Düsseldorf (dpa) - Income inequality in Germany has reached a new high, according to a recent study by the Economic and Social Sciences Institute (WSI) of the union-friendly Hans Böckler Foundation.
Despite the good state of the economy and the favorable situation on the labor market, the gap between the wealthy and the lower income groups has widened in recent years, according to the WSI distribution report published on Monday. This was an "indictment of Germany".
Although inequality is currently growing much more slowly than at the beginning of the millennium, WSI expert Dorothee Spannagel emphasized. And development does not undermine the position of middle income households that much. But the gap between the very poor and the very rich is getting bigger and bigger.
"More and more income is concentrated in the very wealthy," says the study. The high income groups profited from the gushing capital and corporate income. By contrast, the 40 percent of households with the lowest incomes had fallen further behind - also in comparison to the social center, which had benefited from the good labor market situation and noticeable wage increases.
"More and more people are affected by poverty," says the study. The number of households that have less than 60 percent of the average income and are therefore considered poor according to the current scientific definition, grew between 2010 and 2016 from 14.2 to 16.7 percent.
And the households below the poverty line are getting worse and worse. The poverty gap - the amount that the average poor household lacks to get above the 60 percent hurdle - has grown considerably. While the shortfall was still at 2873 euros per year in 2005, it reached 3452 euros in 2016, adjusted for inflation - an increase of almost 30 per cent.
One of the strongest drivers of development is the increasing spread of wages in Germany. A growing section of the population at the bottom has lost touch with wage increases in the middle of society. The bottom 10 percent of households in income rankings would have had even lower incomes in 2016 after taking inflation, compared to 2010, researchers said.
According to WSI, incomes in East Germany developed much faster than in the West. At present, the income distribution in the new federal states is still noticeably lower than in the old one. But the distance is getting smaller.
To counteract the growing inequality, WSI experts recommend a whole package of government measures, from strengthening collective bargaining to raising minimum wages to increasing taxation of top income and very high inheritances.
A recent study by the German Institute for Economic Research (DIW) came to the conclusion that wealth in Germany is also very unevenly distributed. Thus, the richest ten percent of the population own more than half of the total assets (56 percent). By contrast, the poorer half only has a share of 1.3 percent. However, wealth inequality has not increased in the last ten years, according to the DIW study.
WSI Press Releases