For More Transparency: German Bundestag Tightens Rules on Supplementary Income for Members of Parliament
Members of the German Bundestag receive compensation to the tune of EUR 10,083.46 per month. According to Germany’s Basic Law, or Grundgesetz, this is to ensure their independence while also doing justice to the special responsibility and burden they carry. On June 11, 2021, the Bundestag voted to tighten the rules on supplementary income for members of parliament. From now on, MPs must declare the exact amount of supplementary income, starting at an annual amount of EUR 3,000 (or EUR 1,000 per month). Paid consulting and lobbying activities as well as lecture fees will also be prohibited in the future. The 34th ifo and FAZ Economists Panel looks at the compensation and supplementary income of German parliamentarians. A total of 146 professors at German-speaking universities participated.
Economists Deem Compensation for MPs to Be Appropriate
A clear majority – 62 percent – of the participants consider the current compensation for members of the Bundestag to be appropriate. As a reason for this assessment, many of them say that it ensures independence. A majority of respondents also emphasized that MPs carry a heavy workload and that this level of compensation can attract appropriately qualified or talented people. Around 14 percent of the respondents, on the other hand, consider the salary to be somewhat too high, with another 2 percent considering it to be much too high. They argue that this creates incentives for people to become professional politicians for purely financial reasons. In addition, critics say the level of compensation exceeds the position’s qualification and performance. A full 16 percent of the participants, on the other hand, believe the compensation to be somewhat too low (13 percent) or much too low (3 percent). The most important reason given for this assessment is that highly qualified people tend to seek employment in the private sector, where compensation is better. In addition, a low level of compensation creates incentives for supplementary income.
Calls for an Independent Body to Determine Compensation
More than half the participants are in favor of having an independent body determine the level of compensation for members of parliament. The economists state that this is the only way to avoid conflicts of interest and to prevent the impression that MPs are “serving their own interests.” Some of the responses also point to Germany’s Minimum Wage Commission as a model. The 10 percent of participants who would like to see MPs decide their own salaries without restrictions explain that they have to answer to the electorate for their decisions and that they can even be voted out of office. A good quarter of the participants are in favor of MPs being able to decide their own salaries, but with restrictions: for example, through fixed reference points such as civil servant salaries or the average wage. The economists hope that this will lead to a balance between autonomy legitimized through elections on the one hand, and increased acceptance among voters on the other. Only 3 percent of the responses are in favor of a parliamentary committee, while 5 percent would like to see a completely different solution: tying compensation directly to civil servant pay or the politician’s previous profession, for instance.
Increase in Compensation without Affecting Quality of Work
More than half the participants believe that the quality of work in the German Bundestag would not change as a result of an increase in compensation. Their responses highlight that the quality of parliamentary activity is not related to the current level of financial compensation for MPs, but to other factors: the quality of work in the Bundestag is due above all to the intrinsic motivation of its members. In addition, the sometimes opposing incentive and selection effects of changing the level of compensation are unclear: only a good fifth of the participants believe that an increase would improve the quality of work in the Bundestag somewhat (19 percent) or greatly (3 percent). Some economists hope that a higher level of compensation would attract better candidates for political careers and make them less susceptible to corruption. On the other hand, 5 percent of the participants are of the opinion that the quality of the work in the Bundestag would somewhat or even greatly deteriorate because with a higher salary, MPs’ intrinsic motivation for their work would decrease.
When asked directly how much a change in compensation would have to be in order to have a positive impact on the quality of work in the Bundestag, about half say that a change would have no impact. The large proportion of “don’t know” answers (30 percent) indicates a high level of uncertainty. Only the remaining 21 percent indicate percentage changes: on average, they expect a 30 percent increase in compensation to have a positive impact on the quality of work in the German Bundestag. Most of the respondents see a positive impact at an increase between 10 and 50 percent, while some assume positive effects only if compensation is doubled. A few economists state that positive effects on the quality of MPs would result only from a reduction in compensation.
Economists View Supplementary Income for Bundestag Members as Problematic
A good two-thirds of the participants state that supplementary income poses a problem for the quality of MPs’ work. Some of the respondents fear that MPs are unable to concentrate sufficiently on their work in the Bundestag due to the time commitment associated with their secondary activity. Moreover, many economists feel that a lack of transparency can give the impression that politicians are not independent and can be swayed. A large number of the participants are even quite specifically concerned about unauthorized influence. In this way, lobbyists and outsiders could exert influence on politics through supplementary income in order to push their particular interests through. Just under one-quarter of respondents do not believe that supplementary income poses a problem for the quality of work in the German Bundestag. They explain that it is not the supplementary incomes per se that is problematic, but rather a lack of transparency surrounding them. They also emphasize that it depends on the type of secondary activity.
For More Transparency: German Bundestag Tightens Rules for Additional Income of Members of Parliament
ifo Institut, München, 2021
ifo Schnelldienst, 2021, 74, Nr. 09, 66-69
