Germany - Poverty and wealth

After World War II Germany developed a social structure comprised predominantly of a large and prosperous middle class (about 60 percent of the population), including mid-level civil servants, most salaried employees, skilled blue-collar workers, and a shrinking number of farmers. A smaller, wealthier group is made up of the upper-middle class and the upper class; and the poorer class is made of unskilled white and blue-collar workers, and unemployed and socially disadvantaged people. Unskilled blue-collar workers perform the poorest paid and dirtiest tasks. Foreigners account for about 25 percent of this group, and German women form about 38 percent of unskilled blue-collar workers. In 1992 approximately 7.5 percent of the population in the western states and 14.8 percent in the eastern states were poor (with income less than half the national average). From

Distribution of Income or Consumption by Percentage Share: Germany
Lowest 10% 3.3
Lowest 20% 8.2
Second 20% 13.2
Third 20% 17.5
Fourth 20% 22.7
Highest 20% 38.5
Highest 10% 23.7
Survey year: 1994
Note: This information refers to income shares by percentiles of the population and is ranked by per capita income.
SOURCE: 2000 World Development Indicators [CD-ROM].

1960 to 1994, the disposable income of private households in the western part of the country increased 10 times, from DM188 billion to over DM1,867 billion, and in 1997 the disposable income of private households in the whole of Germany reached about DM2,355 billion. In 1997, a 4-member household in the western part of Germany disposed of about DM5,725 per month, of which DM4,293 was spent on private consumption, and only about 57 percent had to be spent on food, clothing, and housing. Spending on leisure, automobiles, education, and telephones rose markedly. In 1997, about 53 percent of the private households in the west and 30 percent in the east owned real estate.

Although living standards in the eastern states and among many foreign workers are considerably lower than among most western Germans, there are no extreme forms of poverty, and extensive social programs relieve to a large extent the economic condition of the poor. In 1992 there were 4.6 million recipients of social assistance, nearly 700,000 from the east. Households with 3 or more children, and single parents were the most likely recipients of social assistance. In terms of education, average income, and property ownership, Germany ranks among the world's leaders. In 1963, at the height of the so-called economic miracle following World War II,

Household Consumption in PPP Terms
Country All Food Clothing and footwear Fuel and power a Health care b Education b Transport & Communications Other
Germany 14 6 7 2 10 7 53
United States 13 9 9 4 6 8 51
France 22 7 9 3 8 12 40
Japan 12 7 7 2 22 13 37
Data represent percentage of consumption in PPP terms.
a Excludes energy used for transport.
b Includes government and private expenditures.
SOURCE: World Bank. World Development Indicators 2000.

social spending excluding education was 17.8 percent of the GDP in West Germany, compared with 13.8 percent in Sweden and 11.8 percent in the United Kingdom. Social benefits were further improved in the 1970s. In the 1990s the cost of social protection increased as a result of the aging population, rising structural unemployment, and the high rate of unemployment in the eastern states. German labor costs in the mid-1990s became the highest of most major economies, primarily as a result of high wages and non-wage social costs.

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