Poverty is Rising in Rich Germany

Germany is the economic locomotive of the European Union. It is a proud, powerful and rich nation, but paradoxically unable to contain poverty in its rich society.                                         

 Germans like cleanliness. You find waste-bins all over in public places, more so at railway, tram and bus stations. If you just watch such a bin for a while, you will see some deteriorated people fishing out empty beer cans or soft drink bottles, cramming them into a carry-bag or trolly, and moving on to the next bin. These cans and bottles are recycled and  carry a deposit of 15 to 50 cents (Rs. 7.50 to 35) per can or bottle, which can be obtained by returning them to a supermarket or drinks shop. For the destitute and poor this has become a source of little extra income. Similar scenes can also be observed for eatable stuff near waste containers of supermarkets. 

The ratio of those confronted with poverty in Germany’s 80.2 million population has been rising ever since the fall of the Berlin Wall 26 years ago. The European Commission sees this as a serious shortcoming in the fight against social disparity. In a recent report on poverty in the  countries of the Union, authorities in Brussels state, “in the period from 2008 to 2014, German policy has contributed greatly to increasing poverty.” This is due to the fact that needs-dependent services have “decreased in real terms and in relation to income development”. 

Media ignored EU report 

According to the findings of the Commission, in the first place, the government did not even increase support for those living with the so-called Hartz IV, which pulled together various public benefits into one streamlined unemployment allowance and limited the welfare payments. Similarly in the case of monthly financial support scheme as a loan for needy students (BAföG), no adequate measures were taken to compensate for the loss of purchasing power due to price increases. Secondly, the government ignored the increase in prosperity in large sections of the population, from which people were decoupled at the lower end of the income scale. “The overall favorable economic and labor market performance of the past few years has not come equally in all parts of society,” emphasised the commission experts. Their report however found very little attention in the media and so  the crushing verdict therein on German social policy has largely been ignored in public debate.  

For growing division in the society, the Commission does not hold present Chancellor Angela Merkel solely responsible, who has been in charge since 2005. Some of the causes go further back

around the same time as the EU report was published, a Berlin-based leading welfare association, Paritaetische Gesamtverband, reported that poverty is at its highest level in Germany since the reunification 26 years ago. Some 12.9 million (15.7 per cent) of Germany’s 80.2 million are now classified as poor; they earn less than 60 per cent of the median household income. The figures, presented by Paritaetische Wohlfahrtsverband and nine other organisations, show a sharp rise in poverty rates in several regions. At the same time, the report makes it clear that the rate at which poverty is rising is accelerating. 

20 per cent poverty in erstwhile Eastern Germany 

Poverty rose most of all in Berlin, from 20 to 22.4 per cent compared to the previous year. The highest rate, 24.8 per cent, is in Bremen, where almost one in four people is poor. Overall, the percentage of the population living in poverty has increased in 11 of the 16 states compared to the previous year. In all of the five states of eastern Germany, poverty rates are either slightly under or over 20 per cent. Poverty rose most rapidly in the most populous German state of North Rhine-Westphalia, from 14.4 per cent in 2005 to 17.5 per cent in 2015. 

Those most affected by poverty are the unemployed with 59 per cent, single parents and their children at a rate of 43.8 per cent, foreigners at a rate of 33.7 per cent and people who have an immigration background at 27.7 per cent. These high rates are followed by families with three or more children, who have a poverty rate of 25.2 per cent. Poverty among retirees rose by 49 per cent, from 10.7 per cent in 2005 to 15.9 per cent in 2015. These numbers will further increase due to the creation of a massive low-wage sector and the spread of insecure jobs. The impact of the rise in the retirement age to 67 and the cutting of pensions also have their share. The report also describes the impact of poverty on the life expectancy of people. Among men with an income of less than 60 per cent of the median income, life expectancy is 70.1 years. This is more than 10 years less than among men with an income of more than 150 per cent of the median, whose life expectancy is 80.9 years. Among women, the corresponding difference is 76.9 to 85.3 years. 

Poverty grew with economic growth 

The Paritaetische Wohlfahrtsverband has made its calculations on the basis of a European Union provision. According to this, researchers count all people in a household whose income is less than 60 per cent of the median income of all households. The household’s entire net income is taken into account.

This calculation puts the poverty limit for single people in Germany at 942 euros (1,012 dollars), while for a family with two small children it is 1,978 euros (2,125 dollars) per month.

The report also referred to the fact that economic development and growth had not brought about a reduction of poverty for a long time. Too many people worked part-time or had mini-jobs and could barely make ends meet. The inclusion of hundreds of thousands of students in the poverty report is hardly surprising. In the first place, a large section of students, if they receive no support from their parents, are in fact poor. Secondly, many students do not obtain a good-paying job after graduation appropriate to their level of qualification. Many have to put up with short-term contracts and low-paid jobs for years. 

The  author of the report regretted that hundreds of thousands of students, refugees, people with care needs and people with disabilities do not appear in the official statistics because they do not have their own household. Also not included are 335,000 homeless people. The poverty report was therefore “not an artificial dramatization, it underestimates rather than overestimates the risk of poverty,” he noted. 

Political responsibility for the dramatic rise of poverty in Germany is attributed mainly to the SPD-Green government led by Gerhard Schröder and Joschka Fischer (1998-2005). The Agenda 2010 and Hartz IV welfare reforms implemented by that government resulted in the formation of a huge low-wage sector and the creation of insecure jobs. The low-wage mini-jobs bring just 450 euros a month, and those out of a job for more than 12 months get a basic welfare support of 399 euros a month plus living allowances. 

Temporary work sector booming 

The temporary work sector has been booming. Germany’s Federal Employment Agency says the number of temporary jobs has doubled over the past 10 years. Half of the temporary work contracts end after less than three months, and the wages earned are well below what full-time employees earn in same companies.  According to the Federal Statistical Office, a little over 3 million German workers now fall below the poverty line in spite of a job. More and more people have a job, but fewer can actually live from it. This policy was part of a major redistribution of wealth from the bottom to the top, which took place internationally and continues even today.


“The new poverty debate is a highly politicized credibility debate,” wrote a reporter for the leading national daily Süddeutsche Zeitung. “It’s between those who believe poverty is an overhyped nightmare scenario and those who live the reality every day. Germany is a rich country, but poverty is growing. You don’t see it if you don’t want to see it.”

Income from capital and pay for managers have increased by 30 per cent since the turn of the millennium, four times faster than wages.  Experts say, the real number of unemployed amounts to 3.7 million, a million more than the official figure. Increasing prices for rent, energy and basic foodstuffs affect poor people particularly harshly. There are repeated reports of children going to school without breakfast, of parents who skip meals at the end of the month so as to be able to feed their children and of elderly people who must choose between a warm apartment and a sufficient quantity of food. That 1.5 million people regularly obtain food from around 2,000 food banks across the country provides a clear indicator of how widespread poverty is in Germany.

And yet, for every German “India is really very poor!”

—— From Ram Yadav in Bonn—–

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