GERMANY'S SOCIAL CENTER SHRINKS

A study paints a bleak picture of the German middle class: This is getting smaller, struggles to cope with the high taxes and has no guarantee of lasting prosperity.


The income distribution and equity in Germany develop negatively. The new figures show the German Institute for Economic Research (DIW), which was presented together with the Bertelsmann Foundation, a study on the situation of the middle class. The conclusion of the researchers: Germany shrinks social center - and has even prospects.

The figures are based on the so-called socio-economic Panel, for the annual 20,000 adults interviewed. Accordingly, the proportion of those with an average income fell in 1997 by 5.5 million people, from 65 to 58 percent. And one in four of them, the study has the latent fear of losing his status. Because "even a good education today is no longer a guarantee for a secured life in prosperity."

This development for the scientists are several factors: On the one hand are especially "educated people" immigrants. Second, the single-and single-parent households have increased. This led to greater income inequality, "since no savings can be achieved through joint economies in larger households."

Inequitable tax policy complicity

Labor market reform and the decline of normal working conditions are another cause. "The resulting non-standard employment is usually drawn by a below-average wages," says the study, which is also the tax policy is partly to blame. Of audits conducted since the mid-1990s, tax reforms, such as the reduction of the top tax rate, would not, mainly benefits the rich. "The middle class was much less easily relieved of the amended tax rates."

As a consequence of all this, the researchers summarize: "The inequality in both income and the assets has increased." Of the additional welfare gains in recent years have benefited only "the elite in society." "The promise of Ludwig Erhard, a 'prosperity for all' is so for some time in Germany not so redeemed as yet in the long period since the 1950s."

Moreover, economists complain two simultaneous developments: while people succeed from lower income groups and more rare, the rise in the middle class. On the other hand people set from the middle class upward, better education and higher professional positions goodness. Result is that the middle class is shrinking and "a social mix of the company is less and less".