Germany: What poverty looks like in a rich country

Amid soaring inflation, particularly for food and energy, the gap between rich and poor in Germany is widening. Incremental increases to social safety nets will do little to alleviate the problem, experts warn. A special report by Sabine Kinkartz/DW

Although Germany is one of the richest countries in the world, signs of increasing poverty are becoming increasingly visible across the country. Homeless people sleeping rough, mothers forgoing meals in order to feed their children, and pensioners looking for discarded bottles to trade for the deposit.

According to the Paritätische Wohlfahrtsverband, Germany’s umbrella organization for welfare organizations, 13.8 million Germans either live in poverty or are at risk of slipping below the poverty line. The German government also voices its concerns about the growing gap between rich and poor.

The term poverty in this context does not mean that millions of people in Germany are at risk of starving or freezing to death. Instead, it refers to relative poverty, which is measured by the average living conditions of the society in question.

In 2021, Germany was ranked the 20th richest country in the world, measured by GDP per capita. This means that if you add up the value of all the goods and commodities produced in a country and divide the figure by the number of inhabitants, you get $50,700 (€52,200) per person per year in Germany on average. By comparison, that number is $136,700 in Luxembourg, the world’s richest country, and $270 in the poorest, Burundi.

Poverty – a question of definition
In Europe, although relatively few people live in absolute poverty, millions are affected by poverty relative to the national average. This means they live with severe material restrictions, and can only make ends meet by restricting their lifestyles in a way that the majority of the population takes for granted.

In the EU, a person is considered to be at risk of poverty or poor if their income is less than 60% of the median in their respective country. If it is less than 50%, it is considered extreme poverty.

For Germany, this means that single people who make less than €1,148 in net income a month are considered below the poverty line. For single parents with one child, that figure is €1,492, and for a household of two parents and two children, €2,410.

Social safety net does little for economic uplift
Germany considers itself to have a robust social safety net. Anyone who cannot find a job, or is unable to work, receives basic social security — a system still known colloquially as Hartz IV. This money is meant to cover basic living expenses such as rent, heating, and water, and well as health insurance.

Under this system, individuals and single parents have only €449 a month for food, clothing, household goods, personal hygiene products, and bills such as the internet, telephone, and electricity. For each child, a parent or a couple receives between €285 and €376, depending on age.

Hartz IV and other public welfare programs have been repeatedly criticized in Germany for covering only the barest of necessities. In response to this, the federal government has proposed raising the standard rate to €503 per month, beginning in 2023, and changing the name to Bürgergeld, or “citizens’ money.”

However, according to social scientist and poverty researcher Christoph Butterwege, even that will be far from enough. Butterwege told DW that at least €650 is necessary for people to live “with dignity” and, for example, to eat healthy food for every meal.

Under the current system, only €5 per person per day is earmarked for food, leaving poorer households to either buy less food or food of lesser quality.

Pensioners struggling
As inflation skyrockets in Germany, more and more people will find themselves unable to make ends meet without assistance. It is becoming increasingly difficult for many to afford bread, milk, fruit, and vegetables, which are over 12% more expensive than they were a year ago. In 2020, around 1.1 million people made use of food banks. That number is now closer to 2 million.

Poverty is also on the rise amongst the elderly. Even after decades of work, a monthly pension is often not enough to cover all expenses. Women in particular are feeling the strain, as they are more likely to have worked part-time and been paid less. According to a new study from the Bertelsmann Foundation, old-age poverty is expected to affect 20% of Germans by 2036.

People with pension payments below a certain threshold are allowed to claim government assistance. However, many shy away from doing so out of a reluctance to be seen as needy. Studies show that two-thirds of those entitled to claim benefits are ashamed to do so. Older people often prefer to try to work longer, or collect cans and bottles with a refundable deposit from rubbish bins, in order to put a few more euros in their wallets.

The working poor
In Germany, the number of people who cannot live on their income despite having a full-time job is also rising — even with a recent increase in the minimum wage. At €12 per hour, a single person with no children who works 40 hours a week would receive a net income of around €1,480 per month. Although this is nominally above the poverty line, the excess has been eaten up by inflation.

Students are also greatly affected by the situation, especially recipients of federal funding. These students receive a maximum of €934 a month, which includes money for housing and health insurance. This amount puts students well below the poverty line.

The German government plans to spend €200 billion to cushion the impact of high energy prices. However, this will be far from enough to absorb all the additional costs, and economists believe that inflation will remain high. Life in Germany will remain expensive for the foreseeable future, and this will be felt above all by those who have no financial buffers and little savings.

© DW