GERMANY: Shocked - One quarter poor or on the brink

BERLIN (Monster & Critic), May 19, 2008: Business News New official figures Monday suggested that Germany's economic miracle is far from perfect, with a quarter of the population either living in poverty or conscious that a stroke of bad luck could push them over the brink. That shock to the self-esteem of a nation that prides itself on booming experts, superb technology and sophisticated culture was accompanied by central-bank data reiterating that German affluence lags far behind that of the United States. Both figures underline how the lifestyles of rich German holidaymakers and art collectors is a world apart from life in blighted small towns where the factories have all closed or grim inner-city tenements where immigrants count on welfare to survive. Like other Europeans, Germans have been debating whether soaring executive pay is fair and whether average-ability Germans starting out working lives today can aspire to, and achieve, the middle-class lives that were the norm a generation ago. The federal social-welfare ministry figures released Monday in Berlin show that the incomes of 26 per cent of Germany's population leave them 'at risk of poverty,' a broader category that includes those who are on the brink and have no significant savings. After various social security payments, only 13 per cent technically count as poor, which is still a lower poverty rate than the European Union average, according to Berlin officials. Using European Union methods, Germany defines poverty as a single person having less than 781 euros post tax in income monthly. Welfare provides a safety net of 347 euros monthly, topped up with various supplements, but on incomes between those two figures, diets are dreary, living space is cramped and cars are unaffordable. During the late 1950s and 1960s, Germany underwent an economic spurt, the Economic Miracle, similar to the rapid growth nowadays in emerging economies such as China. Jobs were easy to find, visible poverty shrank and Germany became an industrial world power. Over subsequent decades, Germany expanded its old-age pensions system, largely eliminating poverty among the elderly. Monday's figures show only 2.3 per cent of Germany's residents over 65 rely on welfare handouts. Critics charge however that conditions have become comparatively worse for the low-skilled, the young, solo parents and the unemployed, with the widening spread of incomes beginning to resemble that in the United States. Social scientists say that in a welfare state, an economic slowdown does not change much for those on welfare, but scares those on the brink - those worried that being fired or divorced could wipe out their savings and plunge them into the underclass. The Monday figures showed the poverty risk among employed people had risen in Germany - whereas it has fallen in the rest of the European Union. The reason was the spread of low-paid jobs, defined as those paying less than two-thirds of the national pay average. The figures issued Monday by the central bank, the Bundesbank, provide additional evidence that the affluence of Germany's upper crust is less impressive when averaged across the whole populace. The bank said that in 2007, real per capita GDP in the United States was still 27 per cent higher than in Germany. The income levels are adjusted to exclude differences in prices in the two countries. 'The gap is just as great as at the end of the 1990s,' the bank said in its monthly report, noting that Germany's slight lead in GDP growth figures in recent years had not altered the disparity. © 2003 - 2008 by Monsters and Critics.com, WotR Ltd.