Germans Get Incentives For Having Babies

Stephen Graham, AP, Jan. 3, 2007

When her water broke early on New Year’s Eve, Julia Gotschlich was mainly thinking about the imminent birth of her second child. But she couldn’t help worrying about family finances, too.

She and her husband stood to lose out on more than $13,200 if the baby arrived before midnight, when Germany’s generous new family benefits took effect—part of a government effort to raise one of the lowest birthrates in Europe.

Births in Germany dropped 4 percent in 2005 from the previous year, according to figures from the Federal Statistics Agency, to around 690,000. That’s the lowest since World War II and lagging even 1946, when 922,000 babies were born even as the country lay in ruins.

A recent government study forecast that Germany’s population will drop by as much as 16 percent by 2050, from the current 82.4 million to as little as 69 million. That could hurt the economy by sapping the work force—and undermine the state pension system.

Facing such an alarming demographic trend, the German government has shaken up its financial assistance to parents in a bid to make it easier for working women to have children.

The new “Elterngeld”—or “parent money”—program allows an adult who stops work after a child is born to continue to claim two-thirds of their net wage, up to a maximum $2,375 per month. Low earners can claim 100 percent compensation for lost wages.

One parent can claim for up to 12 months; if both parents take a turn, they can claim the benefit for a total of 14 months—a tweak designed to encourage more fathers to help.

Germany previously paid a flat $400 a month in benefits to needy parents for up to two years. The change is expected to raise the annual outlay in direct payments for parents with infants by about $1.2 billion per year to $5 billion.

Other countries have instituted similar incentive programs to boost birthrates. France and Sweden both pay child subsidies roughly equivalent to those in Germany—but also have an extensive network of low-cost childcare centers that take babies to preschool-aged children.

France offers additional help to some families who need in-home care. The Swedes give either moms or dads 80 percent of their salary for a total of 480 days in a parental leave.

While the French had 12.7 new babies per 1,000 residents in 2004 and the Swedes 11.2, Germany recorded only 8.5 new births—the lowest rate in Europe not counting Vatican City.

Britain introduced a so-called “baby bonds” scheme in 2004, giving a $490 voucher to every newborn to start a trust fund, while a new Russian law entitles families to a bonus of $9,600 following the birth of a second child and any subsequent children.

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There had been media reports about German women taking magnesium tablets, which can prevent premature labor, or putting off planned Caesarean births to qualify for the new bonuses.

Klaus Grunert, a doctor at Auguste-Viktoria Hospital, said some women avoided things thought to help induce labor—from hot baths and massages to sex. But he said none asked doctors to delay births, which the doctors would have refused in any case.

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