Germany’s poor count cost of recession

As Germany belatedly feels the pinch from a crisis that has pushed most of its neighbours into recession, low-wage workers and the old-age pensioners who are being hit hardest, according to the latest four-yearly poverty report drawn up by Germany’s labour ministry.

The ministry found that the gap between rich and poor in Europe’s top economy was continuing to widen. In 1998, 45 percent of Germany’s total wealth was owned by the wealthiest 10 percent of the population, whereas a decade later that proportion had risen to 53 percent.

About half of all households owned just one percent of the nation’s wealth, the study found.

“Hourly wages that are no longer sufficient – even if someone is working full time – to feed a one-person household,” the ministry said. It described the situation as “exacerbating the poverty risks and undermining social cohesion.”

Unions argue that those very same labour market reforms which helped steel the country against the worst of the debt crisis and brought down unemployment are contributing to the ever-widening gap between rich and poor.

The absence of a legal minimum wage and the strong expansion of the low-paid job sector, and so-called “mini” jobs come at the expense of society’s poorest, critics say.

Hungary’s EU Commissioner, Laszlo Andor, has even said that Germany’s low-wage policies have helped to prolong and deepen Europe’s current crisis, because they have created some of the economic imbalances across the region that are to blame for the continent’s woes.

“For the past decade, Germany has exercised an enormous degree of restraint in wages in order to become more competitive for one or two years. But that has had consequences for the other EU countries, too,” Andor told the Frankfurter Allgemeine Zeitung newspaper in an interview, calling for the introduction of legal minimum wages in all sectors and wage increases.

AFP/The Local/rc