EMPEROR SANCTIONS PENSIONS FOR AGED AND DISABLED WORKERS

BERLIN, 1889-06-22. — The Emperor William II has to-day sanctioned a measure establishing compulsory insurance against invalidity and old age for a great body of Germany’s working population. The law carries the Empire into a new department of public responsibility: the regular provision of money for insured workpeople whose strength fails, whether through lasting incapacity or the advance of years. Employers and employed are to contribute, while the Imperial Treasury adds a fixed annual subsidy to each pension. For the ordinary old-age allowance, the prescribed age is seventy. The measure is neither a universal bounty to the aged nor a promise that every labourer may retire upon reaching that birthday.

Its formal title, translated, is the “Law concerning Invalidity and Old-Age Insurance.” Behind those sober words lies a substantial alteration in the relation between the State and the wage-earner. Men and women in the employments covered by the statute are to acquire claims through insurance rather than depend solely upon their savings, their families or the poor authorities. The coverage embraces wage-earners and specified classes of lower-paid employees; it does not embrace every inhabitant of the Empire. Nor does it establish one identical payment for all. Earnings classes, contributions and the nature of the claim enter into the calculation.

The immediate parliamentary contest has been close. On May 24 the Reichstag approved the bill by 185 votes against 165, a division which affords little support for any representation of the scheme as an uncontested national settlement. The Government has obtained its measure, but not extinguished the controversy over its cost, administration or sufficiency. Social Democratic opposition is especially significant, since the Chancellor presents the improvement of working-class security as one answer to that movement. To its critics among the representatives of labour, compulsory contributions and a distant pension age do not necessarily constitute an adequate return for the burdens placed upon the insured.

The principle has nevertheless been before the country for years. In the Imperial Message of November 17, 1881, the late Emperor William I’s Government declared that the remedy for social grievances must be sought “not exclusively in the repression of Social Democratic excesses, but equally in the positive advancement of the welfare of the workers.” This translation of the message states plainly the double purpose of Prince Bismarck’s policy. The authorities would restrain revolutionary agitation while removing some of the insecurity upon which it feeds. To-day’s law gives further practical expression to that declared purpose, without bringing the political dispute surrounding it to an end.

The same message expressly recognised the position of “those who become incapable of earning their living through age or invalidity,” declaring that they possessed a well-founded claim to public care. The present enactment follows the sickness-insurance legislation of 1883 and the accident-insurance legislation of 1884. Those measures address hazards which may interrupt or destroy a working man’s earnings during his active years. The new law extends the undertaking to lasting incapacity and old age. Taken together, these enactments represent an attempt to organise protection against several distinct misfortunes of industrial life, rather than leave every case to charitable discretion after destitution has occurred.

For business, the material point is that the expense will not fall upon the Treasury alone. The insurance contributions are to be borne in equal shares by employers and insured workers. The Empire is to supplement each pension by fifty marks annually. Thus the establishment of a public claim entails a continuing charge upon employment as well as upon public revenues. Masters must make provision for their share and for the necessary records; workpeople must surrender part of present earnings in exchange for a future entitlement. The distribution is central to the design: neither private thrift, employer benevolence nor taxation is expected to carry the whole undertaking.

Seventy is a demanding threshold for the ordinary old-age pension, particularly in occupations requiring heavy bodily labour. The distinction between old age and invalidity is therefore indispensable to an understanding of the law. An insured person who becomes incapable of earning a livelihood need not in every case wait until seventy before seeking assistance; invalidity is a separate ground of claim, subject to its own requirements. Conversely, the old-age allowance is not simply another name for relief upon proof of complete incapacity. To describe the measure merely as a pension at seventy would conceal much of its intended work and much of the administration it will require.

The qualifying conditions also forbid the supposition that a few payments will ordinarily purchase a lifelong allowance. The old-age branch rests upon a long insurance record, with thirty years prescribed as the normal qualifying period. Transitional provisions make allowance for workers already advanced in years when the system begins, so that the undertaking is not simply deferred for an entire generation. There will nevertheless be difficult practical questions of proof, classification and continuity. A worker changing employment must not lose the evidence upon which a claim depends. Contribution records and the machinery for examining applications will consequently be as important to the scheme’s operation as its declarations of principle.

Administration is to be conducted through insurance institutions organised on a territorial basis, with participation by employers and insured persons. This arrangement places substantial duties beyond the central offices of the Empire and reflects the difficulty of fitting a common obligation to Germany’s several States and local circumstances. For commerce and industry, the immediate significance is accordingly a statutory obligation to be prepared for, not a sudden distribution of purchasing power to all elderly households. For public finance, the fifty-mark supplement establishes a recurring liability whose aggregate will depend upon the number of pensions payable. Neither burden can sensibly be judged from the subsidy attached to a single case.

Imperial sanction settles the existence of the law; it does not by itself place pension money in the hands of every qualified claimant. Institutions, contribution arrangements and the examination of claims must be brought into working order. The Government has secured an instrument with which it hopes to reconcile working people to the established State, while its opponents remain free to contend that the provision is too narrow or too costly for what it offers. The practical test will be whether an insured labourer can turn the promise into an allowance when earnings fail. Upon that question, rather than upon the splendour of the enactment, confidence in the new undertaking must rest.