Category / Income and assets / Society
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New insights on poverty in Germany
Poverty in Germany has risen significantly over the last decade. A study has examined the connection between poverty and social participation in Germany using data from “Living in Germany.” According to the study, poor people not only have less income and assets, but also acquire fewer educational skills and work under poorer working conditions. They live in smaller housing and have poorer health.
The various impairments mean that poor people can only participate in society to a limited extent. Persistently poorer people also state that they are significantly less satisfied with their lives than the average population.
The authors of the report, Dr. Dorothee Spannagel and Dr. Aline Zucco, point out that the report relies on data up to and including 2019. Since then, rising energy prices and high inflation are likely to have exacerbated the situation for poorer people.
Further information
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Donating money despite low income
Many people in Germany donate money to social, religious, cultural, and charitable causes.
Who donates how much, and how does donation behavior change over time? Prof. Jürgen Schupp from the Socio-economic Panel (SOEP) investigated these questions. Differences emerged between East and West, men and women and, not least of all, between people with low and high incomes: High-income households account for 37 percent of total donations in Germany, but low-income households donate more relative to their available annual income.
The results of this year’s survey will show how donation behavior in Germany is changing in a phase of high inflation and rising prices.
Further information
DIE WELT: Ärmere sind oft großzügiger als Reiche (Video)
Der Tagesspiegel: Trotz geringer Rücklagen: Ärmere Haushalte spenden mehr als reiche
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Rising energy prices
The German government has invested almost 24 billion euros in relief measures to counter rapidly rising energy prices due to the war in Ukraine. The money is going toward increased social welfare benefits, reduced gas taxes, and a heavily discounted monthly public transport pass. But are these measures actually offsetting the increased costs?
As data from the study “Living in Germany” show, the increase in energy prices is placing the most severe burden on poorer households. For the poorest 10 percent of the population, the costs of electricity, heat, and fuel will eat up 6.7 percent of net income in the next 12 to 18 months. These households will receive 3.7 percent of that back in the form of government relief, leaving them with an energy burden of 3 percentage points. leaving them with an energy burden of 3 percentage points.
For the richest 10 percent of households in Germany, energy costs will only consume an additional 2 percent of net income. They will receive 0.7 percent of that back in government relief, leaving them with an energy burden of just 1.3 percentage points.
“There is a lot to be said for not reducing the tax burden on higher income earners, and in the medium term, for raising taxes on very high incomes and assets,” says economist Stefan Bach of DIW Berlin, who carried out the study with his colleague Jakob Knautz.
Further information
DIW Berlin: Hohe Energiepreise: Arme Haushalte trotz Entlastungspaketen am stärksten belastet
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Taxes and transfers
Relationships are all about give and take, and so is the one between the government and the people. In childhood, people are on the receiving end of government services such as school and daycare. When they reach working age, they have to start giving back by paying taxes. In old age, the relationship flips again, and the government pays their pensions.
How exactly this give-and-take evolves over the life course depends on where people live and what kind of education they have. There are also differences between men and women.
Researchers at the German Economic Institute (IW) in Cologne have developed an interactive graphic based on data from the study Living in Germany that shows what these relationships look like in detail.
Further information
Frankfurter Allgemeine: Wer den Staat finanziert und wer profitiert
Photo by Federico Giampieri on Unsplash…
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![Frau und Mann mittleren Alters füllen ein Formular aus]()
Who does what to prepare for old age?
Few can afford to invest in real estate, and there is no guarantee that government pension funds will be able to cover younger generations when they retire. A study based on data from “Living in Germany” and published by ZEIT online shows how people in Germany are providing for old age instead.
According to the study’s findings, men are more likely to invest for retirement than women, and academics and higher earners are more likely to invest in financial assets and insurance than others.
In addition, they ways people prepare for retirement depend on their age: Almost half of people over the age of 51 have financial investments such as stocks, savings bonds, or investment certificates, whereas younger people tend to rely on pension insurance.
People in the former East Germany also tend more to rely on pension insurance than those in the West, with 36 percent in the East and 33 percent in the West holding pension or life insurance policies. This could be because people in the former East Germany have fewer alternatives, as they are less likely to own real estate than people in the former West.
Further information
Zeit Online: Wer sorgt wie fürs Alter vor?
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![Woman caring for elderly gentleman with cane, she supports him and carries his shopping bag]()
Low-income workers need supportive care services six years earlier
New analyses based on data from the study Living in Germany show that people with lower incomes have a higher risk of needing supportive care and nursing services. Men at risk of poverty are likely to need care almost six years earlier than higher-earning men, while women need care around three and a half years earlier.
Occupation also plays a role. On average, blue-collar workers need supportive care and nursing services about four years earlier than civil servants. In addition, men and women with high-stress jobs need supportive care and nursing services on average 4.7 and 2.7 years earlier, respectively.
“In Germany, there is social inequality not just in income and life expectancy, but also in the risk of needing care,” says DIW expert Peter Haan, who worked with colleagues from the SOEP in conducting the study.
Further information
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Higher Wages
The likely future coalition partners in the German government—SPD, Greens, and FDP—want to raise the statutory minimum wage to 12 euros per hour in their first year as governing coalition. This could benefit women in particular, as well as people working in retail, catering, healthcare, and building maintenance. These findings are the result of a study by researchers from the Hans Böckler Foundation’s Institute of Economic and Social Research (WSI) based on data from Living in Germany and the Federal Statistical Office.
According to the study, 7.3 million people currently earn less than 12 euros an hour in their main job and another 1.3 million in a second job. Of these approximately 8.6 million people who would benefit from an increase in the minimum wage, around two-thirds are women.
Further information
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How has the pandemic affected household income?
The income gap between high and low-income households has narrowed over the course of the pandemic. But this is not because things have improved for people on the lower end of the income distribution, as one would have hoped. Instead it is because self-employed people, who are usually among the better-off, have suffered in the wake of measures to combat the virus. The resulting narrowing of the income gap is therefore bad news rather than good.
“If the pandemic drags on well into this year, and if measures to contain it are tightened again, this could bring about rising bankruptcy and unemployment,” says SOEP expert Markus Grabka, who conducted the study.
His analyses show that monthly net household incomes of the self-employed fell by an average of 16 percent, or 460 euros, during the second lockdown compared with 2019. In contrast, salaried employees and civil servants saw a 5 percent increase in household income in nominal terms. In the remaining households, there was no change in income on average.
Further information
DIW Berlin: Corona pandemic reduces income inequality
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How rich are you?
How rich are you compared to others? With an interactive calculator based on the study “Living in Germany,” you can find out where you lie in the income distribution in Germany, and how much of the population is better or worse off than you. The calculator takes into account income, assets, but also your housing situation. The interactive calculator on ZEIT online was developed by a research team led by Bremen sociologist Olaf Groh-Samberg.
