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WEALTH

Study finds German middle class shrinking

The German middle class has shrunk dramatically in recent years as the wealth gap in Europe's biggest economy has widened, a study published on Tuesday found.

In 2000, 62 percent of the German population belonged to the middle class, but by 2006 this figure had dropped to 54 percent, or 44 million people, said the German Institute for Economic Research (DIW) study. DIW said the rich have become richer and the poor not only poorer, but greater in number.

“There is a bigger concentration on both ends of the scale,” the research institute said in a statement. It explained that Germany’s robust economic upswing had benefited the rich more than the poor.

“The incomes of those in the upper half of society grew faster than those in the lower half, which means that inequalities on the income scale grew,” it said.

The study defined the middle class as those who earn between 70 and 150 percent of the median income in the country.

It found that those who have suffered most in the six years under review where the average income groups, who earn between 90 and 110 percent of the median salary.

“They have registered the greatest losses, shedding about five percent of their income,” researchers said.

DIW found that the feeling of economic insecurity among Germans had also decreased as more labour market flexibility meant a growing number of people in temporary jobs.

DIW’s findings come amid an unfolding tax evasion scandal believed to embroil hundreds of wealthy Germans who have stashed billions of euros in secret accounts in Liechtenstein.

The affair has highlighted workers’ concerns that they have not been allowed to enjoy the fruits of the country’s economic recovery – a sentiment that has helped drive a series of ongoing strikes in demand of higher wages.

Last month, striking workers signaled their impatience with the wealth gap and calls for belt-tightening by holding up banners proclaiming “we also want to invest in Liechtenstein.”

WEALTH

Germany takes third spot in global ranking of ‘ultra-rich’ people

Germany has snagged third place in a ranking showing the ultra rich of the world, while the number of millionaires has also gone up despite the pandemic.

Germany takes third spot in global ranking of ‘ultra-rich’ people
The number of rich is growing despite the pandemic. Photo: picture alliance / dpa | Jens Kalaene

The year 2020 caused financial stress for many people across the world. But some people – including in Germany – actually got richer. 

Overall across the world, the number of individuals with a financial wealth of over 100 million US dollars (€82.25 million) grew by 6,000 during the coronavirus pandemic year 2020, according to the Global Wealth 2021 report by the Boston Consulting Group (BCG).

Currently a record 60,000 people belong to the ultra-rich club. These individuals own 15 percent of the world’s investable assets, according to the report.

Germany came in at third place on global rankings, with around 2,900 of these “ultra-high net worth individuals,”.  The US is at the top with about 20,600 people with a wealth of over 100 million dollars, followed by China with 7,800.

READ ALSO: Who belongs to the top 10 percent of earners in Germany?

What about private wealth?

People around the globe accumulated more wealth than ever before in the coronavirus crisis year 2020.

Private financial assets rose by eight percent year-on-year to a record 250 trillion US dollars (around €205 trillion), according to the analysis.

Rising stock market prices and growing savings contributed to this. For the first time, BCG also took into account tangible assets such as real estate or gold. Total wealth thus amounted to 431 trillion dollars.

In Germany, private financial assets, including cash, account balances, shares, pensions and life insurance policies, rose by around six percent to approximately nine trillion dollars, according to the data. Tangible assets increased by five percent to 13 trillion dollars.

“Germans traditionally invest in real estate,” said BCG partner and report author Anna Zakrewski.  This is clearly shown by the real asset ratio of just under 60 percent, she said.

“At the same time, investors in Germany are saving at an above-average rate.”

Many people have been holding on to their money during the crisis, Zakrewski said, adding that temporary closures in the retail sector and travel restrictions were also putting the brakes on spending.

READ ALSO: How and why Germany’s super-rich list is growing

The number of dollar millionaires in Germany increased by 35,000 to 542,000 in 2020, according to the report. 

The consulting firm said the increase could partly be attributed to the development of the euro exchange rate, which rose against the dollar. This had a noticeable effect on the conversion to the US currency.

Across the globe, 26.6 million people own financial assets of one million dollars or more – up by 1.8 million from the previous pre-Covid year.

The US led the global wealth ranking overall with 136 trillion dollars, followed by Asia excluding Japan (111.9 trillion) and Western Europe (103 trillion). In view of the expected economic recovery after the crisis, BCG believes global private wealth will grow steadily in the coming years.

READ ALSO: This is how many millionaires live in Germany

Who are the richest people in Germany?

As heirs to Aldi Süd, they became billionaires: Beate Heister and Karl Albrecht Junior are currently the richest people in Germany, with assets of 39.2 billion US dollars, according to Forbes.

In second place of the richest Germans is Dieter Schwarz, owner of the Schwarz Group, which Lidl and Kaufland belong ($36.9 billion) to. Theo Albrecht, the co-owner of Aldi Nord, is also in the top seven, with assets of $18.8 billion.

Internationally, however, another (super) market founder is leading: with 177 billion US dollars, Amazon founder Jeff Bezos is currently considered the wealthiest person in the world.

Graph translated by Statista for The Local Germany
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