Germany: Rapid increase in poverty for pensioners

[Antid Oto]

REPLY TO: D66 at nic.surfnet.nl

Germany: Rapid increase in poverty for pensioners
By Elisabeth Steinart
26 March 2010

The return of widespread poverty for the elderly in Germany is
inevitable. In particular, pensioners in East Germany are expected to
be confronted with declining pensions. This is the conclusion reached
by the German Institute for Economic Research (DIW) in a study
published last week.

The report declares that millions of German citizens will be forced
under the poverty level by declining pensions. After many years
characterized by high levels of unemployment, miserly Hartz IV welfare
payments, one-euro jobs and other forms of cheap wage labor, a broad
layer of the population is faced with the prospect of living out their
retirement in bitter poverty. The sober set of figures put forward by
the DIW makes clear how effectively the Social Democratic (SPD)-Green
government (1998-2005) and the subsequent grand coalition of
conservative parties with the SPD have wrecked the country’s social
welfare system.

In East Germany the report states that pensions will drop to an
average of around €600 a month or even less, with women receiving an
average of less than €500.

The study analyzes the results for future pension payments of
political measures introduced by a number of federal governments that
have fundamentally changed the nature of the job market in East and
West Germany. Over a period of decades a huge cheap wage labor sector
has been established in Germany involving millions of workers whose
employment contracts contain no, or a vastly reduced, pension entitlement.

This tendency has been intensified by the reduction of pension
entitlements as a result of the pension reform laws introduced by the
former Chancellor Helmut Kohl (Christian Democratic Union, CDU) and
additional legislation introduced by the SPD-Green coalition led by
Chancellor Gerhard Schröder (SPD).

The study computes its data based on the year 2005 and the birth years
1937 to 1971, divided into groups of five years, and dealing with all
aspects of job market development. In its estimation of the effects of
recent pension reforms the study assumes that wages increase annually
by an average 1.7 percent.

In fact, according to the figures of the Federal Statistical Office,
average gross earnings sank in 2009 by 0.4 percent, for the first
decline since the establishment of the Federal Republic of Germany.
This drop was due in particular to the rapid increase in short-time
working.

Based on the unduly optimistic figure of a 1.7 percent annual increase
in wages, the study predicts a relatively small decline in pensions
for men in West Germany and a very slight increase for women.

In East Germany, however, both sexes must reckon with a steep decline
in their pensions in future. The DIW researchers attribute this
tendency to the high level of unemployment that has predominated in
East Germany since reunification in 1990. In addition to long-term
unemployment, East German workers are more likely to have changed
jobs, taken part in occupational training programs and when working
received lower wages than the equivalent worker in West Germany.

The study anticipates a dramatic rise in unemployment and a decrease
in the number of full-time jobs available in East Germany. This also
applies to women and men with higher education. The period of
unemployment for the group of East German men born between 1967-1971
with little or limited education is predicted to exceed on average
more than nine years.

It should be kept in mind that the DIW study does not take into
account the effects of the recent financial crisis and the deepest
crisis of the capitalist system since the 1930s. Even prior to the
worldwide crisis of 2008 there was already a tendency towards
decreased pensions, especially for layers of less qualified workers.
The above average high ratio of unemployment, long-term unemployment
and lesser qualified workers, particularly amongst young people in
East Germany for the past 20 years, has meant that contributions to
pension funds have been limited and will be reflected in meager
pensions in the years to come.

Elderly East Germans can currently anticipate a pension of between
€900 to €1,000, but for those born between 1962 and 1971 this level
will sink to approximately €600. In the case of women, pensions will
rise for those born between 1947 and 1951 but will then decline steadily.

In one section of their study the authors put forward of an
alternative scenario based on a more favorable development of the job
market, but then come to the conclusion that such a development would
be unable to prevent the long-term decline in pensions. Even the
decision by the former grand coalition government (conservative
parties and the SPD) to increase the pension age from 65 to 67 will do
little to counter this process.

The DIW study concludes: “From a sociopolitical view it must be feared
therefore that these job market developments linked to the measures
already decided for a long-term lowering of pension levels will lead
to an increase of poverty amongst the elderly and increased dependence
on social welfare payments.”

Despite the fact that unemployment and long-term unemployment is at
record levels among older layers of workers the completely reactionary
conclusion of the DIW study is that the working life should be further
lengthened until sufficient contributions have been paid in for a
pension that falls above the basic level of social welfare payments.

http://wsws.org/articles/2010/mar2010/pens-m26.shtml

**********
Dit bericht is verzonden via de informele D66 discussielijst (D66 at nic.surfnet.nl).
Aanmelden: stuur een email naar LISTSERV at nic.surfnet.nl met in het tekstveld alleen: SUBSCRIBE D66 uwvoornaam uwachternaam
Afmelden: stuur een email naar LISTSERV at nic.surfnet.nl met in het tekstveld alleen: SIGNOFF D66
Het on-line archief is te vinden op: http://listserv.surfnet.nl/archives/d66.html
**********