Bloomberg News

Germany Income Gap Stops Widening as More Find Jobs, Report Says

March 06, 2013

Germany’s income gap has stopped widening as the economy expanded and more people found jobs, according to a Labor Ministry report that was attacked by opposition lawmakers for presenting a misleading picture of Europe’s biggest economy.

Income equality is less than the average for members of the Organization for Economic Cooperation and Development and comparable to that in France and the Netherlands, Labor Minister Ursula von der Leyen said today in Berlin.

The country is doing “very well by international comparison,” thanks to employment growth and rising wages, von der Leyen told reporters.

The report, endorsed by Chancellor Angela Merkel’s Cabinet, was attacked by opposition and welfare groups that said the government ignored other findings, including an increase in low- wage jobs and a widening gap between wealthy and poor. The richest 10 percent of Germans own more than 53 percent of the country’s net wealth, while half of all households own 1 percent, according to the 548-page report.

“The social division in our country is becoming an economic risk,” Hubertus Heil, general secretary of the main opposition Social Democrats, said today in an e-mailed statement.

The report coincides with mounting calls for a statutory minimum wage in Germany to counter a surge in low-paid jobs and concern that the poor in Europe’s biggest economy lack adequate pension entitlements for old age.

Poverty Gap

The opposition has accused the government of rewriting parts of the study, which was due to be published in November, to mask the widening poverty gap. Von der Leyen called the opposition’s criticism “thin” on substance and said the report was updated with new data.

Von der Leyen said the drop in unemployment among workers younger than 25 by two points to 8 percent from pre-crisis levels to Europe’s lowest level “is an absolute success story.” The government should try to help more long-term unemployed find a job and and raise the share of women working, she said.

The SPD has taken up the income gap as a campaign theme for federal elections on Sept. 22, announcing plans to initiate legislation to introduce a minimum wage of 8.50 euros ($11.09) per hour. About 7.9 million people worked in Germany for less than 9.15 euros in 2010, the report said.

To contact the reporter on this story: Stefan Nicola in Berlin at snicola2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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