‘An army of low-paid workers’: wealthy Germany’s not so equal

Pharmaceutical dynasty heir Antonis Schwarz is a millionaire. And he wants Germany's next government to tax him more.

 'An army of low-paid workers': wealthy Germany's not so equal
Activists of the anti-poverty international movement ONE project portraits of the SPD chancellor candidate Olaf Scholz (L), Germany's The Greens party chancellor candidate Annalena Baerbock (C), and Germany's CDU chancellor candidate Armin Laschet with a message for the next German chancellor reading "Make the world fairer", on a facade of the Paul Loebe parliamentary complex in Berlin. John MACDOUGALL / AFP

The 33-year-old is a founding member of “Tax Me Now!“, an initiative bringing together 47 of the wealthiest names in Austria and Germany that wants to put social justice at the top of the agenda in Europe’s biggest economy’s election campaign.

Schwarz has given 500,000 euros ($590,780) to the ecologist Greens, offering strong backing for the party that wants to bring back wealth tax, and reform inheritance tax.

The current economic system “pushes money upwards” into the hands of a few people, he said in an interview with public broadcaster ZDF, urging fairer distribution across the population.

As Chancellor Angela Merkel prepares to leave the political scene after the September 26th elections, a glance back at the socio-economic record of her 16-year reign offers a mixed picture.

Under her watch, Germany has regained its spot as Europe’s economic engine, today fully rehabilitated from the “sick man of Europe” image that plagued it in the 1990s and early 2000s.

From 1995 to 2001, Germany grew on average 1.6 percent a year, almost a whole percentage point lower than the rest of the EU at the time, as it absorbed the costs for reunification, and in 2003 it suffered a recession.

But its fortunes turned around, and a yawning gap in well-being between east and west has narrowed, even if differences still persist.

GDP per head in the ex-communist east outside Berlin, under 40 percent of the German average in 1990, was closer to 75 percent in 2021, according to a report by the economy ministry.

But the relative prosperity belies other inequalities that have only worsened in the coronavirus pandemic.

Just one percent of the country’s population controls 35 percent of its wealth, according to a study published in 2020 by the German economics institute DIW.

Deep-rooted poverty
With the pandemic heaping unprecedented economic turmoil on the population, calls have grown for a fairer redistribution of wealth in the country.

READ ALSO: Who is hardest hit by the pandemic financially in Germany?

Besides the Greens, both the poll-topping Social Democrats and the far-left Linke party are in favour of a return of the wealth tax, struck out of the statute books in 1997, or a reform of inheritance tax.

In comparison, Merkel’s conservatives have opposed raising taxes.

And both the SPD and Greens want to up the minimum wage to 12 euros, up from the current 9.60 euros, a remedy in their view to another flaw of the German economic miracle: relatively low pay and precarious employment.

When she came into office, Merkel inherited a set of sweeping reforms aimed at making work more flexible, known as the Hartz laws, from her predecessor social democrat Gerhard Schroeder.

READ ALSO: Germany to raise Hartz IV unemployment benefit by just three euros

The reductions in the length of unemployment benefits and the new conditions attached to them pushed thousands of jobless towards a system of generally poorly paid “mini-jobs”.

The number of people in these jobs increased by 43 percent between 2003 and 2019, up to 7.6 million workers in an active population of 42 million.

But they were taking home small wages.

Hospital on strike
Before the pandemic, around one in six or 15.8 percent of people in Germany lived at risk of poverty — a measure defined as a monthly pay of under 1,040 euros, according to a 2021 study coordinated by the federal statistics agency Destatis. The figure was just under 11 percent in the 1990s.

Among the most vulnerable, the percentage “consistently” faced with the threat of poverty has doubled since 1998.

The success of the Merkel years was built on “an enormous shadow army of low-paid workers”, said sociologist Oliver Nachtwey.

“Almost 20 percent of employees in this country are in this category. If you add part-time jobs to the four million full-time posts, Germany has one of the largest low-paid sectors in the OECD with around eight million people,” he said in an interview with Spiegel weekly.

With a monthly gross salary of 1,850 euros, Suheyla, who does not wish to give her last name, does not think of herself as a “poor worker”.

And yet, as a nurse at one of the biggest hospitals in Berlin, raising two children, she says she has difficulty “getting to the end of the month”.

Suheyla has, along with colleagues, since the beginning of December been striking for better pay and working conditions.

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Ex-chancellor Schröder sues German Bundestag for removing perks

Former Chancellor Gerhard Schröder has sued the German parliament for removing some of his official post-retirement perks over his links to Russian energy giants, his lawyer said Friday.

Ex-chancellor Schröder sues German Bundestag for removing perks

Schröder, 78, has come under heavy criticism for his proximity to Russian President Vladimir Putin and involvement with state-backed energy companies.

The decision to suspend Schröder’s taxpayer-funded office and staff in May was “contrary to the rule of law”, Michael Nagel, told public broadcaster NDR.

Schröder “heard of everything through the media”, Nagel said, noting that the Social Democrat had asked for a hearing before the budget committee responsible but was not given the chance to express himself.

READ ALSO: Germany strips Schröder of official perks over Russia ties

Schröder’s lawyers filed the complaint with an administrative Berlin court, a spokesman for the court confirmed.

In its decision to strip him of the perks, the committee concluded that Schröder, who served as chancellor from 1998 to 2005, “no longer upholds the continuing obligations of his office”.

Most of Schröder’s office staff had already quit before the final ruling was made.

Despite resigning from the board of Russian oil company Rosneft and turning down a post on the supervisory board of gas giant Gazprom in May, Schröder has maintained close ties with the Kremlin.

The former chancellor met Putin in July, after which he said Moscow was ready for a “negotiated solution” to the war in Ukraine — comments branded as “disgusting” by Ukrainian President Volodymyr Zelensky.

Last week, the Social Democrats concluded that Schröder would be allowed to remain a member after he was found not have breached party rules over his ties to the Russian President.

Schröder’s stance on the war and solo diplomacy has made him an embarrassment to the SPD, which is also the party of current Chancellor Olaf Scholz.