The work is called “Lebenslagen in Deutschland”, is almost 500 pages long and is extremely explosive in the federal election year. Federal Labor Minister Hubertus Heil (SPD) will shortly present the Federal Government’s new 6th report on poverty and wealth. The draft of the official analysis, which is currently being supplemented by other departments and the Süddeutsche Zeitung is available shows: Financially, the corona pandemic is primarily affecting the lower income groups. Above all, those who are already earning good or better earnings benefit from growing incomes. And the chances of advancement in Germany remain poor, those who move at the bottom of society have a hard time getting to the top. The Federal Ministry of Labor submits the report every four years. What is still in the draft and what the government itself sees critically – a first overview.
Social consequences of the pandemic
By the end of August 2020, 15.5 million households in Germany had already suffered a loss of income. According to the government report, it was mainly “low and normal wage earners” who suffered from this. If you divide the population into five equal parts (quintiles), a good 30 percent of those surveyed in the bottom quintile reported problems with covering current expenses. The self-employed are particularly affected. The income risks associated with the pandemic are “greater in the lower income brackets”, according to the analysis, also because these people have “little reserves or other financial leeway”. In the job market, too, the pandemic hits the weaker members of society harder: Those with lower qualifications have a greater risk of losing their job. “The previously great challenges of integrating the long-term unemployed and the people who have come to Germany in recent years into the labor market are therefore likely to have intensified,” states the government analysis.
Opportunities for advancement in society
How easy it is to get from the bottom (“dishwasher”) to the top (“millionaire”) is measured by scientists by the mobility of different groups in society. In this regard, the Federal Government self-critically states: “The fact that ‘poverty’ only leads to a limited extent to the ‘lower middle’ or even to locations beyond shows the high level of explosiveness of this solidified situation.” The opportunities for advancement from “poverty”, “precariousness” and the “lower middle” have “decreased significantly since the beginning of the 1990s to the beginning of the 2000s, only to have remained at a low level since then.” The government speaks of strengthening the margins of the distribution. According to this, the “middle” is losing size, because people from this group constantly make the leap up, while fewer people come from the lower layers. Werner Hesse, managing director of the Paritätischer Gesamtverband, says: “The so-called center is shrinking, social mobility is decreasing and social inequality is increasing”. The report shows “how dramatically the situation of the unemployed has worsened”.
Improvements in low wage earners
The minimum wage has a positive effect on low-wage earners. According to the report, almost two million jobs in Germany benefited from the rise in the statutory minimum wage in 2019. The proportion of so-called low-wage employees fell in 2018 to its lowest level in more than ten years, but according to the analysis, a good one in five in Germany (21.7 percent) is still considered to be a low-wage worker.
The development of wealth
This was a controversial subject in earlier reports on poverty and wealth. From the 2013 report even statements about the unequal distribution of assets (money, real estate, securities), which were initially in a draft by the then Federal Labor Minister Ursula von der Leyen (CDU), but which were not favored by the coalition partner FDP, disappeared. This time the report says: “Looking at households by wealth, households in the lower half of the distribution accounted for around 1 percent of total net wealth, while the wealthiest 10 percent of households accounted for more than half of total net wealth united. ” According to the information, 3.8 percent of the population had a high individual wealth of 500,000 euros or more. On average, the average gross wealth of private households (before deducting debts) has increased significantly, from 144,000 euros in 2008 to 194,000 euros in 2018. However, there are still major differences, according to the government analysis. Accordingly, the gross wealth of men is given as 145,000 euros, for women it is 104,000 euros. Every ninth household stated that they had no gross wealth whatsoever. Half of the households reached a fortune of just under 50,000 euros. Real estate made up the majority of assets at 70 percent. This is where the increased value of many apartments and houses is reflected.
Consequences of inequality for democracy
If people earn little money in the long term, this also has political consequences. The federal government apparently sees this with great concern. The report draws attention to the fact that people with low incomes are more likely not to get involved voluntarily or politically. The analysis says: “Voter turnout has fallen in all strata of the population in Germany as in most industrialized countries over the past decades. However, the decline among those eligible to vote with low incomes was above average. This increases the risks of political and social exclusion Decision-making processes. “