Reform of the financing of maternity protection - a comment on the maternity protection ruling of the Federal Constitutional Court

The ruling of the Federal Constitutional Court obliges the legislator to find new regulations on the financing of wage-substitute benefits during the period of maternity protection by the end of 2005. The Court left open which financing variant the legislators should choose. Nevertheless, an expansion of the U2 allocation method - currently used in Germany for small firms with up to 20 employees - to all businesses is already under discussion. Prof. Dorothea Alewell, University of Jena, and Prof. Kerstin Pull, University of Tübingen, conclude that a transition from an individual employer subsidy to a general, obligatory pay-as-you-go system would lead to reducing the disadvantages of women in the labour market but the costs of maternity protection that the employer would have to pay would be placed on the factor labour (on both men and women) with the accompanying negative effects on employment. They prefer a tax-financed solution because it would place the social goal of protecting pregnant women and young mothers on a broad financial basis and also prevent negative effects on the labour-market position of women.