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Imported care

Marcus Lütticke / gsw
June 30, 2013

Germans are aging, and many need care as they enter their final years. Families aren't always able to provide or afford these services, making elderly care an enormous market in Germany - with gaps left to fill.

A caregiver braces an elderly woman's hands as she holds a cup Photo: Patrick Pleul
Image: picture-alliance/dpa

Ask people outside of Germany what major German companies they're familiar with, and you're likely to hear names like Deutsche Bank, Siemens, Volkswagen, BMW or Bayer. These large corporations do, indeed, employ hundreds of thousands of people in Germany. However, the country's largest employers remain unknown to many. Following the state, they are the church-affiliated charity groups Caritas and Diakonie.

More than 1.5 million people in Germany work for charities. Along with Caritas, which is Catholic, and Diakonie, which is Protestant, the other major groups include the German Red Cross, the Workers' Charity Association (AWO) and the Paritätische, an association of social movements.

These organizations may operate nursing homes or provide in-home care to seniors. They also run hospitals, day-care centers and help centers for immigrants, people in debt, drug addicts and the homeless. As such, charitable groups are an integral part of Germany's social welfare state.

Competing for clients

The services charities provide are financed largely by social insurance systems and from the state itself. When it comes to elderly care, the recipients often have to cover at least aa portion of the costs. Although the organizations are non-profit groups not allowed to make money, they often do end up with budget surpluses.

Dr. Dominik H. Enste Copyright: Institut der deutschen Wirtschaft Köln
IWT economist Dominik Enste has been observing the elderly care market for yearsImage: Institut der deutschen Wirtschaft Köln

"In many institutions, the money goes back to those they are trying to help; for example, by being invested in infrastructure, equipment and many other things," said Dominik Enste, an economist specializing in charitable groups at the Cologne Institute for Economic Research (IWK). Those investments might include adding gardens to nursing homes that can be accessed by residents.

"But sometimes the money goes to less useful areas, like bigger offices or company cars," Enste added.

However, there are numerous private, for profit, groups offering the same services as major German charities and competing for their clients. The legal conditions under which private and charitable groups operate are not the same.

"There are clear differences in how they are treated," noted Bernd Tews of the Federal Association of Private Social Service Providers (BPA).

Perks for charitable groups

Along with tax breaks for not-for-profit charities, Tews says he is disturbed by one legal regulation in particular that effedctgs his group.

An elderly woman is pictured as she is fed by her female caregiver Photo: Tobias Kleinschmidt dpa/lsw
Caring for the elderly is often physically and emotionally demandingImage: picture-alliance/dpa

"The charitable groups can pay allowances to volunteers that are close to people in need of care. These payments are free from tax and social security requirements. And this is a possibility we don't have," Tews explained.

Nevertheless, the number of private service providers has risen sharply in recent years, cutting into the market share for charitable groups on the home and health care market. In 1999, private providers had 51 percent of the market. Ten years later, that number had risen to 62 percent, according to Germany's Federal Statistics Office.

But since the number of elderly people in need of care is constantly growing, no one needs to worry about having enough work to do. Problems for this branch of health care lie elsewhere.

"We are not fighting for clients - instead, it's much more about specialists," said Brigitte Döcker, an AWO board member.

The Federal Association of Private Social Service Providers estimates that around 50,000 jobs in the area of elderly care currently cannot be filled because of a lack of trained professionals.

Germany's federal government is making a concerted effort to attracts health care workers from abroad and recently signed an agreement with the Philippines.

Elder care's high price

Health services for the elderly cost a great deal of money, and nursing insurance generally only covers part of the bill. That leaves senior citizens and their families in a position of having to pay for things themselves.

Brigitte Döcker Source: AWO Bundesverband
AWO's Brigitte Döcker sees the lack of trained care professionals as a major challenge for GermanyImage: AWO Bundesverband

"Around the clock, legally registered care in one's home can quickly cost 4,000 to 8,000 euros a month if the caregivers are employed full-time," said economist Enste.

That explains why a third group of care providers has emerged alongside the traditional charities and private organizations in Germany. Foreign caregivers, primarily from Eastern Europe, are sent by placement agencies to the homes of German seniors on a monthly basis. Officially, they are still employed in their home countries and merely being sent out for a mission. In Germany, they earn more than they would at home, but they earn significantly less than would be customary among German workers.

"There's apparently demand, and this demand is being met," said Brigitte Döcker of AWO. "There's often criticism here, but I would not necessarily second it."

Currently, there are around 2.5 million seniors in need of care in Germany. By 2030, estimates hold that an additional one million people will be added to that tally. Under today's financial models and with a simultaneous reduction in the number of workers in Germany, that rise in need represents a serious challenge. It seems evident that German taxpayers will have to invest even more money into the health care system than at present - good news for both those in need of services and the charities themselves.