Germany may be booming, but have some been left behind?

Bremen, Germany – On a rain-sodden Sunday in March, a current passed through the crowd in a teeming Berlin convention centre as the man of the hour arrived. It was the Social Democratic Party’s (SPD) congress, and Martin Schulz was the main attraction. He was mobbed by members of his party as he bobbed towards the stage, clenching his fists and grinning.

It was nothing short of rock-star treatment for the stocky, bespectacled ex-EU Parliament president, and for good reason; Schulz has seemingly turned around the Social Democrats’ fortunes. After he was announced as the centre-left party’s candidate for chancellor in January, the SPD witnessed a 10-point jump in the opinion polls, even overtaking Chancellor Angela Merkel and her conservative Christian Democrats (CDU) in early February.

Although the SPD suffered a setback in a March 26 regional election in the small state of Saarland, some political analysts argued the result may have had more to do with the popularity of the CDU’s local candidate Annegret Kramp-Karrenbauer, dubbed “mini-Merkel”. On the national level, a recent weekly voter poll conducted by the Erfurt-based survey institute INSA put the SPD only two percentage points behind Merkel’s party.

Schulz has painted himself as Germany’s Robin Hood; a salt-of-the-earth, straight-talking dealmaker who fights for blue-collar labourers and struggling families – and it has worked. He was confirmed as the SPD’s candidate with 100 percent of the party’s votes on March 19, a record result for a party with a long history.

“If we don’t make sure this country is fairer, no one else can,” boomed Schulz at the party congress. “I want each and every person to be respected.”

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Germany has one of the world’s most powerful economies, with a huge export industry, a record trade surplus, rising wages and low unemployment. As Italy, Greece, Spain and France still suffer from the remnants of the eurozone’s debt crisis, Germany has remained relatively unscathed. It might seem curious, then, that Schulz’s message of a return to fairness, dignity and respect seems to have resonated so deeply.

But his popularity has shined a light on a paradox that has become central to this year’s election: Germans have long prided themselves on the country’s social market economy – free-market capitalism framed by a generous social welfare system. Yet growing inequality and poverty among segments of society have cast a long shadow, and many Germans share a growing sense of not only inequality, but injustice.

The weekly news magazine Der Spiegel released a March issue with two different covers: one featured the headline “How Well are Germans Doing” while the other read “How Poor are Germans Doing”. It was partly a ploy to see which would sell better, but also a nod to a debate over how far Germany’s social promise has unravelled. As campaign season shifts into full gear before September’s national, federal elections, the battle over perceptions of inequality and injustice will be at the heart of the vote.

Poverty by numbers

As Germany’s well-oiled economic engine has motored on, single parents, long-term unemployed, immigrants, elderly, and low-skilled workers have struggled to keep up. The yearly poverty risk report released in March by the Paritatische Wohlfahrtsverband, an umbrella welfare association, shows relative poverty at 15.7 percent, its highest point since German reunification.

The term “relative poverty” is commonly used in the European Union to describe anyone who lives on less than 60 percent of the medium household income. For single households in Germany, that is calculated to be 917 euros [$971] a month; for a single parent with a child under six years old, the amount is 1,192 euros [$1,262].

“Poverty does not begin when people become paupers,” said Ulrich Schneider, head of the welfare association, at the press conference unveiling the figures. “Poverty starts when people don’t have enough money to take part in the normal way of life of society, when people can no longer keep up.”

The study compared statistics from 2005 and 2015 and found that poverty among single parents rose from 39.3 percent to 43.8 percent. Among retirees, the number jumped from 10.7 to 15.9 percent over a decade.

However, the Paritatische report sparked a wave of scepticism. Some economists and media have accused the authors of alarmist exaggeration and raised concerns over the study’s methodology.

Some argue that relative poverty is a skewed measure: If all incomes across the board were to be tripled, poverty rates would remain unchanged. Also, students often register as poor, single households because they earn little while they study. The elderly, on the other hand, may draw from several pensions beyond the one that is measured, and assets are also not registered.

The Paritatische has countered this backlash, pointing out that many more poor Germans – the hundreds of thousands of homeless, for example – are not included in the study’s statistics. It is calling on the government to do far more to stem the tide and lift struggling Germans out of poverty. And this is precisely what Martin Schulz is promising to do.

In an interview with Germany’s largest circulation daily, Bild, Schulz vowed to tackle the gender pay gap, sharply curtail top manager and CEO salaries, and raise wages for workers in the country’s understaffed and underpaid nursing care industry. He avoided making any promises of tax cuts, pointing out that low-wage earners would hardly see a difference because they already pay little or no income tax.

“It would help them much more if kindergarten fees cease to exist. That is why we prefer to invest money in education and infrastructure,” he told the paper.

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Sabine Weiss, a member of the CDU’s Labour and Social Issues Committee in parliament, argues that Chancellor Merkel’s economic policies have been a boon for most Germans, and the government has boosted pensioners’ incomes as well.

“Under Angela Merkel’s leadership, Germany has grown fairer, because so many people have profited from the growing wealth and the economic upswing,” she said in an email, pointing to Germany’s record-low jobless rates. “At the same time, our party wants to make sure Germany is even more just and fair. We don’t want to leave anybody behind, and everyone deserves a fair chance to participate in society.”

Bremen’s poor, down and out

The CDU’s message might ring hollow in Bremen. It has topped the list of Germany’s poorest states for years, with one in four residents living in relative poverty and more than 18 percent drawing welfare benefits – almost double the national average.

Nestled in Germany’s northwest near the North Sea, Bremen was once home to large shipbuilding and steel companies, and thousands of guest workers arrived from Turkey as labourers. However, many of the companies were forced to shutter their doors in the 1980s and 1990s, and many working-class neighbourhoods have yet to recover.

Gropelingen is one of them. The sprawling, disparate district has become a symbol of the problems plaguing Bremen, with unemployment at 27.4 percent. There is a high concentration of at-risk groups: long-term unemployed, low-skilled workers and large immigrant families. Some 40 percent of residents have an immigrant background (more than half are of Turkish descent).

Rita Sanze has been a social worker and neighbourhood manager in Gropelingen since 2004, leading various outreach, education, and social projects. A small percentage of immigrant families have successfully built businesses or left the neighbourhood, but poverty and joblessness remain pervasive.

“A bad reputation has to come from somewhere. We can’t seem to get rid of our image,” she said, adding that poverty was actually on the rise.

“It’s all about education levels: If you didn’t study or learn a certain career, you won’t find work – even when companies are hiring and the economy is doing well,” she added.

Her office is tucked just off the main throughway in Gropelingen, where a tram rumbles past a vibrant mix of Halal butcheries, Turkish bakeries, flower shops and African hair salons. Posters offer counselling for debtors – a rising number of families in Gropelingen are finding themselves struggling under growing debt. Just a few blocks away, a grey cement low-income housing complex rises above the neighbourhood, home to some 600 residents. Sanze says most work in low-wage jobs and still depend upon welfare.

Sanze has helped organise regular resident meetings here to try to prompt civic engagement and community cohesion. The city-state also funds various initiatives with NGOs, neighbourhood organisations, and social workers. Yet Sanze says so much more is needed, especially programmes aimed at helping children and youth excel at school, to shatter the relentless cycle of unemployment and poverty.

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“In general, social background plays an extremely decisive role in educational success or upward mobility,” she said. “Germany isn’t very permeable when it comes to social classes.”

A few neighbourhoods away, a non-profit association called Solidarity Assistance counsels Bremen’s poor and struggling on unemployment benefits, social issues and debt relief. Juliane Hegewald, 54, has been counselling local residents for more than a decade. 

“Everyone who comes here doesn’t have enough money, either because the state aid isn’t enough or they don’t earn enough at their jobs,” she said. “We have pensioners who worked 40 years and can’t live off their pensions because they earned too little.”

At one of her appointments on a recent Wednesday afternoon, a 28-year-old hairdresser from Bremen, Natalia*, was struggling to parse the complicated legal structures regulating her low-wage part-time position, state aid and sick pay for a medical condition. The nationwide minimum wage – now 8.84 euros ($9.4)­ – that came into effect in 2015 has helped, but not enough.

“I don’t want to get state money but I have to, I can’t do without it,” said Natalia. “A full-time job would be great but I can’t [find one] because of my health, and even then I would probably need two full-time positions to live decently. There are just so many costs.”

The view from below

Natalia is part of a stubborn low-wage sector that swelled over a decade ago and has stayed relatively constant at around 20 percent ever since.

Germany’s unemployment levels have fallen to their lowest levels since the country’s reunification in 1990 – in large part due to a series of sweeping labour reforms ushered in under the SDP former Chancellor Gerhard Schroder in 2005. The programme – called Agenda 2010 – overhauled unemployment benefits and spawned new, more flexible part-time employment while deregulating temporary work.

Although the programme boosted employment figures significantly, critics blame the Agenda 2010 reforms for the growing underclass of Germans unable to make a decent living. Instead of turning temporary jobs into full-time employment, workers string together various low-wage, precarious positions or mini-jobs – part-time employment that pays 450 euros ($476) a month tax-free – and have little chance to break out of the cycle.

“It’s very hard to find a well-paid job in a highly productive economy if you’re not a qualified worker,” said Holger Bonin, a leading labour market and social policy expert at the Centre for European Economic Research in Mannheim.

Bonin believes there is indeed a core of long-term unemployed and poor Germans whose struggles need to be better addressed, but he says the statistics surrounding labour, poverty and inequality must be understood through the context of societal changes.

Germany is ageing rapidly, with one in three people predicted to be over 65 by the year 2060 according to the Federal Agency for Civic Education, with the working-age population especially hard hit.

The ballooning number of elderly and retirees explains some of the rise in inequality, as retirees more often have lower incomes than the working population. Far more women have entered the workforce as well, but many take part-time positions to balance child-rearing.

A better measure of inequality, argues Bonin, is net income equality – comparing income after taxes. Because of Germany’s highly progressive tax system, the yawning chasm between incomes is somewhat counterbalanced to ensure more evenly distributed wealth. Germany’s Gini coefficient, an internationally used measure to examine income inequality, has remained relatively stable over the last decade.

In the end, Germany may not suffer from deep inequality, but people increasingly perceive it that way, says Bonin.

“In a society where everybody drives a Porsche or a Rolls Royce and you drive a Volkswagen, you feel poor,” he said.

Stefan Liebig, a sociologist specialising in social inequality and structural analysis at the University of Bielefeld, believes it is primarily a perception of injustice, rather than a sense of inequality, that has roiled the debate. 

Liebig studies how perceptions of inequality and injustice have developed over the last 12 years. He and a team of researchers have examined survey data where Germans were asked how they perceived their own income in terms of justice. On the whole, perceptions of injustice have remained relatively unchanged over the last decade with two peaks in 2007 and 2015, according to their data, and the satisfaction or subjective well-being has increased for most Germans.

In fact, Liebig says Germans want inequality in incomes, or unequal distribution – because it reflects the belief that those who work harder and are better qualified deserve better wages. Yet, when there was a perceived gap between the level of productivity and the correlating wage, the sense of injustice climbed. For those in low-wage and temp jobs, perceptions of injustice have also risen, particularly when they are working alongside full-time, regular-wage employees in the same company. 

“We have this puzzle that, on one side we have a very high level of well-being and satisfaction about the economic situation and on the other side the groups feel Germany is unjust. I don’t think this has to do with inequality, it is more about people feeling unfairly treated,” Liebig told Al Jazeera.

What’s more, the better Germany does on an international level, the more earners find their situation unjust: They, too, want their piece of the country’s economic success.

Schulz has promised to roll back the Agenda 2010 labour reforms his own party instituted more than a decade ago, and provide relief for wage earners, single parents, and elderly struggling to live a decent life, at least in German terms. 

At a rally in the state of North-Rhine Westphalia in early April, Chancellor Merkel announced her party would make children and families its central focus in the coming months – a nod, perhaps, to Schulz’s success so far.

Merkel faces a crucial test on May 14, when North-Rhine Westphalia (NRW) holds state elections. It is Germany’s most populous state with nearly 18 million people; it is also home to the Rhine-Ruhr valley, a former industrial mining heartland that is now the largest metropolitan area in Europe. The urban population density has contributed to poverty rates rising from 14.4 percent in 2005 to 17.5 in 2015, according to the Paritatische’s report.

It will be a bellwether vote for Schulz as well, viewed as a sign of whether he can truly translate his strong poll numbers into a win at the ballot boxes. It is also Schulz’s home state, making a win for the SPD all the more likely – but a loss all the more crushing.

Bremen, meanwhile, is also an SPD stronghold, although far smaller and less pivotal for the chancellor candidates. Yet Bremen has witnessed a trend in recent years that could spell trouble for both Schulz and Merkel: voter apathy. Whereas nearly 79 percent of the voting population cast their ballots in 2002, only around 69 percent did so in 2013, and the number continues to fall. Rita Sanze, the neighbourhood manager in Gropelingen, says most residents in her district are too consumed with their daily struggles to give much thought to politics; those who do, however, are increasingly disillusioned with the political system and may well stay home on September 24.

“These people don’t feel like they’re even really noticed – they feel they have been left behind,” she said. “That kind of disillusionment is an alarm signal.”

Both Schulz and Merkel will be vying to win over undecided and disillusioned voters and drive them to the polling stations with promises of change and justice. In what is an increasingly tight race, those very votes across Germany could be a deciding factor.