As Elections Near, Germany Courts Its Pensioners

The New York Times

May 7, 2009 

Germany

The two biggest political parties in Germany spend much of their time these days squabbling over everything from nuclear power to Guantánamo detainees. But in this election season they found time Wednesday to join together on one issue: protecting pension benefits.

With Germany’s federal elections less than five months away, the two parties are competing to win over the bloc of older voters that has become one of the biggest and most powerful segments of the population — one that is likely to play a major role in deciding whether Angela Merkel is re-elected chancellor.

On Wednesday, the German cabinet voted overwhelmingly to prevent any reduction in pensions, agreeing to end a decades-old law that linked pension payments to a rise or fall in average income. The new legislation is almost certain to be approved by Parliament, meaning that Germany’s 20.2 million pensioners, who make up a quarter of the population, will largely be protected from the impact of the global financial crisis — not only for this year but for 2010 as well. 

But things could get even better for pensioners. Several weeks ago the cabinet agreed to actually increase benefits this year — by 2.4 percent in western states and 3.38 percent in the east, where unemployment is higher. It will be the second increase in pension benefits in the past 12 months.

These measures reflect the growing influence of the pensioners at a time when overall membership in both major parties is shrinking but the percentage of senior voters is rising. The legislation Wednesday had the backing of both Mrs. Merkel’s conservative Christian Democratic Union and her coalition partners, the Social Democrats, whose candidate, Foreign Minister Frank-Walter Steinmeier, is challenging Mrs. Merkel for the chancellorship.

In the 2005 election, pensioners split their vote almost evenly between the two main parties, with each garnering about 35 percent. So even a small shift either way in the voting bloc could prove significant. 

“Woe to the conservatives or the Social Democrats if they dare ignore the pensioners,” said Gero Neugebauer, political science professor at Berlin’s Free University. “They are one of the main powers in this coming election.”

The protection of benefits comes despite the growing impact of the economic downturn on the German people. Unemployment is rising. Wages are lower. More people are on shorter work weeks. Traditional perks, like extra pay at Christmas time, are being abolished, and the extra month’s pay that many workers received until recently has been scrapped. 

State pensions in Germany are paid by equal contributions from employers and employees that amount to 19.9 percent of a worker’s monthly salary. Last year, when wages rose, state pensions increased by 1.1 percent. The new legislation will prevent them from declining as wages fall this year. 

The concern over pension payments comes as Germany’s two big parties grapple with the shifting demographics in their membership. More than 46 percent of Mrs. Merkel’s Christian Democrats are older than 60, an increase of 16 percent since to 1990. Almost 44 percent of Social Democrats are over 60, a 20 percent increase over that same period. Younger voters, meanwhile, are searching for alternative parties.

These trends matter as party membership in the two “Volkspartei,” or peoples’ parties, both established after World War II, has slumped. Membership in the Christian Democrats has fallen to just more than half a million, from a peak of 790,000 in 1990. The Social Democrats’ membership has fallen from more than one million in the 1970s to under 550,000.

But the biggest problem facing all the political parties may be Germany’s birth rate. It remains one of the lowest in Europe — despite attempts by Mrs. Merkel’s government to create incentives, especially for professional women, to have children. The incentives include larger allowances, and allowing either parent — before it had to be the mother — to remain at home on paid leave for a certain period of time after birth.

If the birth rate remains low, an increase in pension benefits now will make it difficult to meet payments for the next generation of elderly. “There are too few people of working age to support the pensioners and when this younger generation reach retirement age, who is going to pay for them?” said Otto Wulff, chairman of the Christian Democrats’ senior citizens association.

Nevertheless, senior citizens’ associations are defensive about the pension protection the government is providing. “We are consumers too,” Mr Wulff said. “We matter to the economy.”

And, increasingly, they matter to the political parties as well.

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