Gap between poor and rich rises in Germany: Study

The gap between rich and poor in Germany is widening and could add to instability in society, a leading economic research institute said.

Gap between poor and rich rises in Germany: Study

 

The gap between rich and poor in Germany is widening and could add to instability in society, a leading economic research institute said on Tuesday.

The report by the DIW Institute of Economic Research could strengthen opposition to austerity measures planned by Chancellor Angela Merkel's government, which the authors criticise as an unfair burden on lower earners.

"The study clearly shows that not only have the numbers of rich and poor been rising, but households have been getting poorer for 10 years," the respected think-tank said.

A single person in the poorest income bracket earned an adjusted 680 euros a month ($912) on average 10 years ago but just 645 euros in 2008, the report found. Meanwhile, the average for the higher income brackets rose to 2,700 from 2,400 euros.

Merkel came under fire last week after her cabinet unveiled Germany's biggest austerity drive since World War Two, with the 80 billion euros in budget cuts and taxes facing challenges in parliament and opposition in the street.

The findings may also provide ammunition for foreign critics who contend that a decade of export-driven economic policies have depressed domestic demand to the detriment of Berlin's European partners and the wider world economy.

DIW economist Jan Goebel said upper income brackets should contribute more to the government's drive to rein in its budget deficit, and that by singling out the poor the austerity plan could add to instability.

"The concrete proposals made to date affect only lower earners, while the number of rich is rising steadily and they are earning more," he said. "It begs the question of whether this group should contribute more."

The DIW said the middle class is shrinking. Only 60 percent of Germans make a net monthly income of 860 to 1,844 euros -- down from 66 percent in 2000. The number of low-income earners rose to almost 22 percent in 2009 from 18 percent in 2000.

Labour market trends are the main cause for the growing income gap, the researchers said. As unemployment rises, the lower-income bracket grows. The 2009 recession did not have a significant effect on income distribution, because unemployment remained relatively stable.

The study uses data from the DIW's Socio-Economic Panel, a long-term survey which has gathered data from over 10,000 private households since 1984.

Polls show most Germans view the government's austerity package as socially unfair and insufficient to achieve savings goals. Tens of thousands have protested against it.

Reuters

Last Mod: 16 Haziran 2010, 08:34
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