Report highlights increasing poverty in Germany

Source: Xinhua   2017-03-06 11:10:11

BERLIN, March 5 (Xinhua) -- The poverty rate in Germany has hit a post-reunification high of 15.7 percent, up from 14.7 percent a decade ago, according to a latest research report available here.

The Report on Poverty Developments in Germany 2017, conducted by the Equality Association, defines poverty in relative terms as households with less than 60 percent of the median income of all households.

Christian Woltering, who led the NGO's project, told Xinhua that "the causes are multifaceted but essential changes to taxation policy over the past 20 years have led to growing inequality."

"Income is taxed more heavily than capital," said Woltering. "There are fewer wealth taxes, for example, inheritance tax is very low, and social security has been reduced."

The report says that economic growth in Germany did not reduce poverty, which actually increased while GDP grew from 2.3 trillion euros (2.4 trillion U.S. dollars) in 2005 to 3 trillion euros (3.1 trillion U.S. dollars) in 2016.

Germany has seen significant labor market reforms, beginning with the Agenda 2010 Harz reforms under Chancellor Gerhard Schroeder and continuing in the same direction under Chancellor Angela Merkel.

The reforms were aimed to address Germany's lack of competitiveness and were successful, as productivity has outstripped real wage growth for over 20 years.

However, the report shows that only the top 10 percent are benefiting from these changes, with the poorest 30-40 percent receiving almost nothing out of the economic growth generated.

"Additionally, changes to employment policy have seen more people working part-time or in low wage jobs, created gaps in employment history, and reduced pension entitlements," said Woltering. "Because of changes such as these, retirees' risk of poverty rose by 50 percent over 10 years."

The successful improvement of Germany's competitiveness has also come at a price socially, said Woltering, adding that "we've observed a clear increase in poverty in Germany over 10 years. This should worry us all, including the government."

In response to criticism that absolute poverty, not relative poverty is the key consideration, Woltering explained that "in a wealthy society like Germany, poverty must be defined in relative terms. Poverty does not start with the homeless, it starts when it forces people to withdraw, to be unable to meaningfully participate in society."

Editor: xuxin
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Report highlights increasing poverty in Germany

Source: Xinhua 2017-03-06 11:10:11

BERLIN, March 5 (Xinhua) -- The poverty rate in Germany has hit a post-reunification high of 15.7 percent, up from 14.7 percent a decade ago, according to a latest research report available here.

The Report on Poverty Developments in Germany 2017, conducted by the Equality Association, defines poverty in relative terms as households with less than 60 percent of the median income of all households.

Christian Woltering, who led the NGO's project, told Xinhua that "the causes are multifaceted but essential changes to taxation policy over the past 20 years have led to growing inequality."

"Income is taxed more heavily than capital," said Woltering. "There are fewer wealth taxes, for example, inheritance tax is very low, and social security has been reduced."

The report says that economic growth in Germany did not reduce poverty, which actually increased while GDP grew from 2.3 trillion euros (2.4 trillion U.S. dollars) in 2005 to 3 trillion euros (3.1 trillion U.S. dollars) in 2016.

Germany has seen significant labor market reforms, beginning with the Agenda 2010 Harz reforms under Chancellor Gerhard Schroeder and continuing in the same direction under Chancellor Angela Merkel.

The reforms were aimed to address Germany's lack of competitiveness and were successful, as productivity has outstripped real wage growth for over 20 years.

However, the report shows that only the top 10 percent are benefiting from these changes, with the poorest 30-40 percent receiving almost nothing out of the economic growth generated.

"Additionally, changes to employment policy have seen more people working part-time or in low wage jobs, created gaps in employment history, and reduced pension entitlements," said Woltering. "Because of changes such as these, retirees' risk of poverty rose by 50 percent over 10 years."

The successful improvement of Germany's competitiveness has also come at a price socially, said Woltering, adding that "we've observed a clear increase in poverty in Germany over 10 years. This should worry us all, including the government."

In response to criticism that absolute poverty, not relative poverty is the key consideration, Woltering explained that "in a wealthy society like Germany, poverty must be defined in relative terms. Poverty does not start with the homeless, it starts when it forces people to withdraw, to be unable to meaningfully participate in society."

[Editor: huaxia]
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