European society is undergoing significant economic, social and religious changes. The German and Sweden social welfare system is also being restructured as a result of ongoing societal changes. Specialisation and individualisation, as well as an altered age structure, represent challenges to the social security system. The development of a European market has meant that the social sector has opened up in a new way to the private market system. The subsidiarity principle, which has led the way for so long, must be rethought as a result of these of these changes. Until a few years ago the law gave priority to independent social welfare organisations. This system is currently being revised and undermined.
This development has long-term consequences for 'Diakonie'(Protestant) and 'Caritas'(Roman-Catholic)-both agencies dominate the independent and non-profit making social welfare services. Together these independent organisations have over a million employees. The organisations have experienced increasing competition from profit-orientd agencies. This has an important influence both on working conditions and on quality. There is potential conflict within the social welfare organisations of the church, between customer-oriented social service and a more prophetic and critical diaconal work, which gives a voice to individuals who are marginalised(for example, the homeless). Development, for the diaconal services of the church, also means a growing trend towords the decentralisation of diaconal welfare services, with an increased interest at parish level for providers within the social field. This is complemented by an increased interest in society, not just for church organisations, but also parishes as cooperative partners.
Sweden as the social democratic model typical of the Nordic gives the state overall responsibility for general social welfare, while voluntary organisations provide complementary service. In Sweden the Lutheran folk church embraces the doctrine of 'two kingdoms', which ascribes a particular role to the state in the organisation of social welfare. The position of the Church of Sweden as a free entity has created now new opportunities as a provider of social projects and of hostels, pre-schools, free schools and care for the alderly. A comparison of the position of diaconal work in Sweden and Germany highlights the similarities and differences towards the organisation of social welfare in the two countries. It also suggests new models for the role of the churches in the organisation of social welfare.