Social inequality in Germany – need for action

In the last decade social inequality in Germany has been rising significantly due to reforms of welfare state and labour market policy. Today, as economic crisis seems overcome, employers estimate compensation for their contribution in fighting recession.

As a result of moderate economic growth in the beginning of millennium Germany witnessed high unemployment rates and exploding welfare state costs. In this regard government took actions to reinforce economic competitiveness in global competition: welfare state modification (new rights and responsibilities), promotion of low wage sector and labour leasing, dilution of dismissal protection, end of parity in health care in favour of employers – just to name the most important. These reforms followed a new dogma: ‘social justice is about creating jobs.’ However, we do not merely need more jobs, but better jobs.

As a result of this policy employees had to accept large deprivations. First of all they suffered increase of value-added tax in order to reduce enterprises’ tax burden. Secondly low wage sector has increased significantly. Last but not least wages have decreased. According to the ILO real average wages in Germany were decreasing by 4.5 per cent between 2000 and 2009. Altogether, these reforms have resulted in soaring social inequality. While the ratio between total income received by the 20 per cent of population with the highest income to that received by the 20 per cent with the lowest income was 3.5 per cent in the year 2000, 4.5 per cent in 2009.

In order to stop cumulative social cleavage, employers must receive compensation for their deprivations. Now, as German economy has survived crisis and realises profits again, employers demand their piece of the cake. Regarding this, we have to consider new means of remuneration.

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About Intercentar

Intercentar is devoted to dealing and promoting the idea of Employee Financial Participation for a more just society.

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