Incomes of the old rising faster than those of young, study shows

A new report shows that the incomes earned by the old are increasing at a significantly faster rate than those of younger workers.

Incomes of the old rising faster than those of young, study shows
Photo: DPA.

While Germany continues to discuss the increase in poverty risks for the elderly, a report on Wednesday by the Cologne Institute for Economic Research (IW) shows that the real earnings of seniors have in fact increased much faster than those of younger people in recent decades.

In 1984, more than 31 percent of people over 65 years old fell into the lower fifth of income levels of the entire population. But by 2014, just 19 percent of people in this age group were at this level. Over the same time period, the number of seniors who were among the upper fifth of incomes grew from 12 percent to 14 percent.

The researchers attributed the increase to one simple reason: those aged 65 to 74 in western Germany now earn on average 52 percent more since the mid-1980s. But on the other hand, those under 45 years old only earn between 21 and 31 percent more than 30 years ago.

And since German reunification in 1990, the income of elderly residents has shot up by 25 percent, compared to just 10 percent for younger people.

But the increase of income for older people is not due to rising pension rates. On the contrary, retirees on average in 2015 received 47.7 percent of their former gross salaries, compared to 55.2 percent in 1970.

And between 2004 and 2014, there was a slight increase in seniors being at risk of poverty, from 10.9 percent to 14.1 percent for those between 65 and 74 years old. But the study notes that the portion of seniors at risk of poverty is still lower than the average across the general population. Overall in 2014, 15.9 percent of Germans were at risk of poverty. Those under 25 are most at risk at 22.1 percent.

The researchers explained that the increases in incomes for the elderly were due to a variety of factors. For one, private and company retirement plans are playing a greater role. Another major reason is that more women have gone into the workforce in recent decades, meaning as couples have retired over the years, their total household pensions have increased from the additional income.

In the 1980s in West Germany, men contributed about 83 percent of state-sanctioned pensions to a household. By 2014, that proportion had sunk to 71 percent.

Fewer seniors are also now living alone than 30 years ago.

“These results are a significant reminder for politics not to let pension-related policy measures get carried away by shotgun approaches,” said IW economist Susanna Kochskämper in a statement on the report.

“Such measures must finance the younger generations, which have already been left hanging in the past few years in terms of income developments compared to older people,” added IW economist Judith Niehues.

SEE ALSO: Report shows Germany's ageing baby boomers to be drain on economic growth

For members


Reader question: Is it ever legally too hot to work from home in Germany?

Germany has regulations on working during a heatwave - but does that also apply to people who work remotely? We take a look.

Reader question: Is it ever legally too hot to work from home in Germany?

The number of people working from home shot up during the Covid pandemic, and though employees no longer have the right to work remotely by law, many have chosen to stick with more flexible arrangements and set up a home office at least part of the week.

This is great news for people who enjoy a lie-in more than a long commute, but there are some downsides. One major issue is that it’s not always clear how Germany’s strict employee protection rules actually apply in a home setting. The rules for working during a heatwave are a good example of this.

How does Germany regulate working in extreme heat? 

By law in Germany, employers are responsible for creating a safe environment for their workers. This means that they should try and keep the temperature below 26C at all times and are legally obliged to take action if the temperature goes above 30C. 

That could include putting blinds on the windows to prevent the glare of the sun, installing air conditioning systems or purchasing fans. In some cases – such as outdoor manual labour – it could also involve starting and finishing earlier in the day. 

And in really high temperatures, employers may simply decide to call the whole thing off and give their employees a ‘hitzefrei’ day – basically a heat-induced day off – to go and cool down in a lake. However, business owners are generally given free rein to decide how hot is too hot in this instance (except in the case of vulnerable workers). 

READ ALSO: Hitzefrei: Is it ever legally too hot to go to work or school in Germany?

Do the heat rules apply to ‘home office?’

Unfortunately not. In most cases in Germany, the company isn’t directly involved in setting up the workspace for an employee that works from home, aside from possibly providing a laptop or phone for remote use. 

“The occupational health and safety regulations regarding room temperature do not apply in this case,” labour law expert Meike Brecklinghaus told German business publication T3N. “This is because the employer does not have direct access to the employee’s workplace and in this respect cannot take remedial action.”

That means that on hot days, it’s the employee’s own responsibility to make sure the environment is suitable for working in. 

woman works from home in Germany

A woman works in her living room at home. Photo: picture alliance/dpa | Daniel Naupold

One duty employers do have, however, is to instruct their workers about the best way to set up a healthy work environment at home, for example by giving guidance on how to regulate the temperature. 

“In the end, it is the employee’s responsibility to maintain his or her workplace in a condition in which he or she can perform his or her work without the threat of health impairments,” Brecklinghaus explained.

What can home office workers do in hot weather?

There are plenty of ways to keep flats cooler in the summer months, including purchasing your own fan, keeping curtains or blinds drawn and ventilating the rooms in the evening or early morning when the weather is cooler.

However, if heat is really becoming a problem, it’s a good idea to communicate this to your employer. This is especially important if you have a health condition that makes it more dangerous to work in hot weather. 

In some cases, you might be able to negotiate for the employer to pay for the purchase of a fan or mobile air conditioner as goodwill gesture. If possible, you could also arrange to travel to the office where the temperature should be better regulated.

Another option for early birds or night owls is to arrange more flexible working hours so you can avoid sweltering at your desk in the midday sun, although this of course depends on operational factors. 

READ ASO: Jobs in Germany: Should foreign workers join a union?