February 25, 2021

Economic Miracle Eludes Germany’s Lowest-Paid

But hidden behind the so-called German economic miracle is an underclass of low-paid employees whose incomes have benefited little from the country’s stability and in fact have shrunk in real terms over the last decade, according to recent data.

And because of government policies intended to keep wages low to discourage outsourcing and encourage skills training, the incomes of these workers are not likely to rise anytime soon.

That, in turn, means they are likely to continue to depend on government aid programs to make ends meet, costing taxpayers billions of euros a year.

The paradox of a rising tide that does not lift all boats stems in part from the fact that Germany has no federally set minimum wage. But it also has its roots in recent German politics, which have favored measures to keep unemployment low and win support from employers.

While the top net income for middle- to higher-income Germans, generally defined as those earning 3,400 euros a month, or $4,870, rose slightly in real terms from 2000 to 2010, net incomes for low-wage earners, or those earning 960 euros a month or less, have fallen 10 percent, according to a new study by Markus Grabka, an economist at the DIW German Institute for Economic Research.

“Someone who earned 1,073 euros in 2000 earned 963 euros in 2010,” Mr. Grabka said.

And despite Germany’s renowned inflation-fighting efforts, which kept consumer price increases at an average of 1.7 percent a year from 2000 to 2010, more and more low-income Germans report that they cannot make ends meet despite having a job and that they must rely upon state aid to supplement their income.

This aid, which often includes rental support, costs German taxpayers 11 billion euros a year, according to Ver.di, the trade union representing the services sector.

Nowhere is this deepening chasm more visible than in Berlin-Mitte, the prosperous center of the capital, full of handsome government buildings and fine restaurants that cater to officials and lobbyists.

On a rainy summer morning here, only a 10-minute walk from the glamorous Unter Den Linden boulevard, hundreds of poorly dressed men and women lined up inside the district employment office. Some of them had come to look for work, some were applying for state help and some just wanted to accompany a friend.

Maria Müller, 63, works in a clinic in Berlin that cares for elderly handicapped people. “Before tax, I earn 900 euros a month,” she said while waiting for her friend to finish her business in the district employment office. “I haven’t had a pay rise since 2002. I can barely survive even though the government here talks about how good the economy is doing.”

Mrs. Müller said she was too proud to approach the Labor Office herself to apply for state help. “I can’t do it,” she said. “Not yet. I just feel so angry that I have to count every euro I earn.”

According to the Institute for Employment Research, which is affiliated with the Federal Agency for Labor, 1.37 million people who are working full time, part time or are self-employed are dependent on state aid to supplement their income. “Take the 358,000 people of that total in full-time work,” said Helmut Rudolph, a labor expert at the Institute for Employment Research. “They cannot live off their income. Their wages are just too low. They have no choice but to receive help from the state.”

Dieter Heymann, 63, knows all about low pay. He worked for a security firm, earning 5.52 euros an hour before tax. “I wanted to take early retirement, but when I did, I realized I needed to return to work,” he said. “I did not have enough to live on.”

Article source: http://www.nytimes.com/2011/08/19/business/global/many-germans-scrambling-as-economic-miracle-rolls-past.html?partner=rss&emc=rss

Speak Your Mind