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BUSINESS

Small town’s big plan to ditch small change

Retailers in the small town of Kleve on Germany's border with the Netherlands have banded together in a movement to end the use of one- and two-cent coins.

Small town's big plan to ditch small change
A shop's cash draw with the spaces for one- and two-cent coins empty. Photo: DPA

From February 1st, any customers paying for their goods in cash in retailers participating in the scheme will see prices rounded up or down to the nearest five cents.

The North Rhine-Westphalia community action is the first time anyone has tried removing the coins in Germany, the German Trade Association (HDE) told DPA.

The initiative comes from Klever City Netzwerk (KCN), an association of small retail businesses in the 50,000-population town.

They argue that with many banks now charging customers to deposit large numbers of the low-value coins, it's simply not worth their time and money to handle them.

But there's a benefit for customers as well, in that “it's simpler and faster when paying in cash,” KCN spokeswoman Ute Marks told The Local on Monday.

Customers who insist on exact change – or paying using one- and two-cent coins – will still be able to ask for it, she emphasised, but added that few are expected to do so.

Local businesses on board

According to Marks, around 60 businesses have so far signed up – but KCN hopes to get up to around 150, matching their current membership, within a few weeks.

So far, most of the participating shops are locally-owned ones rather than the bigger chains present in the town, such as the Aldi supermarket.

A shop owner displays a sign reading “Dear customers, we are rounding!” in Kleve, North Rhine-Westphalia, on February 1st. Photo: DPA

“Some [business owners] think the technical side will be difficult and others wonder how it will work with financial reporting to the authorities,” Marks said.

“It's less that people don't want to take part, but that they want to keep clean books.”

“So far we've had very positive reactions,” Intersport Kleve shop manager Christof Dammers told DPA on Monday at around midday.

Thrifty Dutch neighbours

Marks explained that the move to do away with one- and two-cent coins within the city limits was inspired by Kleve's proximity to the Netherlands.

The town is one of the westernmost in Germany, just across the border from the Dutch town of Nijmegen.

Some people on the German side had been doing shopping across the border for years without realizing that prices in the Netherlands were being rounded up or down to the nearest five cents, Marks said.

And the Netherlands have been joined by Finland, Sweden, Belgium and Ireland in removing the smallest coins from circulation since the introduction of the Euro.

“The Dutch are a very thrifty people and they wouldn't have gone ahead with it if there were disadvantages for either [customers or retailers],” Marks said.

KCN plans to have mathematicians from the local university follow up with the businesses participating in the scheme to see whether it's made any difference to their ledgers.

Rest of Germany to follow?

Meanwhile, the Lower Rhine Chamber of Commerce and Industry (IHK) told The Local that they were watching the experiment in Kleve “with great interest”.

“It's hard to predict how far customers will accept this,” IHK manager for Duisburg, Wesel and Kleve Michael Rüscher told The Local.

“If the small-scale test in Kleve works, retailers in other cities will certainly pick up on the idea.”

Rüscher agreed with KCN spokeswoman Marks that bank fees for processing the small coins were to blame for the move.

As for Marks, she hopes that Kleve will repeat the success of their predecessors in the Netherlands.

“In the Netherlands, one small town of 50,000 people – like Kleve – introduced this and then the whole country followed.

“It wouldn't be so bad if in 11 years we looked back and then realized that it all began in Kleve,” Marks said.

SEE ALSO: Germany dropping old-style bank details

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MONEY

Where in Germany do people have the highest disposable income?

An economic study has shown huge regional differences in income throughout Germany. So which parts of the country have the most to spend each month, and which are feeling the squeeze?

Where in Germany do people have the highest disposable income?

A study by the Economic and Social Sciences Institute (WSI) of the Hans-Böckler foundation reveals stark regional differences in disposable income in Germany. In some cases, households had as much as double the spending money of those in other parts of the country. 

Here’s where people have the most – and least – disposable income each month.

What is disposable income?

The WSI calculated disposable income as the sum of income from wealth and employment, minus social contributions, income taxes, property taxes and other direct benefits or taxes.

What’s left is the income which private households can either spend on consumer goods or save.

The study, which was based on the most recent available national accounts data for 2019, looked at the disposable income of all of the 401 counties, districts and cities across Germany.

Which regions have the highest and lowest disposable incomes?

The study found that the regions with the highest disposable incomes were in the southern states.

Heilbronn in Baden-Württemberg had the highest disposable income of all 401 German counties and independent cities – with an average per capita disposable income of €42,275. The district of Starnberg in Bayern followed in second place with €38,509.

READ ALSO: REVEALED: How much do employees really earn across Germany’s states?

By comparison, per capita incomes in the cities of Gelsenkirchen and Duisburg in North Rhine-Westphalia were less than half as high, at €17,015 and €17,741 respectively. These regions had the lowest disposable income in the country. 

The study also found that, more than thirty years since German reunification, the eastern regions continue to lag behind those in the west in terms of wages.

According to the WSI, the Potsdam-Mittelmark district is the only district in the former east where the disposable per capita income of €24,127 exceeds the national average of €23,706.

Do regional price differences balance things out?

The study also showed that regionally different price levels contribute to a certain levelling out of disposable incomes, as regions with high incomes also tend to have higher rents and other living costs.

“People then have more money in their wallets, but they cannot afford more to the same extent,” WSI scientist Toralf Pusch explained.

READ ALSO: EXPLAINED: When will Germany raise the minimum wage?

Therefore, incomes in the eastern states, adjusted for purchasing power, are generally somewhat higher than the per capita amounts would suggest.

That could explain why, even after price adjustment, the cities of Gelsenkirchen and Duisburg in western Germany continue to be at the very bottom of the list.

Saxon-Anhalt’s Halle an der Saale, on the other hand, which has an average disposable income of only €18,527, benefits from the lower prices in the east.

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