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January 1, 2010

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Why don’t Germans have more children? From conversations and the media, one gets the feeling they might want kids, but don’t want to risk it for financial reasons. After all, barely a day goes by without a headline screaming “One in six children in Germany live under the poverty line”. And, funnily enough, it’s the university-educated, least deprived young adults who moan on about the financial obstacles to having children. For years, the state has desperately tried to incentivize breeding, but none of their hard work has had much of an effect. The benefits keep getting more and more generous - and all legal German residents are eligible. So: what kind of financial stimulus can would-be breeders really expect?

Mutterschaftsgeld

For about six weeks before the birth and six weeks after, expectant mothers are officially banned from working. During this time, you’ll get your full salary as an employee - but you have to apply for it at your Krankenkasse. The self-employed lose out here: they only receive a one-time payment of €210, which they must apply for at their local Sozialamt.

Elterngeld

The first year after a birth is a hellish ordeal of sleepless nights, breast-feeding problems, post-partum depression etc. You deserve a year off! Together parents (whether employees or self-employed) are entitled to between 12 and 14 months (depending on the circumstances) of paid leave, during which the state pays you Elterngeld or 67 percent of your average income for the past 12 months, with additional allowances for those who earn under €1000 a month. Introduced in 2007, it’s made life easier for working mothers and allowed many fathers to take some time off. Applying for Elterngeld is an especially bureaucratic affair in Germany (applicants must diligently collect all documents pertaining to the birth and their income, job, health insurance etc and bringing them to their local Jugendamt), but the reward is well worth the effort. There are loads of tips and tricks about how to get the highest possible amount of Elterngeld listed on www.elterngeld.net.

Kindergeld

This is Germany’s monthly “child subsidy”, and for some unknown reason, you apply for it at the Familienkasse at the Agentur für Arbeit. Starting in 2010, happy parents will receive a monthly payment of €184 per kid (for the first two brats) from birth till at least age of 18 (a total of €39,744 - though unfortunately not all paid at once) and up to 25 if the kid continues into higher education. Have a third kid (€170 per month) and a fourth (€195), and you´ll really hit the jackpot! Why you get more for the third and fourth is a mystery - to pay for that minivan, I guess.

The current conservative (CDU) and neo-liberal (FDP) government coalition - obsessed as it is with pepping up its “family” credentials - is promising a Kindergeld increase in the near future for the first two children, to €200 a head. Unemployed parents on Hartz IV, on the other hand, get a slap in the face from the new pro-business, low-tax Angela-Guido partnership. From the beginning of 2010, Kindergeld will count as “additional income” - and will be deducted from the Hartz IV welfare payments, meaning less cash for poor families.

Tax write-offs

Unsurprisingly, middle and upper earners get more! After all, these are the people who should be reproducing, nicht wahr? The yearly income tax allowance per child has been increased from €6024 to €7008, meaning that top earners can avoid slipping into higher tax brackets... Combine that with the full tax deduction of private health insurance cost, and cash-rich mums and dads should be able to splurge on that Swiss skiing holiday the kiddos have been dreaming of.

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January 1, 2010

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