In Germany, the middle class includes anyone who has at least 1,500 euros a month as a single person or at least 3,000 euros a month in a family with two children.

The upper limit, i.e. to wealth, runs at 4,000 euros for singles and 8,000 euros for families.

Almost two thirds of Germans were recently in this range, according to a study presented on Wednesday by the Organization for Economic Cooperation and Development (OECD) and the Bertelsmann Foundation.

Johannes Pennekamp

Responsible editor for economic reporting, responsible for “Die Lounge”.

  • Follow I follow

The interesting thing about the finding: Although the middle class visibly shrunk between 1995 and 2005 - from 70 to 64 percent of the population - since then it has been almost stable.

In their study, the participating scientists emphasize several tendencies that they consider to be questionable.

In essence, however, their analysis contradicts the often cited thesis that more and more people in Germany are slipping into poverty.

According to the analysis, initial data rather indicate that during the Corona crisis, people with middle incomes in particular gained above-average income thanks to government aid, while top earners had to cope with losses.

"The middle class has been stable in recent years"

The study, which is fed by various national and international data sources, counts all those in the middle class who earn at least three quarters or at most double the median disposable income. This so-called median income was most recently around 2000 euros for singles. The fact that the proportion of the middle class in society has recently been stable is primarily due to the good economic development in the period between the financial and corona crisis, from which large parts of the population have benefited, especially in recent years. Since 2015, Germany has recorded a “solid increase in the disposable income of all households regardless of their position in the income distribution,” write the OECD and Bertelsmann.

This positive finding coincides with the recently published distribution report of the union-related Institute of Economics and Social Sciences (WSI).

It said that the fears of relegation and financial worries in the middle class have steadily declined over the past ten years, which is attributed, among other things, to the drop in unemployment.

Other distribution researchers, too, have little concern about the middle class, which is often described in the public perception as being at risk of decline.

The craft is also worthwhile

“The middle class has been stable in recent years,” says Andreas Peichl, who heads the Center for Macroeconomics and Surveys at the Munich Ifo Institute. Judith Niehues from the German Business Institute, which is close to the employer, also believes that the German middle class is solid. While the authors of the Bertelsmann Foundation critically note that the middle class has not grown again despite the long-lasting upswing before Corona, Peichl and Niehues emphasize that this is also connected with the increased immigration. The upturn in employment had a compensatory effect, and the immigration of, on average, less qualified people had increased inequality.

The authors of the new analysis draw attention to some rather negative points. The middle class, which is roughly the same size in Germany as the average in the OECD countries, has aged at an above-average rate in this country. Conversely, this means: “It is becoming more and more difficult, especially for young people, to secure their place in the middle class.” Between the ages of 20 and 39, 71 percent of baby boomers (born 1955-1964) would have belonged to the middle class. For millennials (born in the early 1980s to the mid-1990s), the figure is only 61 percent of the same age.  

However, it is not clear from the analysis whether this could also be due to the fact that the younger ones now study longer on average and therefore often only earn money later than their parents. It is becoming clear, however, that education is playing an increasingly important role in establishing oneself in the middle class. "The level of education in the middle income group has risen faster than in the general population," says the study. It is noticeable that not only a university degree greatly increases the chances, people with masters also often belong to the middle class. According to the analysis, more than half of the average wage earners work in the manufacturing industry or in the public sector.

The analysis of social mobility, i.e. the question of how good the chances of advancement in society are, turns out to be mixed. These opportunities have diminished in the past decades, but the scientists conclude: "Of those who live with an income that they classify as low-income or at risk of poverty, every third person manages to move up to the middle income group over a period of four years." The chance of rising out of poverty is therefore greater than the risk of slipping out of the middle class. 

In order to strengthen the middle class, the Bertelsmann Foundation recommends, among other things, doing more for the training and further education of the working population, relieving tax on middle incomes and increasing work incentives for women.

The authors see the coalition agreement of the designated federal government made up of the SPD, the Greens and the FDP as a step in the right direction: "There are a number of projects that are set out in the coalition agreement that are to be assessed very positively against the background of our study results," says Valentina Consiglio, labor market expert at the Bertelsmann Foundation.

This includes the planned introduction of a training guarantee, the increase in the minimum wage and the announced extensive investments in digitization and infrastructure.