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Employment fails to protect against poverty

December 5, 2019

A comparison of the world's most developed countries has found that rising employment is masking an increased risk of living below the poverty line. In Germany, the contrast is particularly stark between generations.

A piggy bank
Image: picture-alliance/W. Rothermel

Despite unemployment beginning to fall to pre-financial crisis levels in most EU and OECD countries, poverty is still on the rise, according to a new study by Germany's Bertelsmann Foundation published on Thursday.

After examining 41 of the world's most developed economies, the report found that poverty was either stagnating or increasing in 25 of them. The worst performers were the United States and Israel, and younger generations were at a greater risk of living below the poverty line than their elders.

"The upswing in the labor market could become a boomerang, it must be accompanied by policies to minimize the risk of poverty," said Bertelsmann Foundation board chairman Aart De Geus.

In Germany, from 2013 to 2018, employment rose by 3.3%, but the risk of falling below the poverty line exceeded that value at 4.3%, the foundation reported.

The study defined poverty as less than half the average middle-class income, meaning the poverty line in Germany is considered to be  €950 ($1,054) a month. This means that many people in Germany live below the poverty line despite having a job. National statistics are not kept on underemployed individuals. 

'German climate protection lags behind'

Unlike most of the other nations studied, Germany has one of the lowest youth unemployment rankings but one of the highest for older generations. The risk of poverty for the elderly was 9.7%.

The authors of the study warned that the relatively good unemployment numbers in Germany might be used to give politicians a free pass not to address the expanding wealth gap between generations. Specifically, future environmental and development challenges that will hit millennials and even younger groups particularly hard.

"The authors would like to lament Germany's lack of an exemplary role" in climate policy, they wrote. "Although Germany was able to further expand its use of renewable energy to a share of 14.2% last year, it is only 24th in the country comparison. The high greenhouse gas emissions, of around 11 tons per capita (30th place), also show that Germany's climate protection lags behind."

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Elizabeth Schumacher
Elizabeth Schumacher Elizabeth Schumacher reports on gender equity, immigration, poverty and education in Germany.
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