spouse following divorce.
• The Artists’ Social insurance Law (1981), which introduced compulsory insurance for artists below a certain income-limit.
• A prison reform (1977) which limited sentences in all but the gravest cases to 15 years, while proclaiming rehabilitation to be the objective of incarceration.
• Increases in pensions, which went up in numerical terms by 11.1% (1975), 11.0% (1976), 9.9% (1977), 4.5% (1979), 4% (1980), 4% (1981), and 5.8% (1982). Adjusted for changes in the annual price index, pensions went up in real terms by 5.1% (1975), 6.7% (1976), 6.2% (1977), 0.4% (1979), and 0.6% (1982). However, the rate of pension was not changed in 1978 (even though prices increased by 2.7%), and in 1980 and 1981 the real value of pensions fell by 1.5% and 2.3%, respectively.
• The Introductory Tax Reform Law (1974), which increased bad weather payments, part-time workers’ benefits and insurance benefits to 68% of net wages, fixed special benefits during vocational training at 90% of net earnings, increased assistance benefits to 58% of net earnings, and abolished special family benefits “in favour of the inclusion of the unemployed under general child allowance scheme”.
• The Students’ Sickness Insurance Law (1975) which extended compulsory coverage to students (medical benefits only).
• The Maintenance Security Law (1979), which introduced public advance payments for single parents “not in receipt of maintenance payments from the liable parent.” These benefits were made payable up to 36 months, and private claims against a parent not meeting a maintenance liability were taken over by the state.
• The extension of entitlement to educational allowances to cover all tenth-grade pupils in vocational education (1978).
• The adoption of the European directive on equal treatment for women in paid employment (1979).
• The passage of the Detergents Law (1975) and the Effluency Levies Act (1978) to encourage environmental protection.
• The introduction of four months paid parental leave for working mothers (1979).
• The introduction of a law which enabled married women to enter employment without the permission of their husbands (1977).
• The passage of a law to encourage low-income home ownership.
• The provision of 250 million marks (1978) for the promotion of sports and physical education.
• An increase in job-protected leave after childbirth from 8 weeks to 6 months (1979).
• The strengthening of the legal status of people from other countries by facilitating the acquisition of unlimited residence permits (1978).
• An extension of paid parental leave from 2 to 6 months (1979).
• An amendment to the legal code for residency permits (1978), which granted foreign residents the right to unlimited residence permits after five years of continuous residency. The amendment also stated that legal residents would be eligible for a residence entitlement after eight years if certain conditions were met, such as language fluency.
• A reduction in poverty between 1978 and 1982.