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Education against poverty

Nearly 13 million people in Germany are considered poor. And this while the economy is booming and the unemployment rate decreases from year to year. Is information technology the cause of the new poverty, like a scientist prophesied in one of the first editions of "unizeit"?

Graphic: poverty rate
© iStock/Ralf Geithe, Graphic: pur.pur

Source: Poverty report of the Paritätischer Wohlfahrtsverband 2018.

At the end of the 1990s, scientists warned that the new information technologies of computers and the Internet could become drivers of poverty and create unemployment. For instance, higher requirements in the office would exclude parts of the population from jobs, and machines would replace unskilled workers. Lack of education is therefore a cause of poverty.

This has only become partially true. A study by the Bonn-based Institute of Labor Economics (IZA) has revealed that machines have cost around 1.6 million jobs throughout Europe over the past decade. However, at the same time approximately three million new jobs arose through cheaper production of goods, and the resulting increased consumption. Job opportunities shifted from the production line to the service sector: today, three out of four Germans work in these industries. In this sense, computers are not job-killers. This is also reflected in the continuous decline in the unemployment rate in Germany since 2005. It currently stands at 5.1 percent of the potentially employable population, and is even lower in Schleswig-Holstein (5 percent).

Nevertheless, almost 16 percent of the population (14.6 percent in Schleswig-Holstein) are considered poor. Poverty in Germany means having a disposable income of less than 60 percent of the average net income. This is 969 Euros for a single person, almost 1,400 Euros for a couple, and just over 1,200 Euros for a single parent with one child. "In this country we talk about relative poverty, which is more of an inequality measure," explains Professor Rainer Thiele, head of the research area Poverty Reduction, Equity, and Development at the Kiel Institute for the World Economy (IfW). According to the World Bank poverty threshold, absolute poverty begins at a daily income of two dollars, so around $60 (54 Euros) or less per month, and is more relevant for developing countries.

There is no clear connection between economic growth and the development of relative poverty in the rich countries of the global north. "Economic growth does not automatically lead to poverty reduction if the income distribution is not changed," says Rainer Thiele. At a steady growth rate for all groups of the population, 60 percent of average income also remains equivalent. Although overall social prosperity is increasing, for example also through globalisation, some parts of the population will always find it more difficult, because participation in this prosperity requires one thing above all: more education.

In this respect, the predictions of 20 years ago are true. The so-called Poverty Report of the Deutscher Paritätischer Wohlfahrtsverband (German Parity Welfare Association) from 2017 classifies 31.5 percent of low-qualified workers as a risk group, and therefore considered threatened by poverty. According to statistics published by the Federal Employment Agency (BA), more than one in five unemployed persons in Schleswig-Holstein has not finished school, and 65 percent have no vocational qualification. The educational plight also has a devastating impact on children. Around 21 percent of them live in poverty, either permanently or on a recurring basis, as reported by the Bertelsmann Stiftung.

"Social mobility across generations is very low," according to Thiele. This means that if there is no money for education in the family, the children struggle to advance economically and socially. This particularly affects children of single parents. The Poverty Report classifies 43.8 percent of them as a risk group. The reasons for this lie in a complicated mix of lack of childcare, insufficient social benefits, part-time jobs and low-paid work. The low minimum wage, and one of the largest low-wage sectors in Europe - eight million people in Germany work in this sector - result in 10 percent of workers living at or below the poverty threshold, despite being employed.

In this country, unemployed persons in particular are affected by poverty or threatened by it (59 percent). The reason for this is primarily the form of social security provided in the event of unemployment, i.e. Hartz IV. Migration or a migrant background, and/or discrimination and exclusion on the basis of origin and skin colour, starting in school, also play a major role, says Rainer Thiele. They are also listed in the Poverty Report as significant poverty factors (27.7 percent).

The high cost of living in Germany, such as the exploding rent prices in big cities, will also play a major role in increasing the poverty rate in the coming years. Thiele predicts that poverty in old age will soon be another big factor. This is indicated by the reduction in the pension level to 44.6 percent by 2029, and an increasingly overburdened social insurance system. "Those who wish to effectively combat relative poverty in Germany must transform the education system and develop new ideas for the welfare state," summarises Professor Thiele.

Author: Denis Schimmelpfennig

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