The future of the German welfare state is more open than for many years before. It
waits to be seen if social cleavages will challenge the German model of social
integration; if there will be a shift from the ‘transfer state’ to a ‘social investment state’
with more emphasis on education and employment and less on paying for time off
employment; and if there will be revolutionary breaks or, as before, a smooth and
evolutionary adaptation. It will also matter if the ongoing administrative modernisation
will successfully transform the welfare state from within (and from below, by reform
of local government) – a relevant issue irrespective of questions of policy which are at
the centre of the debate. Judging from the German experience, the end of the era of the
welfare state is not near. In 1999, Schröder and Blair joined forces in a programmatic
paper on the Third Way. In principle, this is what the German ‘social state’ has always
been about