After impressive growth rates had been achieved in the 1950s
the stabilisation of this process played a major role in the financial
policy of the 1960s, especially during the recession of 1966/7.
Stabilization policy did not start then, however, because even in
the 1950s the Federal government and the Leander had
occasionally used the policy tool of an anti cyclical fiscal policy in
the construction sector. 22 In the late 1960s Schiller’s
Globalsteuerung ran into problems, partly because of insufficient
coordination between Federal government, regional and local
authorities.
During the 1960s and especially after the social-liberal coalition’s
taking office in 1969, there were attempts at “strengthening
the social net”. At the end of the 1960s continuing wage payment
for up to six weeks in case of illness was stipulated. The
“employment promotion act” of 1969, which granted allowances for
participation in vocational training, further training and re-training,
put new emphasis on an active labour market and on employment
policy, mainly with the objective of improving the mobility of the
labour force. Needy university students were supported by cost of
living payments (Bundesausbildungsfoerderungsgesetz of 1971).23
After the dramatic increase in outlays in 1974 which resulted in
large deficits, fiscal policy between mid-1975 and mid-1982 vacillated
between expansion and consolidation, although an expansive
stance with rising public deficits was predominant. 24 In March
1977 the government decided upon an “investment programme for
the future” (Zukunftsinvestitionsprogramm, ZIP) which provided
DM 16 thousand million for the improvement of the transport
system, an efficient and ecological energy supply, provisions for
water supply, the protection of the environment and vocational
training. After an expansive phase between 1978 and 1981 a
restrictive period followed from 1982 onwards owing to large
government debt and high interest payments. This policy had
already been inaugurated in September 1981 by the social-liberal
coalition government with cuts in the social security system. 25
Whereas total social security expenditure from the social
insurance funds had increased at an average rate of 11 per cent per
annum between 1965 and 1969, the average rate of increase had
reached 16.5 per cent in the period 1970–5. There was a “cost
explosion” in the health service: total health expenditure almost
© 1990 H.J.Braun
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trebled during the 1970s. As a result of unemployment benefits
increases during the recession of 1974–5 the Federal Labour Office’s
total expenditure rose from DM 4 thousand million in 1970
to 22 thousand million in 1980. 26 Because of growing
unemployment and reduced wage growth the Federal German
social system ran into difficulties. 27 As a consequence, services
were reduced or became more costly for the insured as in the
health service, in old age or invalidity pensions and in the
eligibility requirements for unemployment payments.28 In view of
the still growing outlays for the social security system this policy
of cutting back social security benefits was continued after the
Wende of September 1982.