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No money for shoes: more and more poverty in Germany

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The “social stress test” that the Federal Republic is currently experiencing meets with a “conceivable bad starting position”. There is more poverty in the country, the deficit of low-income households compared to the average income was already a third larger before the war and Corona compared to 2010. As the new distribution report of the scientific institute of the Böckler Foundation (WSI) goes on to say, poverty undermines this democratic system. “68 percent of people who live below the poverty line consider democracy to be the best form of government, only 59 percent think democracy works well,” reports the WSI. “Poverty and social polarization can shake the foundations of our coexistence,” says WSI Director Bettina Kohlrausch.

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Even in economically stable times – these were the years from the financial crisis of 2008/09 to 2019 – low-income households lose quality of life and opportunities for participation: Poor people often have to do without everyday goods such as basic clothing or shoes, they are less likely to be able to heat and live properly in a smaller living space. “They are in poorer health, have fewer educational opportunities and are less satisfied with their lives,” writes the WSI, thereby also explaining the distance to the political system. “More commitment against poverty is also necessary to keep society together,” concludes Kohlrausch. This applies all the more in these times of extremely high inflation rates.

16.8

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percent of people in Germany are considered poor

The distribution report is based on the Socio-Economic Panel (SOEP), for which around 16,000 households are interviewed each year and currently extends to 2019. In addition, there was data from the Böckler Foundation’s “life situation study”, for which a good 4,000 people were surveyed over the past two years. The trade union institute also included August data on the inflation burden.

In 2019, more people were affected by poverty than ever before.

WSI Poverty Report

According to the usual scientific definition, the researchers define poor as people whose net income is less than 60 percent of the median income. “In 2019, more people in Germany were affected by poverty than ever before,” says the new WSI report. According to the SOEP, the poverty rate rose from 14.3 percent to 16.8 percent between 2010 and 2019, with intermittent fluctuations. The proportion of very poor people, who had less than 50 percent of the average income at their disposal, even rose by a good 40 percent in the same period: Their share of the total population grew from 7.9 to 11.1 percent.

The poverty gap also increased significantly. This is the amount that a poor household lacks to mathematically get above the poverty line of 60 percent. In 2010, the backlog was 2,968 euros within twelve months and increased to 3,912 euros by 2019. “This shows that poor households have not been able to benefit from this upswing.”

Inequality has increased

This circumstance then also has an effect on the inequality of income, which is reflected in the so-called Gini coefficient. The Gini curve flattened at times, only to reach a new high of 0.296 in 2019. In 2010 the value was 0.283. “Even in the years of mass unemployment in the early 2000s, the Gini was not higher,” the WSI authors point out.

Even before the Corona crisis and record inflation this year, a good 14 percent of people below the poverty line could not afford to buy new clothes. After all, five percent lacked the means to heat their homes adequately, and a good three percent didn’t even have two pairs of street shoes.

Currently, further economic polarization is very plausible given the enormous price increases for basic goods such as energy and food, which are hitting lower-income households more than high-income households. In August, more than two-thirds of those surveyed with lower household incomes of less than 2,000 euros net per month said they wanted to cut back somewhat or significantly on spending on clothing or shoes.

To combat poverty, the authors of the trade union institute propose various measures. These include higher wages for low-income earners by strengthening collective agreements and reducing the low-wage sector. In order to strengthen the collective bargaining system, which ensures comparatively good incomes, the instrument of making sectoral collective agreements generally binding should be simplified and compliance requirements for public contracts should be strengthened. In addition, the statutory minimum wage should be based on the recommendations of the EU Commission, according to which the minimum wage should be at least 60 percent of the average wage.

You can read more Tagesspiegel-Plus texts here

Furthermore, the WSI advocates an increase in basic security and “reliable public services of general interest”. This includes a “good, affordable range of local public transport and in the energy and water supply, as well as good educational facilities across the board”. Social housing construction must be stepped up: as early as 2018, i.e. before the crises and the dramatic increase in heating costs, more than ten percent of households renting in large cities spent more than half of their income on rent including heating.

Qualify migrants more

Finally, the compatibility of family and career should be improved, since single parents are often affected by poverty. “More flexible working time models and easier access to reliable, ideally free, childcare are important steps in this direction.” Especially people in the lower income bracket often work in atypical employment, in temporary positions or in mini-jobs. Here, the transition to secure and better-paid employment subject to social security contributions must be promoted in a targeted manner, above all through “tailor-made further qualification for people on the fringes of the labor market”. When it comes to qualification, the focus should be on migrants in particular.

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Source: Tagesspiegel

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