The new parental benefit package, which goes into effect with the new year, is aimed at making it easier especially for middle-income, professional women to have children. Many well-educated women find it difficult in Germany to balance work and family, and many are choosing to climb the career ladder instead of changing diapers.
Speaking to the dpa news agency, Family Affairs Minister Ursula von der Leyen, said Germany has one of the world's longest and sharpest decline in the birth rate. The fall in the number of children born could have serious consequences for the nation's health and pension systems as well as its economy. Analysts predict that Germany's current population of 82 million could drop to 50 million by 2050.
"I would be extremely pleased, if (the parental benefit) succeeded in stopping this dramatic decrease," she said.
The decrease has been apparent for several decades now, but was not seriously addressed by previous governments, in part because of the country's Nazi past. Hitler's regime encouraged large families in order to propagate what it called the "master race." Consequently, during much of the post-war era population studies were considered almost taboo in Germany.
How it works
Under the new child benefit plan which goes into effect on Jan. 1, parents -- either the mother or father -- would be entitled to 67 per cent of their previous income, up to a maximum of 1,800 euros a month ($2,363) while staying at home for up to 14 months.
Von der Leyen, who has seven children, said the new parental benefit represented the "first, but, key component" in helping Germany to address the aging of its population.
But she conceded that it will take some time "before people have the confidence to bring more children into the world again."
The plan has not been without controversy, mostly due to a provision that requires fathers take two months off work in order get the maximum period of benefits. Some conservative members, mostly men in van der Leyen's own party, the Christian Democratic Union, said the government should not be telling parents how to raise their children.
Putting it off?
Since the new benefits only apply to parents with babies born after Dec. 31, there have been concerns by members of the medical profession that women will try to wait until midnight on that day to give birth.
"We warn against any intervention in the natural birth process," said Christian Albring, the president of Germany's gynecologists' federation.
He said that medication which stops early contractions should only be given for sound medical reasons and not for financial gain.
Birth rates in many countries in the EU are low and the bloc has urged its member states to tackle the challenges of a shrinking workforce and an ageing population, especially by making it easier to meet the demands of both work and family.
European governments must set up more flexible working patterns, said EU Employment Commissioner Vladimir Spidla earlier this year. Such programs should include cuts in working hours for young parents which would be made up for at a later stage in their lives and even compulsory paternity leave.The average number of children per woman across the EU is at 1.5, but 2.1 are needed to replace a previous generation.