Business Interests and the Development of the German Welfare State

This paper analyses the influence of employers’ associations on the adoption of the main social insurance programs in Germany. The chapter focuses on four programs: work injury insurance, health insurance, old-age and disability pensions, and unemployment insurance. The comparison of employer attitudes across the four programs will help to test alternative theoretical accounts about employers’ social policy preferences. The theoretical accounts in this field emphasize employer’s dependence on skills and on work incentives, respectively. The four programs studied differ in their relationship to the labor market. Work injury insurance and unemployment insurance directly affect the working of the labor market, as they benefit workers that are in principle available for the labor market, while old-age and disability pensions are more removed from the labor market and benefit only workers that, in the case of disability pension, are unable to work, or, in the case of old-age pensions, are not expected to work. If employers think that social programs benefit labor productivity and skills investments, they should be most supportive of unemployment and work injury insurance. In contrast, if they fear an erosion of work