Welfare states in Europe

The German proverb „Misfortune seldom arrives alone“, captures completely the essence of present German social economic difficulties. The decade of vibrant economic growth has become a memory and is not part of the historical experience shared by the generation born in the 70s and 80s, getting in to work now. Most of these young people do not know the right balance between efficiency and equity. Self-responsibility and self-decision-making, on the one hand, and social security to prevent poverty on the other, are both very important features in creating a civil society, as a third sector between the private and the public sectors. The definition of this type of civil society and the avoidance of a liberal model through the Bismarckian conservative social security system, to maintain the status even in the case of an emergency, will be described in the the first part of the second chapter as a basis for liberty and the increase of the national product. On the other hand, in Ireland between 1988 and 2000 real GDP has grown 132 per cent. It was not only the social pact model which resulted in magnificent economic growth rates, but the whole welfare system was improved to give more incentives, to establish more self-responsibility and to reduce status maintaining features (Baccaro and Simoni, 2004). The beginning and the framework of the Irish success, in terms of efficiency and equity, will be discussed in the second part of the second chapter. The third chapter describes in a detailed way the differences of social security financing and its impact on efficiency and equity in both Germany and Ireland. The fourth chapter is divided into two parts. The first part deals with the unlimited social service provision of health care, disability and occupational benefits in Germany and compares it to the Irish system. The fifth chapter deals with, as a consequence of the described problems in the fourth chapter, poverty reduction and efficiency increase, to develop a civil society. Therefore, the first part discusses the effects of increased take home pay due to less social security contributions for both employer and employee, as was achieved due to social pacts in Ireland. The second part relates efficiency and equity, measured in terms of effectiveness to one another and explains that a more efficient management of social security in Germany might be a solution to current difficulties. The better relationship between efficiency and equity in Ireland has led to the conviction that less social contribution revenue must be targetted more exactly. Finally, it will be explained in the conclusion, that a partial retreat from the outdated conservative system is not avoidable any more. Of course, Ireland seems to be less equitable, but on the other hand it is efficient. Germany’s system is neither equitable nor efficient.