Economist Nicola Fuchs-Schündeln has strongly cautioned against making further cuts to existing parental leave benefits, instead arguing that a fundamental structural reform is necessary. According to the President of the Berlin Institute of Social Research (WZB), policymakers should focus their efforts not on finding ways to save money within the existing Elterngeld system, but on reforming the structure itself.
This concern arises amid budget requirements for 2027, which mandate that Federal Minister of Family Affairs, Karin Prien (CDU), must save 500 million euros-a significant portion of which is anticipated to come from altering parental leave payouts.
Fuchs-Schündeln emphasized that the goal of policy should be to establish stronger incentives that help mothers remain employed while simultaneously raising children. She pointed out that Germany is facing a combination of demographic challenges: birth rates are at a record low, while the retirement of the Baby Boomer generation guarantees labor shortages in the coming decades.
To address these issues, the WZB President proposed a model that significantly expands paternity leave time while potentially reducing the duration of mother-only benefits. Her specific proposal suggests that each parent should receive 80% of their net income for a maximum of seven individual months of parental leave. Crucially, she noted that if a parent utilized more months beyond this limit, the income replacement benefit would decline to 50%.
This structured decline, she argued, would substantially increase the incentive for couples to divide the caregiving responsibilities for their child equally throughout the period during which benefits are drawn.
