Great Reboot

The poor get poorer in Germany, too, draft government report shows

BERLIN (Reuters) - Germany’s rich have been getting richer and its poor poorer, a government report seen by Reuters shows, all-but shattering the popular global image of a wealthy country with equal access to high-paying jobs in a robust labor market.

FILE PHOTO: People line up during snow fall to receive food that is either to old or not looking nice enough for sale at the non-profit Dortmund food bank "Dortmunder Tafel" in the western German city of Dortmund March 20, 2013. REUTERS/Ina Fassbender/File Photo

It found that between 1995 and 2015, the lowest-earning 40 percent of the workforce saw their gross hourly wages decrease by 4-7 percent in real terms. But the top 60 percent saw real hourly pay increases ranging from 1 to 10 percent over the same period.

The report, prepared by the Ministry of Labour and Social Affairs, still needs approval by other ministries before formal publication.

Refugees -- 890,000 of whom arrived in Germany in 2015 -- were included in the report, and the ministry said it believed they had contributed to a rise in the poverty rate. It added that it was unable to quantify the effect refugees had on poverty as data on the new arrivals remains scarce.

Rather, it said the refugee influx led to a rise in people seeking vocational training, which is good for an economy that suffers labor shortages in most if not all sectors.

It cited a 2015 study by the Cologne Institute for Economic Research which found that if refugees who arrived that year made up some 1 percent of Germany’s 82-million population and if all of them earned less than the poverty-risk threshold they would contribute to a 0.7 percent rise in the overall poverty rate.

The labor ministry is run by the center-left Social Democrats (SPD), who as junior coalition partners of Chancellor Angela Merkel’s conservatives are trying to make inequality one of the main themes of the general election on Sept. 24.


The report found that poverty had risen by 6 percentage points among children born in the 1980s compared with those born in the 1970s.

Today, some 15 percent to about 21 percent of children in Germany face the threat of falling into poverty, it said.

SPD chancellor candidate Martin Schulz -- dubbed Robin Hood by media -- has reinvigorated his party by promising to reverse labor market and welfare reforms introduced by former SPD chancellor Gerhard Schroeder in 2003 and which are seen as hurting the poor.

Those reforms saved Germany from years of stagnation as they made the economy more competitive.

The economy, for example, has grown every year since 2010, including 1.9 percent last year.

Merkel’s conservatives would not comment on the report because it is not yet officially published. They are expected to oppose some sections of it.

Schulz is likely to face tough resistance from businesses and some in his own party if he tries to unroll the reforms.

Germans are split on the issue. A poll by DeutschlandTrend for public broadcaster this month found that 44 percent of Germans said they believe society was unequal, down from 50 percent a month earlier.

“We must ensure that salaries are decent. This is especially valid in the services as well as the nursing and care sectors,” said SPD General Secretary Katarina Barley. “This will be an important step in order to narrow the gap between salaries and the split in society.”

A study by the RWI Leibniz Institute for Economic Research published this month found that one in eight of the 7.5 million Germans in low-paying jobs -- known as mini-jobs in Germany -- were earning less than the statutory minimum wage of 8.50 euros an hour.

Editing by Jeremy Gaunt.