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Germany's low death rate and quick payout of relief to workers makes a case for social democracy as preparedness.
During the lethal COVID-19 pandemic, I feel fortunate to live in Germany. Its safety net, reinforced with billions of euros in new state funding, has thus far protected my small family and most of my acquaintances, many of whom, like me, are self-employed. Indeed, when called upon in crisis, the German Sozialstaat, or welfare state—even in its present hobbled version—has come to the aid of most of Germany’s inhabitants.
I don’t know of anywhere else in Europe where such a generous and speedy injection went to the smallest cogs of the economy.
Here in Berlin, the virus itself has not hit hard: 51 deaths and 4,583 infections as of Sunday. Across Germany, the deaths per hundred infections has been one of the lowest in the world: 1.9 percent. Worldwide, 6.1 percent of those infected die, with much higher rates in Spain (10.3 percent), Italy (12.7 percent), and the UK (12.5 percent). Germany’s low toll reflects its early widespread testing, as well as prodigious state-of-the-art facilities. Before the crisis, in 2012, Germany had the highest number of ICU beds in Europe, 29 per 100,000 people, compared to 12 in Italy and 6 in the Netherlands. And when the message from the WHO to “test, test, test” came on March 16, Germany immediately began expanding its laboratory facilities for en masse testing. Across Germany, the weekly testing capacity of the hospitals is currently three times the total number of confirmed cases.
By the end of March, Germany had carried out around 920,000 tests—more than any other European country. Many people who had no symptoms were tested simply because they had had contact with someone who had tested positive. Scientists rigorously traced the infection chains to nip COVID-19’s spread in the bud. In contrast, in Italy, Spain, and the United States, testing focused mostly on seriously ill patients at first. This might, in part, explain why so few in Germany have died: the early testing enabled infected people to be treated early.
In Germany, people adhered fairly conscientiously to new laws and state rules governing behavior, which varied within the country by region. While the New York Times attributed this to high trust in the state, others suggested it had something to do with the national character: 97 percent of Germans believe scientists’ pronouncements on the climate crisis, for example, so were perhaps also inclined to believe the pronouncements of medical professionals. In Berlin, the social distancing regimen has been fairly relaxed: people can still enjoy parks, though only in pairs or family groups. The city, quieter than I have ever known it—bars, clubs, galleries, movie theaters, and restaurants are closed, and traffic reduced—evokes East Berlin under socialism (time was abundant, no one was in a hurry, most folks went to bed early). Since culture and nightlife are so much of what defines Berlin today, the quietude is onerous, but tolerable as long as an end is in sight.
Berlin is known for its small companies, gig economy, and ranks of freelancers, and the economy’s overnight shutdown has cast millions of people and firms into peril. For many, work evaporated overnight. For example, my friend Colin, a professional translator, told me that overnight the emails from clients simply stopped. A version of this is being experienced by all of Berlin’s musicians, writers, filmmakers, photographers, actors, bartenders, café owners—and virtually the entire coterie of Berlin’s creative class, much of which just scrapes by at the best of times.
The city, quieter than I have ever known it, evokes East Berlin under socialism (time was abundant, no one was in a hurry, most folks went to bed early).
Fortunately, last week more than $1.4 billion was already doled out in Berlin to more than 150,000 of the city’s self-employed and small businesses. Colin filled out a short online application for the $5,400 which is being offered, no strings attached, available to freelancers. To his shock—as Germany’s bureaucracy is notoriously ponderous and time-sapping—the sum popped up in his bank account two days later. I did the same and received the payment within days too. Businesses with up to 10 employees are eligible for up to $15,000—a less helpful injection—but can also receive zero-interest loans, backed by the state.
I don’t know of anywhere else in Europe, or for that matter the world, where such a generous and speedy injection went to the smallest cogs of the economy. This speaks to more than just German administrative agility and an economy that has boomed for over a decade, although those surely helped. It is also that Germany’s Sozialstaat, the target of so much leftist vitriol in recent years, has lived up to its postwar reputation, despite severe blows in recent decades. While economic disparity has never been wider in the Federal Republic than it is now, the framework of the safety net nonetheless prepared Germany for this crisis.
“The Sozialstaat has been able to help so many people because it could rely on structures that were already there,” Joachim Rock of Paritätische Wohlfahrtsverband, a nondenominational charity based in Berlin, told me. “Just about everybody is insured and almost all retirees have pensions. As much as the social welfare state has been pared down, its offices and laws are still there. Additional state monies could flow into them.”
The extent to which the recent injection—with perhaps more to come—will tide us over depends on the length of the crisis and the economic turbulence that follows. For someone like Colin, the $5,400 will pad the next two months, after he cuts expenses to the bare bones (Berlin’s rents have soared in past years, but it’s still possible for artists and others to get by on very little). Without doubt, many small shops and one-shot startups won’t make it, which will diminish Berlin’s urban landscape indefinitely.
Künstlersozialkasse (KSK, Social Insurance for Artists), a state institution that provides support for artists, offers hope as well. The KSK provides a broad range of creatives, including writers such as myself, with affordable health insurance, long-term care, and pension plans. The logic that brought KSK to life was not benevolence: it was better to have creatives paying at least something into the system, ran the argument, than nothing and then finding them on the streets or the hospitals’ steps come old age. Income determines how much one pays to KSK, and that amount is then matched by the state—just as private sector companies match the contributions of their employees. KSK cuts the cost of health insurance in half and doubles social security contributions. When COVID-19 hit, KSK announced that its members could adjust down their payments to match their reduced incomes. In the same vein, an April 1 law banned landlords from expelling tenants who couldn’t make rent on account of the pandemic.
Experts say that Germany's program to pay furloughed workers is limiting economic fallout by 45 percent and will speed the private sector’s return to normal once the crisis subsides.
As for those tossed out of jobs and in need of full welfare services and unemployment, the process to qualify for benefits has been streamlined. Sweeping changes to the Sozialstaat under the 1998–2005 Social Democratic government of Chancellor Gerhard Schröder trimmed welfare benefits and made the criteria for obtaining them more rigorous. Today, however, and presumably for the short term, the unemployed no longer need to prove that their assets are nearly zero in order to receive aid. Local administrations are instructed to focus on getting aid to applicants as fast as possible rather than holding them to the letter of the law.
The federal €1.25 trillion crisis aid package (three times the entire 2020 budget) throws a lifeline to much larger companies and their workers. At its heart are zero-interest loans as well as Kurzarbeit, or short-term layoffs, which is a government program that pays workers 60 percent of their wages (or 67 percent, if they have children) when, because of crisis-related shortfalls, a firm must either temporarily lay them off or reduce their hours.
My neighbor owns an advertising firm with thirty full-time employees. When clients started cancelling contracts in mid-March, and it became clear that in-person staff meetings were no longer possible, his company continued to pay staff in full. The state will reimburse the firm 60 percent for the hours staff couldn’t work because of lost contracts or the need to provide child care, since day cares and schools also closed. The firm is picking up the remaining 40 percent of the paycheck for those lost hours. Thus all of the employees will receive full payment for at least the next few months.
This scheme is nothing new in Germany. It provides firms with a bridge when they need it, and it worked commendably during the financial crisis. The difference today is the extraordinary volume: about 4 million people are currently on short-term layoff. My neighbor believes it will help him retain valuable professionals rather than lose them to the market; when business picks up again, his staff will move seamlessly back into their old jobs. And it keeps millions of workers from rushing to the unemployment office, as they have had to in the United States. In Germany, economists project an estimated 2.5 million people will become unemployed as a result of the crisis; in the United States, 17 million filed for unemployment benefits in the span of three weeks (the ratio of the two counties’ populations is roughly 1:4). Experts say that the Kurzarbeit option is limiting economic fallout by 45 percent. But their greatest advantage, they argue, is still to come, as it will speed the private sector’s return to normal once the crisis subsides.
As impressive as it is, Germany’s short-term layoff scheme is eclipsed by those of other European countries: Denmark and Norway pay the entirety of the furloughed employees’ salaries. Austria and the Netherlands chip in 80 to 90 percent. Nevertheless, the emergency measures are extremely popular in Germany, reflected in Merkel’s current ratings—the highest in years—and could bolster the social welfare state after the crisis. “There’s overwhelming approval for the immediate crisis measures,” the economist Achim Truger told the weekly Freitag. “These are far reaching, and were set into motion quickly and were large in volume. So a lot has happened that would not have been possible in other economic situations.” He imagines that some of the measures could remain in place long after the medical crisis.
The short-term layoff scheme is nothing new in Germany. It provides firms with a bridge when they need it, and it worked commendably during the financial crisis.
Rock, of Paritätische Wohlfahrtsverband, argues that while freelance professionals such as me have been administered to admirably, many of the most needy in Germany are falling through the cracks. Welfare payments are so low that simply having children at home for lunch or paying higher prices at the grocery store can stress household budgets to the breaking point. “Most of the soup kitchens and public cafeterias are closed,” he says. Associations of welfare recipients have come together to petition for an extra $110 a month to meet these needs—though to no avail, yet.
“The problem is that 60 percent of a small paycheck is very little,” Stefan Reinecke of the left-liberal daily Tageszeitung told me, referring to the short-term layoff scheme. The vast low-income sector created during the Schröder era struggles to get by even with full pay; many simply can’t make it on 60 percent of their usual pay.
Reinecke also notes that while Germany’s social solidarity at home has been outstanding, that compassion stops at the border. “It doesn’t work internationally,” he says, and only in limited fashion across the EU. “This is very shortsighted. This is a different kind of crisis than the euro crisis,” says Reinecke. “Europe’s hardest-hit countries aren’t in such straits because of their economic policies but because of a pandemic. Germany should do a lot more to help them.”
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