Relevance for social security

The potential relevance of this stronger influence for social security is particularly evident in the area of pensions. The long-term sustainability of the pension system is a recurring issue in the European Semester. The country-specific recommendations for Germany also identify a need for reform in this area. This year’s recommendations are particularly specific. In view of demographic change, the Council considers the long-term sustainability of the pension system to be under pressure. Germany is therefore recommended to improve the financial sustainability of the statutory pension scheme and promote longer working lives. Possible approaches identified by the Council include reducing incentives for early retirement, linking the statutory retirement age more closely to rising life expectancy, changes to pension indexation and contribution ceilings, and giving greater weight to demographic pressures through the sustainability factor. This is also intended to limit the need for additional funding from the federal budget and higher social security contributions.

Long-term care is also addressed in the country-specific recommendations. Germany is called on, among other things, to improve the provision of cost-effective long-term care. Labour shortages are an important factor, particularly in the care sector. The Council therefore calls on Germany to increase labour supply and address existing shortages. Measures should include increasing hours worked, developing skills in a targeted manner, facilitating occupational and job mobility, and improving the recruitment and retention of skilled workers from non-EU countries. However, the recommendations do not contain any specific recommendations on the financing or design of statutory health insurance. The country-specific recommendations therefore provide no indication that specific reforms of the German health insurance system are to be pursued through the Partnership Plans in future.

To date, such recommendations have primarily formed part of the political dialogue between the European and national levels. If corresponding reform objectives were incorporated into a German Partnership Plan in future, however, they could additionally be linked to financial incentives. The implementation of agreed reform steps could then help determine whether the associated EU funds are disbursed.

Experience with the Recovery and Resilience Facility shows that this new governance logic can indeed strengthen EU-level influence. Because the national plans had to explain how they addressed the country-specific recommendations, the European Commission gained greater influence over Member State reforms, according to Zeitlin – including in areas such as social protection, pensions and healthcare. Empirical research has shown, however, that in the interests of national ownership, the EU level largely deferred to Member States’ policy choices when it came to the specific design of reforms.

Nevertheless, the planned Partnership Plans raise the question of the limits of European governance. The organisation and specific design of social security systems remain primarily the responsibility of the Member States. At the same time, Member States have agreed on common social objectives at European level, for example, through the European Pillar of Social Rights. It sets out common principles for a social Europe, including in relation to income in old age, healthcare and long-term care. The key question is therefore less whether there should be common European objectives, and more how far the EU should use financial incentives to influence national reform processes whose specific design is ultimately decided at national level.

For social security institutions, it will therefore be crucial which social policy reforms and investments are ultimately included in the German Partnership Plan and linked to EU funding. The National and Regional Partnership Plans could thus also become increasingly relevant to reform processes in national social policy.