Dismantling the demographic bomb: Issue linkage of pension politics and labour migration policies as the solution for increasing the sustainability of public pension scheme

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Dismantling the demographic bomb

Issue linkage of pension politics and labour migration policies as the solution

for increasing the sustainability of public pension schemes

Master Thesis, 10 January 2018

Leiden University: The Netherlands Faculty of Governance and Global Affairs Public Administration: Economics and Governance

Author: Larissa Verkaik (s1115901) Supervisor: Natascha van der Zwan Second reader: Alexandre Afonso

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Abstract

The sustainability of public pension schemes is threatened in many countries. Due to

declining fertility and death rates and increasing longevity, populations are ageing rapidly. A declining old-age dependency ratio, will negatively affect the viability and future financing of public pension schemes. However, some countries experience more pressure to introduce pension reforms than others. The main reason for this seems to be the established pension system. As some pension systems experience high obstacles for reform, other solutions have to be considered. One quite unexplored solution for this problem, is promoting labour migration policies aimed at economic integration. This study examines whether there is an issue linkage observed between pension politics and migration policies in Germany and the Netherlands.

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1.Introduction

In January 2004, former United Nations Secretary-General Kofi Annan addressed the

European Union with one clear message: A Europe which is open to well managed migration will be fairer, richer and stronger (United Nations, 2004). Specifically, Kofi Annan mentioned more managed migration as a possible solution for the ageing population of Europe. Today, in 2018, this discussion seems even more relevant. Since Kofi Annan held his speech, Europe has undergone a major financial crises, challenging national social welfare policies. Several years later, a large-scale refugee crisis hit Europe. This increasing number of new inhabitants challenged the established migration policies within the European Union for economic reasons as well as for societal reasons. For instance, migrants are considered to be net beneficiaries of the welfare state as natives see migrants as low earners and being more unemployed. Because of these reasons, support for government redistribution remained low (Burgoon, 2014) and consequently support for receiving more immigrants as well.

Nevertheless, migrants should not only be considered as a threat and economic burden for societies but in contrast should be viewed in the light of the opportunities they can provide for the European countries. The European Union introduced several migration policies in order to manage migration flows more sufficient. Managing these migration policies in the EU could benefit its Member States if these policies are also aimed at increasing and managing labour migration and economic integration. Kofi Annan earlier recognized the value of being more open to well managed migration (United Nations, 2004). Is it time for European Member States to do so as well, or are these countries already more open to migration?

Problem definition

Modern welfare states experience multiple societal changes and challenges. Examples are changing labour markets (like declines in manufacturing jobs and growth in the service sector and self-employment), increasing migration flows and demographic changes. One of the most crucial demographic changes most Western European countries experience, is the ageing of populations due to declining birth and death rates in combination with increased longevity. In

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2 countries all over the world populations are ageing, but in Europe the total population is expected to decline by 10 percent between 2000 and 2050 (Bonoli and Shinkawa, 2005). These processes of ageing and declining populations will affect social, political and economic life in crucial ways. Public policies like old age pensions, will in particular be affected. As public pensions constitute the largest share of all social policy expenditures (Bonoli, 2000) and the share of the population depending on public pensions is expanding, the costs of public pensions will increase significantly, affecting the sustainability of public pension schemes. An ageing population is not the only threat to the viability and sustainability of public pension schemes. Processes like financial crisis, changing labour markets and changes in

intergenerational equity (the inequality in benefits for older people now and in the future), all affect this sustainability (Bonoli, 2000). Therefore, it is crucial for nations to implement changes or reforms to the established public pension schemes.

There are several policy options available for national governments to implement in order to increase the sustainability of public pension schemes. These policy options are either aimed at increasing the labour force, changes in the financial aspects of the pension scheme or at demographic changes. The first option would be to increase the labour force participation rate. There are still males but mostly females between the ages of 15 and 64 who are unemployed or inactive. An increase in the employment rate in this group would immediately result in a decrease of the pensioner/worker ratio. The employment rates in Germany and the

Netherlands are already amongst the highest within the European Union.

Table 1

Participation rate

OECD Total 71.7

European Union (28 countries) 73.2

Germany 78.0

Netherlands 79.7

Note: Labour force participation rate 2016. Adapted from OECD (2018a). Labour force participation rate (indicator). Retrieved January 5, 2018, from OECD: doi:10.1787/8a801325-en

Table 1 (OECD, 2018a) shows the labour participation rate of 15-64 year-olds as a percentage in this age group for the year 2016. As table 1 (OECD, 2018a) shows, Germany had a labour

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3 force participation rate of 78.0 percent, and the Netherlands 79.7 percent. Especially if

comparing these numbers with the OECD average of 71.7 percent and the EU average of 73.2 percent, Germany and the Netherlands already have employment rates above average.

Therefore, this policy option might not be the policy option which provides the most severe outcome, as there is no substantial gain on this point for these countries.

A second option would be to increase the retirement age. This would result in a direct increase in the total working population and a decline in the share of retirees. Consequently, this would result in a decline in the dependency ratio. Several countries already implemented reforms concerning an increase in the retirement age including Germany and the Netherlands. Both countries are in the process of increasing the retirement age gradually. Germany

gradually increases the retirement age from 65 years to 67 years of age in 2029 (European Trade Union Institute (ETUI), n.d.a.) and in the Netherlands the retirement age will increase from the age of 65 to the age of 67 in 2021 (ETUI, n.d.b.). From 2022 onwards, the retirement age will be linked to the average life expectancy in the Netherlands (Rijksoverheid, 2016). Increasing the retirement age could be an effective policy option, but it has some

disadvantages. Firstly, this policy option is not a popular reform, which means that it will be difficult for politicians to introduce. Secondly, if politicians do succeed in introducing such a reform, the effects will only become noticeable in the long term. Because of the unpopularity of the reform, it will have to be implemented gradually. By the time the new retirement age is socially accepted, there might already be a new need for an even higher retirement age. Hence, the increasing retirement might not be able to keep up with the ageing population. Therefore, this policy option is a good option, but might not be sufficient.

The third and fourth options available for governments concern the financial aspect of the public pension system. The third option would be to reduce the public pension benefits in order to decrease the total costs for the public pension system. In this case, the benefits should be in line with the contributions made by former workings (earnings related benefits). Other options to reduce the costs of public pension benefits are increasing taxes or accepting a deficit and accumulate debt. All these options are however very unattractive and therefore unlikely to be introduced by national governments (Bongaarts, 2004).

A fourth possible option is to diversify the sources of financing retirement. This usually implies a reform in which countries should aim at a public pension system build upon a multi-pillar model (World Bank, 1994). In the next chapter, more information about the different models for pension systems and this policy option is provided, along with theories of

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4 why this policy option is often too difficult to implement for most countries.

Finally, governments can try to counteract the ageing population. This could be achieved in two different ways. The first option is to increase the fertility rates and consequently increase the share of younger individuals within the population. This policy option is however very difficult to accomplish as fertility is a delicate matter. The government would have to interfere in personal lives on a very intimate issue. In addition, even though fertility rates would be increased, this would only have an effect in the long term.

A second method in counteracting ageing populations is by permitting more immigration to the country. In most developed countries, the average age of immigrants is below that of the native population (Afonso and Devitt, 2016). Permitting more immigration would result in a lower average age of the entire population and would therefore reduce the old-age dependency ratio. However, increasing migration is often not a popular option within society. The main reason is that migration is considered to be problematic for social,

economic and cultural aspects of society (Bongaarts, 2004). Even though there are some concerns, the benefits of changing the population composition could make a substantial contribution for the financial stability of public pension systems (Bongaarts, 2004). There are several reasons why migration should be considered as a possible solution for the old age crisis ahead. As mentioned, immigrants tend to be younger on average compared to the native population, which decreases the overall average of the working population. Also, immigrants are often considered as beneficiaries of the welfare state, but can actually serve as net

contributors, which will be explained later in this thesis. Finally, migrants can help fulfill the demands on the labour market which the native population cannot or does not want to fulfill (Afonso and Devitt, 2016).

Due to the growing significance of international migration, it has become difficult to ignore migration at all. The question is not whether a country wants to welcome immigrants or not, but to what degree these societies want to do this and how they will manage it. If these countries manage migration correctly, these countries could also benefit from migration. For this reason, there should be more attention for how and if migration could play a crucial role in reshaping socioeconomic policies (Afonso and Devitt, 2016).

This study will focus on specific types of public pension schemes (either PAYG schemes or multi-pillar schemes) in Germany and the Netherlands. It will be examined how and if the type of pension scheme in these two countries is related with the establishment of more liberal

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5 migration policies, specifically labour migration policies. Accordingly, the research question of this study becomes the following:

RQ: Is an issue linkage observed between pension politics and migration policies?

Issue linkage in this study refers to the intertwining of the issues of pension politics and of migration policies. Through intertwining these two policy issues, one policy area can overcome or prevent some of the challenges in the other policy area. Promoting labour

migration could help to avert the old age crisis, which is also caused by less sustainable public pension schemes. These two policy areas seem unrelated while the possible solution for the old age crisis could be in combining these two policy issues. This study attempts to examine whether two national governments see this opportunity.

Focus of the study

The research question will be answered through a comparative study of public pension schemes and labour migration policies in Germany and the Netherlands. The main reason to focus on public pension schemes is that the long term sustainability of these schemes is one of the main issues western European welfare states will have to act on in the (near) future. In addition, public pensions have a significant impact on a large share (and increasing share) of the population, due to high levels of coverage and due to the generosity of the programs (Bonoli, 2000). As national governments thus have powerful incentives to solve any problems concerning the viability and sustainability of public pension schemes, it is expected that public pension policies play a central and crucial role in the state’s politics.

This study focuses on the comparison between Germany and the Netherlands for several reasons. At a first glance, these two neighboring countries share similarities on various aspects. The economies have strong mutual links. The performance of the Dutch economy relies heavily on the performance of the German economy (CPB, 1997). They also share multiple similarities in the political systems like bicameral legislatures and having coalitions of political parties. However, even though these two countries seem quite similar, both countries have developed different financial arrangements (Haverland, 2001). Germany started off with a Pay-As-You-Go (PAYG) public pension scheme, and still heavily relies on this type of funding. The Netherlands also introduced a PAYG public pension scheme, but relies currently more on a multi-pillar system which is partly financed through public

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6 spending, but also through private spending. Table 2 (OECD, 2018b) presents these

differences.

Table 2

Note: Pension spending as % of GDP in 2013. Adapted from OECD (2018b). Pension spending (indicator).

Retrieved January 5, 2018, from OECD: doi: 10.1787/a041f4ef-en

In 2013, Germany spend 10.1 percent of the GDP on public pensions while the Netherlands spend 5.4 percent of its GDP on pensions. If focusing on private spending on pension

schemes, the Netherlands spends substantially more on private spending (4.1 percent of GDP) compared to Germany (0.2 percent of GDP) and the overall OECD average (1.6 percent of GDP).

A multi-pillar system is considered to be more sustainable compared to a (single-pillar) PAYG system. The main reason for this is the fact that a multi-pillar system has more

diversification of financing pensions, as shown in table 2 (OECD, 2018b). Ageing populations affect PAYG systems in a crucial way, as these systems rely on the current workers to finance the current retirees. An increase in retirees and subsequently a decrease in the working

population immediately affects the dependency ratio and increases the costs of the pension scheme (Bongaarts, 2004). Countries with a multi-pillar pension system in place will be less affected by ageing populations, as these countries can also rely on the other pillars of

occupational pension and private savings. Multi-pillar countries do suffer from demographic changes like ageing populations, but not in the crucial way PAYG countries do. Within the funded system, contributions can also be invested in assets, and returns are credited to the fund (Barr, 2012). These pension funds have been a major source of savings for market economies, but as the share of contributors is about to become smaller than the share of receivers, ageing populations also affect the funded schemes. In addition, economic shocks like financial crises also affect the price of the assets which can cause a lower than expected returns, decreasing the pensions. However, as the multi-pillar system always relies on

Public Private

Germany 10.1 0.2

OECD average 8.2 1.6

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7 multiple pillars in providing pensions for the retirees, this system is perceived as a more sustainable scheme.

Germany and the Netherlands seem very similar at a first glance, but if concentrating on the public pension schemes in place, these countries are very different. The two countries started off with a similar pension scheme, but currently have different pension schemes in place. For these reasons, the two countries serve as valuable examples for the debate about sustainability of public pension schemes.

Relevance of the study

This research is of practical and academic relevance as ageing populations concern the future of public pension systems (World Bank, 1994). Institutions like the Organisation for

Economic Co-operation and Development (OECD) and the World Bank already provided policy options for countries to implement in order to increase the sustainability of public pension schemes (World Bank, 1994; OECD, 2016a). Current problems with rising retirement costs threaten not only the elderly, it also threatens future generations which directly or

indirectly will carry a disproportionate share of the costs of old-age care (Demirgüç-Kunt, Klapper and Panos, 2016). As the share of elderly only keeps expanding, national

governments will have to interfere. These advices of the World Bank and the OECD are mainly aimed at reforming the financing of the public pension schemes. However, as several theories in the theoretical framework will show, it is difficult to implement these kind of reforms in most countries. Therefore, this study will focus on a less studied policy option for increasing the sustainability of public pension schemes, which are migration policies. The study examines whether these two policy subjects are intertwined. If the policy areas are not intertwined, this study tries to suggest why this could be the case.

Thesis structure

This thesis is designed in a series of chapters. The following chapter, chapter 2, will provide a theoretical framework. Important relevant literature, theories and the hypotheses are presented here. The theories relate to the obstacles for reforming public pension schemes and the effect of immigration. Chapter 3 covers the research design of this thesis. In this chapter, the conceptual design is described, the case selection is explained and the concepts of the theoretical framework will be operationalized. Additionally, this chapter covers the data collection method and the limitations of this research. The fourth and fifth chapter focus on

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8 the pension politics in Germany (chapter 4) and the Netherlands (chapter 5). Chapter 6

examines the migration policies (specifically labour migration policies aimed at economic integration) in the European Union and the two case studies. The seventh chapter entails the analysis of newspaper articles on the two policy issues in Germany and the Netherlands. The eight chapter covers the analysis of this study. The hypotheses are tested here and a discussion on this study is provided. Chapter 9 covers the conclusion of the thesis and makes suggestions for further research. The thesis is finalized by the bibliography and the appendices.

2. Theoretical framework

Before describing the relevant literature and theories, the different types of pension schemes are explained more in detail in order to support some of the arguments made in this study. Ageing populations are not the sole problem for the sustainability of pension systems. It is rather the design of the pension system related with an ageing population and slow wage growth which is problematic for the sustainability of the pension systems (Myles and Pierson, 2001). In order to distinguish the different pension systems, there are several characteristics to identify. Examples are whether the pension arrangements are mandatory or voluntary, how they are financed, who manages the pension arrangements, who bears the risks and the link between pension contributions and pension benefits (OECD, 2016a).

When analyzing pension systems, pillars and tiers can be distinguished (Immergut, Anderson and Schulze, 2007). The pillars describe who provides the pension. There are three different pillars. The first pillar is a public pillar and is provided by the state. It secures a minimum standard of living. As this study focusses on public pension schemes, this is the most important pillar to examine in this study. The second pillar is the occupational pillar. This pillar is provided by social partners (employers) and it focuses on maintaining the current standard of living for retirees. The third pillar is the personal pillar and is financed through personal savings of the individual (Immergut et al., 2007). The tiers describe what function pensions mainly serve in old age income security. The first tier functions as a basic pension which provides retirees with a minim income. The second tier is an earnings-related pension and the final third pillar serves as a so called topping-up (Immergut et al., 2007; Ebbinghaus, 2011).

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9 population. This means that all the cost of an ageing population are imposed on national wage income (Myles and Pierson, 2001). PAYG systems often rely on the first pillar but could also exist on the other two pillars as there are several variations within the PAYG model. For example, there are PAYG systems which include a buffer fund, which helps covering fluctuations in costs. The buffer fund thus functions as a financial reserve (Immergut et al., 2007). However, the main share of the funding of a PAYG system is usually build upon one pillar. Therefore, the PAYG system can be considered as a single-pillar system. Besides PAYG systems, there are also funded systems. Within the funded system, benefits are financed from the contributions made into a fund. These contributions are made by members of a certain fund, and is build up over a period of years. Contributions are usually invested in assets and returns are credited to the fund (Barr, 2012). An individual thus contributes to the fund for a certain amount of time and receives the benefits paid out of the fund if the person retires. Multi-pillar systems are a combination of the PAYG financing method (usually through the first pillar) and the funded systems which builds on different pillars.

The main difference between countries with (single-pillar) PAYG system and multi-pillar systems is noticeable in the relative importance of the first and second pillar. Countries relying on a PAYG system (also called social insurance countries), like Germany spend significantly more of their GDP on public pensions. The role of the occupational pension in these countries is relatively small. The opposite is true for multi-pillar countries. Table 2 (OECD, 2018b), presented earlier, confirms this. However, within OECD countries (Germany included), there is a growing importance in funded pension arrangements and diversification in financing observed (OECD, 2016a).

Political obstacles for reform

Large influential institutions like the World Bank and the OECD researched the problem of the sustainability of public pension schemes in several countries. Both institutions argued in favor of diversifying the sources of finance retirement (World Bank, 1994; OECD, 2016a). Diversification of financing is important because the mechanism through which demographic and economic shocks work differ within the various pension arrangements (OECD, 2016a). Ageing populations affect PAYG systems as explained, but financial crises affect funded systems more. In order to prevent old-age poverty, the first pillar should provide the minimal obligatory PAYG public pensions. The second pillar should be more earnings-related and

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10 funded and should provide income security for retirees. This could be achieved through public or private sources of financing. The final and third pillar would cover the personal, private and voluntary retirement savings and would top up the first and second pillar (World Bank, 1994). Several countries responded to the advice of the World Bank and the OECD. One of the changes observed in these countries is the privatization of the pension system. However, examining the occupational part of the pension system is beyond the scope of this study.

The major problem of the public pension schemes is the immobility of the schemes. The most important reason for this immobility is that particularly these social schemes enjoy high support amongst citizens of all ages (Hinrichs, 2000). In addition, there are only limited options available for policymakers which constraints them from implementing reforms (Weaver, 1986). One of the consequences of these problems is welfare retrenchment. Welfare retrenchment is characterized by policymakers who pursue unpopular decisions, like taking benefits away. The mechanism of the negativity bias which individuals exhibit increases these negative feelings about unpopular policy decisions. The negativity bias describes how people tend to be more sensitive about any (potential) losses than to the (possible) gains a reform could provide (Weaver, 1986). As the politics of retrenchment impose losses on concentrated groups of voters while the gains in return are diffuse and uncertain, individuals will exhibit this negativity bias. Usually, policymakers are motivated by credit claiming as a result of welfare expansion (in which policymakers extend benefits). However, due to the negativity bias, policymakers are often more driven by blame avoidance. Policymakers are motivated in the first place by their will to be re-elected. Therefore, policymakers will try to avoid blame for possible constituency losses (Weaver, 1986). There are certain situations in which blame avoidance by policymakers is likely to occur, but the situation most relevant in this case is the negative-sum game in which there is no credit to be claimed. This type of blame avoidance usually occurs when the government is allocating budgetary cutbacks (Weaver, 1986). There are certain strategies policymakers can use for blame avoidance. A strategy could be lowering the visibility of reforms. The effects of certain policies are made more difficult to detect or it is challenging to trace back who carriers the responsibility for the effects of the cutbacks. The degree of welfare retrenchment and its political limits are country specific. It depends on the interaction between the type of public pension scheme established and the political institutions in the specific country (Bonoli, 2000).

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11 implementing reforms (Bonoli and Shinkawa, 2005). The reason for this is that the share of payments from the government in the benefits for retirees is much smaller compared to the share of public pension spending in PAYG systems. In these latter countries, governments are directly held accountable for every reform implemented. However, even though in countries where the government has a lower share in financing the benefits and even promotes

proactive engagement if employers and individuals to finance private pensions, voters may still argue that the government does bear some of the responsibility for any lower-than-expected benefit (Bonoli and Shinkawa, 2005).

National governments are held accountable and influence pension politics, but all political institutions affect policies. In order to change certain policies (in this case public pension schemes) a specified number of political actors will have to agree upon a new reform. These actors are called veto players, and they have the ability to stop a change from the status quo (Tsebelis, 2002). There are two different types of veto players: institutional (e.g the President, the Senate etc.) or partisan veto players (e.g. different party members of a government). An institutional player only counts as a veto player if it has formal veto power (Tsebelis, 1995). The agreement of these individual or collective actors is necessary for new policies or

legislations to pass. Dominant party systems and single-party minority governments have only one veto (as there is no agreement to accomplish). Coalitions in parliamentary systems,

federal systems or presidential systems usually have multiple veto players (Tsebelis, 1995). The perspective of the veto-player theory is valuable for this study as it helps understand the dynamics in which political institutions might obstruct pension policy-making (Immergut et al., 2007). A higher number of institutional and partisan veto players results in more obstacles to new legislation and policy reforms (Immergut et al., 2007).

System specific obstacles for reform

Besides political obstacles for reforms, there are also system specific obstacles for reform. The primary decision made towards a certain pension system seems to have a path dependent effect. In most cases, the decision for either one of these types of welfare systems was crucial and determined the path ahead for countries. Especially in countries which have had PAYG systems for a longer period, path dependency is a solid explanation for why reforms are currently hard to implement. PAYG systems are a long-term commitment and the contributors to this system expect to receive the benefits of the system when they retire (Ebbinghaus and Gronwald, 2011). In this way, future generations are bonded to past decisions. There are two

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12 theories provided here which describe obstacles to reform due to the past decision made for a certain pension system (the PAYG system specifically).

The first theory is the crowding out thesis. This theory describes how PAYG pension systems limit the scope of the expansion of private pensions. Public pensions provided by the state are sufficient earnings-related benefits. Therefore, individuals do not have incentives for

additional pension schemes or extra savings. If public pensions are less generous, it seems that retirees also have more additional and private sources of income (Bongaarts, 2004). This is problematic as additional savings and more diverse sources of income are becoming more relevant and necessary in order to maintain the sustainability of the pension scheme.

Therefore, one way to respond to this issue is by promoting personal savings. The question however remains whether individuals are capable of saving enough for their retirement to maintain a certain level of lifestyle if saving is not mandatory. As individuals might be myopic in this case, this could affect the level of private savings and individuals might face the problem of not saving enough in terms of lifetime consumption-smoothing (Disney, 2000). Additionally, workers with high incomes have more opportunities with regard to their personal savings compared to a low income worker (Disney, 2000). Therefore, there is a possibility that it might be more effective in the long term to make private savings mandatory.

The second theoretical explanation for the difficulties for PAYG countries to create an old age security system with a predominantly funded component is that such a swift would create a double-payment problem (Myles and Pierson, 2001). The double-payment problem refers to the situation in which there is one generation that has to pay double: once for current retirees (through the PAYG system) and once for their own retirement (through the funded part of the system). Therefore, it is argued that it is challenging (almost impossible) for PAYG countries to change to a more multi-pillar system which combines public and private pensions.

However, there are some countries which managed a way out of the double-payment problem (e.g. the Netherlands). Bonoli and Palier (2007) argue that this was possible due to two elements: long time lags between the adoption of reform and the full implementation and the pension reform process was in stages. Even though every country goes through different stages, the authors did identify four different stages all countries went through. The first stage is one in which no retrenchment is adopted. The second stage describes how policymakers are forced to act due to concerns of rising contribution rates and because of this, some moderate retrenchment measures are adopted. The third stage describes how more radical retrenchment

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13 is promoted as there are now fewer people depending solely on PAYG pensions. The final and fourth stage shows how new reforms aimed at strengthening the funded element are adopted. A PAYG pension system state trying to transit to a multi-pillar system is likely to follow these four stages (Bonoli and Palier, 2007).

To sum up, what kind of public pension system is currently established in a country

predominantly depends on the type of pension system implemented in the past. The structure of institutions matters when politicians are seeking to impose losses, but is by no means determinative. Political institutions are only one of several factors which constrain politicians strategic and policy choices. Therefore, they should not be considered to be the most

important ones. Past policy options are particularly important (Pierson and Weaver, 1993).

Effects of migration

The previous section of this chapter shows the difficulties and obstacles for reforming public pension schemes. A possible solution for increasing the sustainability of these schemes should therefore be found outside the scheme itself. Promoting migration could in this case be a possible solution, but are these two policy issues intertwined? There are several reasons why these two policy areas might not be interconnected.

An important perspective on this matter is the believe that immigration creates

economic and political divisions which can undermine the social and political enclosing of the markets. Brian Burgoon (2014) examined how immigration and social policies are related and how immigration poses negative effects on support for redistribution in welfare states. He did this by examining the social and economic integration of immigrants in host societies and how this intervenes in this relationship. He argues that this relationship is influenced by the degree to which natives and immigrants are similar on subjects like unemployment levels and dependence on the welfare state and to what degree they share social values. Burgoon focused on three different so-called gaps between immigrants and natives. The first gap, describes the differences in unemployment levels between foreigners and natives. The second gap focuses on the difference in dependency on social benefits. The final third gap describes the social cultural gap between the two population groups (Burgoon, 2014). His study concluded that economic integration is more important than social integration. This means that natives tend to be more negative to immigration if immigrants are more unemployed than natives are, and if they depend more on social benefits compared to the native population. Therefore, it is important that governments of receiving countries focus more on economic integration as this

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14 could help soften the social-policy implications of immigration.

Economic integration

As migrants are seen as low earners, being more unemployed and have more children, natives consider migrants as net beneficiaries of the welfare state. However, immigration poses a net fiscal burden of less than 1% of GDP on European countries (Burgoon, 2014: 368). In addition, it is argued that migration can be beneficial to all income and all age groups in the receiving nation (Burgoon, 2014). Especially in the case of old-age pensions, the situation of immigrants resorting disproportionately to welfare programs is different. As immigrants tend to be younger on average than the native population (Afonso and Devitt, 2016), they are more often net contributors to this specific scheme than net beneficiaries. As pensions represent the highest share of social spending’s in most advanced welfare states, this is an important

argument in favor of encouraging more migration. Additionally, immigrants are seen as net contributors because they arrive in the receiving country when they are already grown-up and finished their studies. Therefore, immigrants are not only net contributors to the pension scheme, but to the welfare state in total as well (Afonso and Devitt, 2016).

There is also the substitution function immigrants can fulfill. As migrants usually have weaker social and political sources, they may be more willing to accept lower wages, more flexible terms of employment (and thus accept less secure terms), worse employment conditions and will be more mobile geographically (Afonso and Devitt, 2016). This could lead to immigrants having jobs the natives do not want to do anymore. In this case, immigration can compensate for the shortcomings of existing (public) institutions. Yet

another option is that immigration can complement the existing institutions by mirroring their logic of functioning (Afonso and Devitt, 2016).

Hence, it is clear that the debate around migration policies is extensive and there are several perspectives on whether migration benefits the economy or puts a burden on it. In favor of the argument that migration benefits the economy, OECD findings support that migrants boost the working-age population due to this fact that immigrants tend to be younger than the native population. Additionally, in contrast to what some believe, migrants arrive with skills and contribute because of this to the development of human capital in the receiving countries as well as to technological processes (OECD, 2014). Boosting the working-age population will immediately have a positive effect on the durability of public pension schemes. As migrants can contribute to this, it is important that promoting well managed migration should be

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15 interconnected with pension politics.

Hypotheses

All the theories described previously are in different ways related to the research question. In order to answer this research question, three hypotheses are presented here. These hypotheses relate some of the theories mentioned above and focus on a specific component of the overall debate central in this study. In addition, the hypotheses reflect some of the causal mechanisms which contribute to the issue linkage of pension politics and migration policies. By testing these hypotheses, the research question is answered in the conclusion of this thesis. The first hypothesis concentrates on PAYG countries and the implementation of reforms to the public pension scheme: PAYG countries experience more obstacles for reform. Firstly, as PAYG countries have less sustainable public pension systems, these countries experience more pressure to implement reforms to these public pension systems. Secondly, reforming public pension schemes in PAYG countries is difficult due to the PAYG system itself. Processes like the crowding out thesis and the double payment problem, make it difficult to implement changes to a PAYG scheme in the first place. Finally, the causal mechanism for this hypothesis is that PAYG countries have the need for reforms, but as the reforms they need or want to implement have to be path deviant and due to the obstacles for reform of the PAYG system itself, these countries will experience more obstacles to reform. Reforms have to be path deviant as the current path of the PAYG system is not very

sustainable. Therefore, as argued in the previous sections of this chapter, it will be difficult to implement these (often unpopular) reforms.

The second hypothesis of this study is the following: Migration policies are more often proposed as a solution to the old age crisis in PAYG countries compared to multi-pillar countries. The causal mechanism of this hypothesis follows the argument presented in the previous hypothesis. PAYG countries will have to implement more radical and path deviant reforms in order to increase the sustainability of the public pension schemes compared to multi-pillar countries. As reforming the public pension scheme itself is hard to accomplish, PAYG countries will be forced to explore different solutions outside the pension system itself. Therefore, other possibilities, like promoting migration policies, will be more often proposed as a possible solution in PAYG countries, compared to multi-pillar countries.

The third and final hypothesis concentrates on the type of public pension system in a country and the focus of migration policies. The hypothesis is the following: PAYG countries implement more migration policies aimed at economic integration. As argued in the previous

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16 sections, promoting more welcoming migration policies could be a possible solution in

averting the old age crisis and could contribute to increasing the sustainability of the public pension scheme. Immigrants are however not necessarily beneficiary for the receiving country. Immigrants who are well integrated in their new society however, are more

beneficial for their new country than immigrants who are not well integrated (Burgoon, 2014). Immigrants who are better integrated are sooner able to find a job and employed immigrants contribute more to the receiving nation compared to unemployed immigrants. Economic integration is therefore the most important aspect within migration policies for the receiving nation (Burgoon, 2014). Therefore, this hypothesis is focused on the labour migration policies which aim at the economic integration of new immigrants, rather than all broad policies which promote more migration in any possible way. The causal mechanism for this hypothesis thus relates to the need for PAYG countries to implement new reforms and policies aimed at increasing the sustainability of the public pension scheme, and how policies aimed at economic integration are the migration policies most beneficial for receiving countries.

In short, there are three processes expected to influence the degree to which public pension system reforms and more welcoming migration policies are implemented. Two of these are explanations endogenous to the system. The other explanation is exogenous to the system. The first of the explanations endogenous to the system is the level of pressure for

sustainability. The higher this pressure is, the more likely it is that reforms are implemented or that migration is considered as a possible solution for the sustainability problems. If there is no pressure, it is likely that no reforms or new policies are implemented as well. The second explanation endogenous to the system is the politics of reform. Certain examples of these are provided in the theoretical framework like the double-payment problem, path dependency, veto points and retrenchment. The final explanation, which is exogenous to the system, is more a societal explanation. It describes the party and electoral politics of migration. As policymakers will always keep their own re-election in mind, they will be very cautious with implementing unpopular policies, resulting in politics of blame avoidance for instance. If there is no support for a certain policy, like migration policies, these societal processes influence the overall outcome as well. All three hypotheses can also be traced back to this overview. The first hypothesis describes the explanations endogenous to the system. The final two hypotheses discuss the explanations exogenous to the system.

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17

3. Research design

This chapter outlines the research design of this study. The conceptual design and the operationalization of the theories and concepts of the theoretical framework outline how the research is conducted. Afterwards, the case selection is explained and justified. In the final section of this chapter, the degree of validity and reliability and the limitations of the research are described.

Conceptual design

The conceptual design applied in this study is a deductive small-n comparative design

(Toshkov, 2016). The number of cases which will be compared in this study is two, Germany and the Netherlands. As described, the two countries share several similarities. Nonetheless, this research will focus on some of the differences between the two cases. These differences are all theoretically-relevant variables for the research question at hand, and both countries are as different as possible on all these relevant dimensions in this study. Therefore, the

comparative design used in this study is a most different system design. The study also takes several variables into account, besides the main explanatory variable and the outcome variable. These variables are possible causally relevant variables. As explained, these variables will differ in both cases. A confounding variable is also included. As the two cases are very different, a different outcome is expected. However, if the outcome is the same, further research will be needed to examine how two very different cases can obtain a similar outcome. In short, the model which is used for this study is the following:

VARIABLE CASE 1 CASE 2

MAIN EXPLANATORY VARIABLE 0 1

OTHER POSSIBILY CAUSALLY RELEVANT VARIABLE 1 1 0 OTHER POSSIBLY CAUSALLY RELEVNAT VARIABLE 2 1 0

POSSIBLE CONFOUNDING VARIABLE 1 1 1

OUTCOME ? ?

Operationalization

The main explanatory variable will be described as the type of pension system. The variable can have two values: either a multi-pillar system or a single-pillar system. As the multi-pillar system is perceived as the more durable system, this is the term on which both cases are valued.

The first causally relevant variable is the variable of the dependency ratio. The dependency ratio reflects the ratio of the retired population compared to the working

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18 population. The ratio describes how many working individuals are needed to support one retiree (Bongaarts, 2004). An ageing population results in more retirees compared to working individuals and hence increases the dependency ratio. Consequently, this ratio is a key

determinant for the level of public pension expenditures. Germany and the Netherlands both experience the ageing of the population. Therefore, it could be argued that both countries are similar in this respect. However, the degree to which the ageing populations affect the dependency ratio differs in the two countries.

Table 3 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 EU 27 countries 24.6 25.0 25.2 25.5 25.8 26.1 26.4 26.9 27.5 28.2 28.8 29.4 Germany 27.8 28.9 29.9 30.4 30.9 31.4 31.4 31.4 31.5 31.6 32.0 32.0 Netherlands 20.8 21.1 21.5 21.8 22.3 22.8 23.3 24.4 25.5 26.4 27.2 27.8

Note: Old-age dependency ratio: per 100 persons. Adapted from Eurostat (2017). Old-age-dependency ratio

(indicator). Retrieved on December 2, 2017 from Eurostat:

http://ec.europa.eu/eurostat/tgm/refreshTableAction.do?tab=table&plugin=1&pcode=tps00198&language=en

As table 3 (Eurostat, 2017) reflects, the German dependency ratio is higher than the Dutch ratio, and also higher as the EU average. Therefore, this variable is considered to be different for the two cases, as one case is above EU average and one case scores below EU average. The second causally relevant variable used in this study relates to the obstacles for reform. In specific, the number of veto-points is described here. A veto-player has the ability to stop a change from the status quo (Tsebelis 1995; 2002). The type of political system in a specific country results in differences in the number of veto players and veto points. For instance, a federal state has more veto players than a unitary state (Tsebelis, 2002). Therefore, this aspect of the political system is relevant to this study and in answering the research question. Governments with more veto points have more abilities to stop new policies or reforms. Having more veto players thus increases the obstacles to reform.

Besides relevant variables there is also a confounding variable used in this study. The first confounding variable is the variable of international influence. In this study, it relates to Europeanization. This can refer to multiple phenomena, but in this study Europeanization refers to the process through which the European Union influences national political and economic policy making. In this way, the European Union could influence both public

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19 pension policies as well as migration policies in the member states. For this reason it is

important that both countries are a member of the European Union, and have the same level of influence from this supranational institution. In this way, this study is able to study the

attempts to reform and promoting migration of the national governments itself. If one country would be a member and the other country not, the cases would be too different to examine. The outcome variable in this study is whether the issues of pension politics and

migration politics are intertwined. As argued before, in order for immigrants to be beneficiary for their new country it is important to implement labour migration policies aimed at

economic integration (Burgoon, 2014). However, it is not possible to conclude that there is an issue linkage by just observing whether a country implemented migration policies or not. Firstly, as mentioned, the introduction of certain migration policies is motivated by EU law. The reasoning behind implementing more migration policies could therefore in some cases only by driven by the EU, and not be linked with pension politics whatsoever. Secondly, it is difficult to conclude that certain policy issues are linked by just focusing on the number of polices implemented. If a country with a less sustainable pension system implements several migration policies aimed at economic integration, this is an assumption that both policy issues are linked. However, in order to argue that this a case of issue linkage, further qualitative research is needed. Therefore, this study will not only focus on whether (labour) migration policies have been implemented, but also attempts to examine what the reasoning behind the laws have been by examining the laws more closely.

Case selection

The countries selected for this study are Germany and the Netherlands. As mentioned earlier, these are two neighboring countries which apart from size seem very much alike. The most interesting aspect of these two cases is the fact that both countries started off with a PAYG public pension scheme. Unlike many other countries, the Netherlands managed to transit to a more multi-tiered pension system with a strong funded component. Germany on the other hand, relied on a true PAYG system for a long time (since 1957, but attempts to change this since the introduction of the Riester Schemes in 2001) (Haverland, 2001). If both countries are quite similar, how could one country have such a different development compared to the other?

Before comparing these two countries, the variables of both cases are valued. The main explanatory variable relates to the public pension scheme in place. The type of pension

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20 scheme which is established also relates with the type of welfare state in a country. If

classifying pension systems, it is therefore valuable to focus on the distinction between Bismarckian and Beveridgean welfare states. The main difference between Beveridgean and Bismarckian welfare states can be characterized as the following. Beveridgean social policies are aimed at poverty prevention and covers the entire population. Bismarckian social policies are aimed at income maintenance for employees. Therefore, these policies only cover a limited share of the population. The choice welfare states had to make between these two different goals (poverty relief and status maintenance) led to the development of either an earnings-related Bismarckian social insurance or flat-rate state-universal Beveridgean pensions (Ebbinghaus, 2011).

In short, the conceptual model with the described variables for this research is the following:

VARIABLE GER NL

PUBLIC PENSION SCHEME (MULTI-PILLAR SYSTEM) 0 1

DEPENCY RATIO (ABOVE EU AVERAGE) 1 0

POLITICAL SYSTEM (MULTIPLE VETO POINTS) 1 0

INTERNATIONAL INFLUENCES (EU MEMBER) 1 1

ISSUE LINKAGE ? ?

Data collection method

The data collection method for this research is twofold. The first part is a document analysis, which will be primarily focused on literature analysis and governmental documents. The government documents will be explored via governmental websites, online archives and the website of the European Commission. These legal documents may provide important

information about pieces of legislation and are created at the time right after a historical event occurred. Concrete examples of these (legal) online governmental documents are letters from the Chambers or Secretaries, press releases from governmental institutions or online archives of constitution law and European law. Examples are websites of the German

Bundestag/Bundesrat/Bundesregierung, the Dutch Rijksoverheid and the European

Commission for European legislation. In addition, this part of the search will not only focus on governmental sources, but will also research already existing literature on public pension policies and migration policies. Several well-known and respected academics already researched one or several of these topics. Some of these findings will therefore also be presented in this thesis.

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21 argument for using these sources, is to research societal processes. One country may have a more durable and sustainable public pension system compared to another country, but does this also imply that there is a lesser fear of an old age crisis within society? Media sources are considered to be perhaps more “dramatic” compared to conventional governmental

documents or academics. For this reason, this type of sources will be used to find whether the public pension scheme in the country and the old age crisis ahead has been recognized and whether migration policies are proposed as a solution for this old age crisis. As the study only tries to capture a societal opinion or feeling about this topic, only three large newspapers (with different political alignments) of both countries will be consulted. For Germany, the newspapers which will be consulted are Die Welt (conservative), Die TAZ (Tageszeitung, centre) and the Süddeutsche Zeitung (progressive liberal, centre-left). For the Netherlands, the chosen newspapers are de Telegraaf (populist, right-wing), the NRC Handelsblad (slightly right from the centre) and the Volkskrant (centre-left). The reason these six newspapers have been chosen, is the fact that these newspapers belong to the largest newspapers with the highest numbers of circulation. Additionally, the papers have been chosen because they have different political alignments. Therefore, this selection should be able to provide an overall view of some societal feelings in both countries.

For each country, a different database will be used. Factiva is the database which is used for the German newspapers, and LexisNexis has been chosen for the Dutch newspapers. Within these databases, the relevant articles will be found with the use of search terms

presented here.

This part of the research tries to find a general feeling or sense about promoting migration policies as a possible solution for averting the old age crisis. The researched period of this part of the research is 15 years (2003-2017). This period has been chosen as it is long enough to cover any trends, but not too long that it would go beyond the scope of this research.

English German Dutch

Pension system Renten/Rentensystem/ Altersvorsoge

Pensioenstelsel/ pensioensysteem

Ageing population Vergreisung/Überalterung Vergrijzing/veroudering Immigrants/migrants Einwanderung/Immigrant/

Migrant

Immigrant/ migrant

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22 Limitations of the research

Small-N comparative research has some weaknesses. The foremost weakness of this type of research design is that it is very susceptible to measurement error and random variability. The reason for this is that the number of cases is too small to filter out noise (Toshkov, 2016). Another problem of small-N comparative research is that it cannot distinguish association form causation effectively and the directionality of causes. This problem is not unique to small-N comparative research, but the design has fewer tools to deal with it, unlike large-N designs.

When focusing on the validity of the research the internal and external validity can be distinguished. The internal validity describes to what extent systematic errors are minimized and the research actually measures what it attempts to examine (Toshkov, 2016). The external validity relates to the generalizability of the research. Comparative design is usually used because the number of cases are limited and therefore, this type of research design has

problems concerning the generalizability and explanatory power (Toshkov, 2016). The results found in the two case studies of this study, do not automatically apply to a variety of other countries. It could be generalizable to similar countries in the same region, but only in a limited way. Therefore, the type of research design used here is not used to build a new theory but is used to sharpen or test existing theories.

In addition, it is important that the measures in the research are reliable. If the same measurement technique is used in further or new research with the same data, this should result in the same or at least very similar outcomes (Toshkov, 2016). The reliability of this study is high. The measurement approach for the content analysis is precise, and if different researchers would conduct this part of the research with the information provided, it should result in similar outcomes.

Finally, explanatory research seeks to identify general causal effects and causal mechanisms underlying certain processes (Toshkov, 2016). This study will also try to expose underlying causal mechanisms in the development of both pension systems and migration policies, but as mentioned above, these causal mechanisms do not have to work this way in other countries. The causal mechanisms this research seeks to identify are the following. Firstly, PAYG countries have more need and pressure to implement reforms, but due to this PAYG system, these countries will have more obstacles for reform. Secondly, as PAYG countries have high

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23 obstacles for reform, possible solutions for increasing the sustainability of the pension

schemes will be searched outside the pension system itself. Therefore, migration policies will more often be proposed as a possible solution in PAYG countries compared to multi-pillar countries. And finally, economic integration benefits the receiving country more in terms of increasing the sustainability of public pension schemes. For this reason, if PAYG countries introduce new (labour) migration policies, these policies will be aimed more on the economic integration of immigrants compared to multi-pillar countries.

4. German pension politics

This chapter and the following chapter outline the emergence of the public pension schemes in both Germany and the Netherlands. The chapters briefly describe the political system in both countries, the most relevant political actors influenced in the policymaking process of social policies and the obstacles for reform. In addition, the German chapter provides some national historical information concerning the unification of the country, as this also heavily influenced the pension politics. Afterwards, the path of pension reforms within public pension schemes which resulted in the current pension schemes will be explained for both countries. These chapters finalize with a short overview of the pensions schemes in Germany and the Netherlands.

Germany is considered to be the hallmark of the Bismarckian social insurance tradition of status-maintaining statutory pensions. The German pension system was established in 1889 as part of Otto van Bismarck’s policy of introducing a public social security system (Konrad & Wagner, 2000; Ebbinghaus, Gronwald & Wiss, 2011). Bismarck tried to cool down a political conflict about the increasing demand for protection, as political risks had emerged due to the arrival of a large working class in combination with the fact that no institutions had been developed to cope with these risks. This first public scheme was called the Disability and Old Age Insurance Act of 1889. This act comprised the mandatory insurance for blue-collar workers. The benefits were granted after the age of 70 had been reached and a minimum of 30 years of contributions had been made (Schulze & Jochem, 2007). The replacement rate was rather low, and benefits were provided when the age of 70 was reached, which did not happen that often at the time. The system was partially funded (Konrad & Wagner, 2000). A separate scheme for white-collar workers followed in the beginning of the twentieth century. This

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24 scheme was also contribution-financed. Benefits were paid out at the age of 65 after 10 years of contribution for men and 6 years of contribution for women. This administrative division between white collar and blue collar employees was restored after World War II. The calculation of the benefits did not take processes like inflation and wage increases into account. This eventually led to unequal benefits in the early 1950s which resulted in

deliberations for a more comprehensive pension reform in 1957 (Konrad and Wagner, 2000). The German old-age insurance of 1957 was based on the PAYG financing method (Haverland, 2001). The PAYG financing method was not only chosen as the most sensible option under the socio-economic conditions of the 1950s, but also because current retirees would already benefit from the system, even though they did not contribute to it. The 1957 reform is seen as the birth of the typical German pension system based on the one-pillar approach. The net replacement rate of 70% reduced the need to strive after further income. This reflects the crowding out effect of high replacement rates. Due to this crowding out effect, about 80% of the total retirement income derived from unfunded public sources (Hinrichs, 2005).

Current German pension system

The current German public pension system is considered to be the standard European model (CPB, 1997; Haverland, 2001; Konrad and Wagner, 2000). As mentioned, the current German pension system almost exclusively relies on a PAYG system, but not completely. The system is based on three pillars. It is made up of the state pension (accounts for 85% of all pensions paid), the occupational pensions (accounts for 5%) and supplementary pensions (accounts for the remaining 10%) (ETUI, n.d.a.). The state pensions are financed by employers and

employee payroll contributions. They are shared equally between these two groups. The payroll contributions are up to 20% until 2020. After this date it will increase to 22%

(Hinrichs, 2005). The pensions are earnings-related. The benefit provides a pension between 40 and 50% of final gross earnings (ETUI, n.d.a.). The occupational pensions are paid by the employers to their employees. Most of the current occupational schemes are based on a defined benefit plan. However, there is a trend towards more defined contribution plans, as is advised by the World Bank (Etui, n.d.a.). The occupational pensions were given a boost trough the legislative reform in 2002, which included tax-favorable treatment of employee contributions. Finally, individuals also have the option to contribute to private supplementary pension schemes. These schemes are independent from the state and/or company schemes. Contribution to these private supplementary pension schemes is voluntary. However, if

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25 contributing to the schemes, there is a recommended minimum contribution of 4% pay. In Germany, these schemes are called the Riester Schemes, set in the Pension Reform Act of 2001 (Etui, n.d.a.). An overview of the current German pension system is provided in table 4 (Schulze and Jochem, 2007).

Table 4

First pillar Second pillar Third pillar

Third tier None Voluntary

occupational pension

Voluntary private pension

Second tier First and second tier combined: earnings-related pension Subsidized voluntary occupational pension: state-regulated Subsidized private pension: Riester Rente

First tier Mandatory

occupational pension: none

Mandatory private pension: none

Social assistance

Note: German pension system. Reprinted from The Handbook of West European Pension Politics, by

Immergut, E.M., Anderson, K.M. and Schulze, I. 2007, p. 674, Oxford: Oxford University Press.

Sustainability challenges

The sustainability of the pension schemes is however uncertain. The system almost exclusively relies on a PAYG system. In addition, there is a very low effective age of

retirement and the employment rate is amongst the lowest in the traditional OECD countries. Compared to these OECD countries Germany has a very fast ageing population (Bonoli & Palier, 2007).The fertility and death rates decline while longevity increases. This results in an ageing population as shown in table 5 (Eurostat, 2018a).

Table 5

Note: Proportion (%) of population aged 65 and over (Germany). Adapted from Eurostat (2018a). Proportion of

population aged 65 and over (indicator). Retrieved on January 8, 2018 from Eurostat:

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 EU (28

countries)

16.6 16.8 17.0 17.1 17.3 17.5 17.6 17.9 18.2 18.5 18.9 19.2

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26

http://ec.europa.eu/eurostat/tgm/table.do?tab=table&init=1&language=en&pcode=tps00028&plugin=1

Most countries in the European Union face the problem of ageing populations. However, the degree to which Germany faces an increasing share of elderly in the population is above the EU average. For this reason, throughout this study it is argued that the problem of an ageing population is more serious in Germany compared to other countries which face the problem of an ageing population in a lesser degree.

Besides having one of the most rapid ageing populations in Europe (Eurostat, 2018a), Germany faces an additional and unique challenge compared to other European countries. This challenge, was the unification of the country in 1990. This also influenced the social policies in place including pension policies (Haverland, 2001; Hinrichs, 1998). The former division of Germany into the Deutsche Demokratische Republik and the Bundesrepublik Deutschland has led to competition between East and West. After the unification, the West German political model was more advanced and developed compared to its Eastern

counterpart. Therefore, it seemed rational to transfer the successful Western political

institutions to the new federal states in the East. However, even though this seemed rational, the unification led to the problem of the expansion of already existing social security systems to an additional population of millions of people. Additionally, because of the unification, unemployment had risen and pension spending increased while the amount of contribution was declining. This significantly influenced the political logic of reform (Schulze and Jochem, 2007).

Hence, the unification also contributed to the problems in the German public pension system. Until the unification, major pension reforms in Germany were passed with opposition support (Hinrichs, 1998). After the unification, the political competition increased, which made reaching consensus (also within pension politics) more difficult.

Obstacles to reform

The German political system consists of the government (Bundesregierung), the lower house of parliament (Bundestag) and the Bundesrat. The Bundestag is the national parliament and its members are elected by the German citizens. It’s most important tasks are legislation and the parliamentary inspection of the governments and its work (Deutscher Bundestag, n.d.). The Bundesrat (the second parliamentary chamber or the Senate) is the institution where the executives of the federal states, the Bundesländer, are represented. Germany is a federal

Dismantling the demographic bomb: Issue linkage of pension politics and labour migration policies as the solution for increasing the sustainability of public pension scheme