TW: This article is about the increasing power of older folks politically in Germany. They have just managed to get themselves an increase in federal pensions amidst the recession even though historically any increases have been tied to private sector wages, which are going down. The last thing Germany likely needs given its serious demographic challenges is further re-distribution of wealth from younger folks to older folks but that is exactly what they are getting.
Many complain about inept politicians but politicians in democracies reflect the will of the people (kind of at least). As voters age they will tend to take care of themselves, just like they did when they were younger. We have the same dynamics. What do YOU want to cut back on? Social security, medical care, defense...if none of the above get ready to pay more taxes.
From NYT:
"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...
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...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...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.
...“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.
...The new legislation will prevent them from declining as wages fall this year.
...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.
...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..."
http://www.nytimes.com/2009/05/07/world/europe/07pension.html?_r=1&scp=1&sq=german%20elections&st=cse
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