Difference between rich and poor is increasing in Germany

Difference between rich and poor is increasing in Germany

Difference between rich and poor is increasing in Germany. Image Courtesy – https://www.linkedin.com

Social inequality in Germany is increasing gradually, and in recent times it has become a point of debate among top the experts in economics worldwide. Economic growth is getting inactive as the federal government expected only 1.4% increase in growth. The difference between rich and poor is increasing gradually, which is not at all good for a country’s economy.

A recent study demonstrated that the 10% wealthiest in the Germany have resources adding up to 1.4m Euros overall, which was 80 times more than the yearly wage of the middle class German family. New researches revealed that Germany abolished the net wealth tax after the decision that the tax in the framework applied until 1997 was unconstitutional. Thomas Theobald, one of the authors of the research told that German companies have increasingly maintained their corporate profits; but their income was not subject to the income tax. So, they have remained statistically invisible and created a prominent picture of wealth inequality.

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The term used across the EU refers to anyone who lives with below 60% of the medium income; it may be a kid or an adult, according to the statistics. In Germany, that threshold is 917 euros ($1102) per month for one person and 1,192 euros ($1432) for one parent with a baby below 6 years of age.

Marcel Fratzscher, President of the German Institute for Economic Research and professor at Humboldt-University of Berlin, stated that Germany has now become one of the most unequally wealth distributed country regarding industrialized world. He also told that no other member state of the European Union has this situation with so unequally distributed wealth; incomes are also getting unequal day by day.

Education may be one solution to the disparity in socio-economic system. According to economic researcher, childhood education in early stage is neglected in Germany. They suggested that children of lower income group could be benefited if that stage of education could be provided better in the country. Germany provides 4% of its gross domestic products for education in comparison to the other European countries where they provide 5% in average.

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Prof. Dr. Andreas Peichl, Director of the The Ifo Institute for Economic Research, stated that difference between rich and poor is directly proportionate to globalisation and digitalisation. Machines are continuously replacing human labour and routine jobs are being sent outside of the country. In that situation, a highly qualified worker may be safe to some extent, but a worker belong to the low-wages group is in danger. But, the government has not shown any effective measure to protect those low-wage labour groups. As a result of this, income difference and economic differences are increasing simultaneously.

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