What is general poverty

poverty

What does poverty mean?

Social science distinguishes between absolute and relative poverty. "Absolute poverty" means that people cannot meet their basic needs. For example, they do not have enough to eat, not enough clothing or housing, or their medical care is inadequate.

The view of "relative poverty" also includes life and development opportunities in a society, so it is about social inequality. Ultimately, poverty means that people do not have the opportunities to participate that are considered normal in a society and that at the same time suffer material shortages. For example, those who are relatively poor have poorer educational opportunities, fewer social contacts and it is more difficult for him or her to advance professionally than for others. The possibility of participating in social life, i.e. social and cultural participation, is restricted in many ways.

  • Participants in labor market policy measures (including one-euro jobs)
  • Unemployed people over 58 years of age who have not received a job offer for more than a year
  • Unemployed people who are unable to work for a short time

In a 2018 report, the Institute for Employment Research showed that over 1.3 million people in Germany are excluded from the labor market. These people have no real chance of integration into the regular labor market

What does poverty risk mean?

Those who have less than 60 percent of the median income to live on are at risk of poverty according to the EU-wide definition. According to EU comparative statistics (EU-SILC), this "risk of poverty" affected 16.1 percent of all people living in Germany in 2017.

What does hidden poverty mean?

"Hidden poverty" occurs when people who are entitled to state basic security benefits (Hartz IV) do not exercise their entitlement, for example because they are ashamed or they do not know exactly what they can get. According to studies by the Institute for Employment Research (IAB), around 40 percent of those entitled to benefits do not make use of such services.

Particular risks of poverty

The causes of poverty are manifold. Often people fall into poverty because they lose their job, get sick or break up with their partner. Single parents, employees in the low-wage sector, women of retirement age and families with more than two children are particularly at risk. The statistics on the risk of poverty clearly show that social disadvantage directly increases the risk of poverty. For example, many mothers suffer from a lack of childcare facilities and the offers on the job market are often difficult to reconcile with a family. This puts them in a spiral of marginal employment. As a rule, this also means that the mothers are poorly protected in old age.

For this reason alone, many people who are perceived as "foreign" have poorer work, housing and education opportunities and are thus discriminated against. These disadvantages are mentioned in many places in the Federal Government's 5th Poverty and Wealth Report, for example, and are repeatedly uncovered by the Federal Anti-Discrimination Agency. For example, children with a Turkish surname with the same performance as other children have a significantly lower chance of being recommended for a high school.

Background and numbers

Poverty and Social Exclusion in Germany

According to the EU-wide comparative statistics “Living in Europe” (EU-SILC) in 2017, 16.1 percent of all people living in Germany were considered to be at risk of poverty. The risk of poverty is determined when the average income falls below 60 percent. As part of this survey, the Federal Statistical Office also determines the number of people affected by poverty or social exclusion. Additional criteria such as access to consumer goods, nutrition, living situation and heatability of the apartment, over-indebtedness or a lack of household appliances are taken into account. In 2017, 19 percent of the population in Germany were affected by poverty or social exclusion.

The Federal Statistical Office collects data according to the European community statistics EU-SILC. This statistic puts the at-risk-of-poverty rate at 60 percent of median income and weights income according to household members. According to these calculations, the at-risk-of-poverty rate continued to rise from 2007 (15.2 percent) to 2014 (16.7 percent). In 2015, the poverty rate stagnated and then fell to 16.5 percent in 2016 and 16.1 percent in 2017 - the value of 2013. As a result, even in a good economic situation, it rose for a long time and then fell relatively little. It is not yet possible to determine with certainty whether the current decline will last longer. It is possible that if the economy worsens, a further increase can quickly occur.

More differentiated studies by the German Institute for Economic Research (DIW weekly report 19/2019) based on long-term studies based on the socio-economic panel (SOEP) show that these nationwide averages cannot reassure a relatively small statistical reference group. Accordingly, the inequality of actually disposable household incomes has increased significantly after the financial market crisis. Most households have benefited from income increases since 1991, but not the households with the lowest incomes. In the long term, poverty despite work also increases relatively. Both of these affect immigrants to a particularly high degree. The development of poverty also varies greatly from region to region. In urban areas in particular, there is a significant increase in the risk of poverty of up to 10 percentage points, regardless of the average development in poverty.

Receipt of basic security benefits (Hartz IV)

A large part of the people who receive basic security benefits according to the Social Security Code II ("Hartz IV") are dependent on this aid in the long term. Over 6 million people receive the state basic security for jobseekers and their relatives "(Hartz IV"), 44 percent of them for four years or more. Half of the benefit recipients are relatives who are unable to work. Two thirds of all people who receive basic security benefits have been receiving them for more than two years.

A growing part of the population lives in poverty but does not receive any state aid. On the one hand, this is due to the fact that the requirements for entitlement to certain benefits are increasing. On the other hand, more and more people are not making use of social rights because they are afraid of the associated sanctions and controls.

Gender differences and differences depending on the family situation

The figures from the Federal Statistical Office based on EU-SILC (survey year: 2017) show clear differences in the risk of poverty between men and women, age groups and family situation. The respective at-risk-of-poverty rate is:

Poverty in Germany 2017:

  • average risk of poverty in Germany 16.1 percent
  • Men 15 percent
  • Women 17.1 percent
  • Children and adolescents 15.2 percent
  • over-65-year-old women 19 percent
  • over 65-year-old men 14.9 percent
  • 32.1 percent living alone
  • Single parents 33.2 percent
  • two adults with two children: 8.4 percent
  • two adults with three or more children 19.5 percent
  • Unemployed 70.6 percent

Comparison with the EU: The EU average at-risk-of-poverty rate is 16.9 percent, only slightly higher than in Germany. This affects 17.5 percent of women and 16.3 percent of men. The gender-specific difference is therefore smaller. For senior citizens, the average number is even lower at 14.6 percent, while it is higher for 18-65 year olds at 16.7 percent and for children and adolescents at 20.1 percent. In Germany, the poverty rate for old age was 15 percent in 2008 and rose to 17.5 percent by 2017.

Child poverty is very unevenly distributed in Germany. It is not only single parents who have a significantly above-average risk of poverty. This means that 40 percent of all single parents live with Hartz IV benefits. According to the family report of the Federal Ministry for Family, Seniors, Women and Youth from 2017, the poverty risk of families with three or more children has been around a quarter for years - with clear consequences: Everyone fifth of these households received SGB benefits at the beginning of 2017. In couple households with one or two children, the proportion was only 6 or 7 percent.

Fighting poverty is more than job placement. It is true that unemployment has decreased in Germany in recent years. However, the numbers on the risk of poverty are stagnating. There are structural reasons for this:

  • Long-term unemployment: According to the statistics of the Federal Employment Agency (2018), almost two thirds of the employable beneficiaries who receive Hartz IV receive this state benefit for more than two years.
  • Scope of labor market promotion: In 2010, the funds for labor market promotion were reduced by half as part of the measures to counter the financial market crisis. Only now have the funds returned to their original level. In the meantime, it was hardly possible to provide long-term unemployed people with sustainable qualifications for work in times of good economic conditions
  • Increase in precarious employment: The Federal Government's 5th report on poverty and wealth in 2017 identified clear problems with regard to precarious employment. The increase in those employed in the low-wage sector from 18.7 percent in 1995 to 24.4 percent in 2013 is documented and has been constant since then. The at-risk-of-poverty rate for atypical employees is 19.2 percent and that of marginally employed people is 25.7 percent. One reason for the deterioration in working conditions: The collective bargaining agreement has decreased continuously and significantly since the 1970s (at that time 90 percent of all companies in West Germany) and is now at 51 percent of West German and 37 percent of East German companies.

Social inequality

According to the results of the Federal Government's 5th Poverty and Wealth Report of 2017, the share of income of top earners in total income rose significantly between 1995 and 2010.

  • In 2010, the top 10% of households in terms of income received 39.84 percent of the income. In 1995 it was 31.8 percent.
  • The top 5 percent received a share of 21.16 percent of total income in 1995, and then 27.94 percent in 2010.
  • The top 1 percent had a share of 9.15 percent in total income in 1995 - in 2010 it was 13.13 percent.

According to the 2018 data from the German Institute for Economic Research (DIW), disposable household incomes fell in the bottom tenth of households between 1991 and 2015, while in the top tenth of households they rose by 30 percent (DIW weekly report 21/2018).

At the same time, according to the Federal Government's Poverty and Wealth Report, the volume of property transfers through inheritances has risen by a factor of 1.5 between 2007 and 2015 and that of gifts by a factor of 4.5.

The fact that social inequality is very pronounced in Germany is also suggested by recent DIW studies of 2018 on household wealth, which are based on projections due to the poor data situation after the abolition of the wealth tax. Accordingly, the net wealth of the top tenth in 2016 was almost 60 percent, that of the bottom half was 3 percent of the private wealth available in Germany. With a share of almost 4 percent, the top 0.1 percent had a larger share than the bottom half. The top percent held a quarter of the assets. (DIW Discussion Paper 1717 from 2018).

These findings stand alongside a stable development of poverty and solidified poverty structures in certain sections of the population. How the data situation on social inequality in Germany can be specified, how the unequal distribution affects the social situation and how effectively high incomes and wealth contribute to poverty reduction must be further clarified. Since the data situation on high incomes and wealth in Germany is relatively poor, extensive studies are being carried out by the Federal Ministry of Labor and Social Affairs in the context of the preparatory work for the 6th Poverty and Wealth Report.

Evaluation of the Diakonie Deutschland

Diakonie wants to support people who are poor or at risk of becoming poor and help them to find a way out of poverty.

A central requirement of Diakonie is that all people care for themselves and their own families and can participate in social life on an equal footing. Access to education is a crucial prerequisite for this. Children and young people need good educational and care opportunities as well as educational offers right from the start so that they do not get caught in the cycle of poverty and exclusion in the first place. The Diakonie therefore calls for the social and educational infrastructure to be expanded and largely free of charge.

The services for children and young people are complex and overlap. The effects are also contradictory. In certain constellations, households with high incomes receive better support than households with medium or low incomes. Diakonie Deutschland advocates a uniform service from a single source that is needs-based and is involved in the discussion about basic child security for all.

The financing of municipal services of general interest must be secured on a permanent basis. According to the Diakonie, there should be no further tax cuts at the expense of the social infrastructure and the municipalities that offer it. Where the municipalities no longer have sufficient funds to guarantee social offers and assistance, but also swimming pools, libraries, leisure facilities or childcare, no voucher can be used to provide free access.

The Diakonie advocates a basic income security that enables a decent life. According to Diakonie calculations, the standard rate is at least € 70 too low, depending on the household constellation, and even € 150 for single people. A basic security should not only be a continuous financial support, but improve the social participation of the people and show perspectives beyond the benefit receipt. This also includes an active labor market policy that deserves the name.

But church aid must also be designed in such a way that it helps to overcome the need for help and neither makes it dependent nor incapacitates. That is why offers such as the food banks are not a permanent solution and cannot replace the welfare state and participation-oriented social policy.

Text: Diakonie / Michael David