IG Metall launches fair share campaign for fairer wealth distribution

In October 2000, the IG Metall metalworkers' union launched a "fair share" campaign, aimed at initiating a broad public debate on the distribution of wealth and poverty in Germany. For IG Metall, the principal goal of this debate should be the development of new concepts for an active distribution policy, guaranteeing all citizens "equal participation rights" through a fairer distribution of wealth.

On 6 October 2000, the IG Metall metalworkers' union launched a campaign () in favour of a fairer distribution of wealth. The overall aim of this campaign is to launch a broad public debate on the existing distribution of wealth and poverty in Germany. During the coming months, IG Metall plans to organise various activities, events and discussions at company, local, regional and national level which should develop new concepts for a reduction of social inequality in Germany. The metalworkers' union also called on organisations such as other trade unions, churches and welfare organisations to join its campaign. In order to provide some basic information on the distribution of wealth in Germany, IG Metall has produced a small pamphlet entitled Broschüre fairteilen – Initiative für soziale Gerechtigkeit, as well as a more detailed memorandum entitled Denk-Schrift fairteilen.

Wealth, poverty and income distribution in Germany

According to the IG Metall "fair share" memorandum, the existing data on social inequalities are in many respects inadequate. There is currently no regular and systematic monitoring of wealth distribution in Germany. There are, however, some indicators which give at least an overview of existing social inequalities, such as

  1. distribution of money assets and real estate;
  2. the number of citizens living in poverty; and
  3. income distribution.

Inequality in the distribution of money assets and real estate

In 1998, all German households together owned net money assets (Geldvermögen) of more than DEM 1.9 trillion, which is a clear indicator of the wealth in German society. An analysis of the distribution of this wealth, however, reveals enormous inequality (see table 1 below). At the top, 4.5% of households owned about 29.4% of the overall money assets, while at the bottom 26.6% of households owned only 0.6% of the overall money assets. The richest third of German households owned more than 80% of the overall money assets, while the remaining two-thirds of households owned only 20%.

Table 1. Distribution of net money assets in Germany, 1998
% of households Net money assets % of total net money assets
4.5% More than DEM 200,000 29.4%
29.5% DEM 50,000 to DEM 200,000 51.0%
39.4% DEM 10,000 to DEM 50,000 19.0%
26.6% Less than DEM 10,000 0.6%

Source: Federal Statistical Office 1999, Sample survey of income and expenditure 1998, quoted from IG Metall,"fairteilen – Initiative für soziale Gerechtigkeit", Frankfurt aM, 2000.

A similar inequality exists regarding the distribution of real estate, which in total was equivalent to a total market value of DEM 6.6 trillion in 1998 (see table 2). The top 5% of households owned more than 30% of total real estate market value, and the top 21.8% of households accounted for 71.5% of total real estate market value, while more than half of all households had no real estate at all.

Table 2. Distribution of real estate in Germany, 1998
% of households Real estate market value % of total real estate market value
5.0% More than DEM 700,000 30.6%
16.8% DEM 350,000 to DEM 700,000 40.9%
22.1% DEM 100,000 to DEM 350,000 27.6%
3.5% Less than DEM 100,000 0.9%
52.6% No real estate 0.0%

Source: Federal Statistical Office 1999, Sample survey of income and expenditure 1998, quoted from IG Metall,"fairteilen – Initiative für soziale Gerechtigkeit", Frankfurt aM, 2000.

Poverty in Germany

Although there is enormous wealth in Germany, a significant proportion of German citizens live in poverty. According to a recently published report on poverty in Germany, carried out on behalf of the German Federations of Trade Unions (Deutscher Gewerkschaftsbund, DGB) and the Confederation of German Welfare Organisations (Paritätischer Wohlfahrtsverband), every 11th citizen in Germany was considered as being poor in 1998. Using the international standard definition of poverty - which is an income of less than 50% of national average income – the study established that 8.7% of all west Germans and 10.7% of all east Germans live in poverty (see table 3 below).

Table 3. Poverty* in Germany, 1998
Group of people % living in poverty
All citizens 9.1%
Children 14.2%
Lone parents about 30%
Unemployed about 30%
Immigrants 18.6 %
All citizens in west Germany 8.7%
All citizens in east Germany 10.7%

* Poverty = income below 50% of the average income per person in 1998.

Source: Walter Hanesch et al,"Armut und Ungleichheit in Deutschland", 2000, forthcoming.

The risk of poverty is particularly high among certain groups and households, such as unemployed people, families with children, or immigrants. About 30% of all unemployed people and lone parents can be considered as being poor. Moreover, 14.2% of all children have to live in poverty. There is also a clearly above-average proportion of poverty among immigrants (18.6%). Finally, the percentage of people who live in poverty but have a job at the same time is only slightly below the average, which indicates that Germany has a significant number of so-called "working poor" (DE9702201F). Overall, the proportion of citizens living in poverty has been relatively stable since the mid-1980s. According to the study's findings, public social transfer payments (ie welfare benefits) have been able to limit a further increase in poverty, but have not been sufficient to eliminate the existing level.

Unequal income distribution

Significant inequalities can be found in both the functional and the personnel income distribution. The functional income distribution describes the distribution amongst different forms of income, namely wage earners' income and income from profits and property. Since pay increases clearly lagged behind overall economic development during the 1990s, Germany saw a significant redistribution from wage to profit income and a significant decline of the share of labour income in the national income from 75% in 1993 to 72.2% in 1998 (DE0002239N). According to figures issued by IG Metall, between 1991 and 1998 net wages and salaries grew by only about 18%, while income from profits and property grew by about 39% in the same period. This was the result not only of very moderate wage agreements but also of a tax policy which clearly favours profit rather than wage income.

As far as the personnel income distribution is concerned, there are various inequalities among different groups of employees or groups of households. Although there is no systematic evaluation of this issue, various indicators provided by the Federal Statistical Office (Statistisches Bundesamt) highlight current personnel income inequalities:

  • there are significant differences between incomes in west and east Germany. While in 1998 a household in west Germany had an average net monthly income of DEM 5,250, an average east German household had a net income of only DEM 3,960, which was 75% of the net income of west German households;
  • there are significant differences in the average payments of men and women. In 1999, a female employee in manufacturing earned on average only 77% of the pay received by her male colleagues. In east Germany, the pay system seems to be more equal, since women earn on average about 90% of men's earnings;
  • there is a significant difference between white- and blue-collar workers' incomes. In 1999, a blue-collar worker in manufacturing earned only about 66% of the pay of a white-collar worker; and
  • there are also important sectoral differences, including a significant low-wage sector which sometimes leads to the phenomenon of the "working poor" (see above).

Commentary

The principal aim of IG Metall's "fair share" campaign is to raise public consciousness about the need for a fairer distribution of wealth. In its "fair share" memorandum, the metalworkers' union sharply criticises the fact that the concept of social justice has become more and more reduced to the idea of "equal opportunity" (Chancengleichheit), even within new thinking in social-democratic circles. By contrast, IG Metall adheres to a more universal concept of social justice which is based on the idea of "equal participation rights" (gleiche Teilhaberechte). Since every citizen should have not only the opportunity but the right to participate in social life, society as a whole has the responsibility to guarantee these rights through an active "distribution policy" (Verteilungspolitik).

According to IG Metall, an active distribution policy aimed at a fairer distribution of wealth has to cover a broad range of policy fields. There is first of all the field of collective bargaining policy, where the unions should strengthen the concept of a solidaristic wage policy which aims at reduction of pay differentials between different groups of employees as well as an equal participation of employees in overall economic developments. In addition, the idea of an active distribution policy has to be integrated in fields such as tax, labour market, education, health, family and pensions policies, which all have the potential to overcome structural discrimination against certain groups and to reduce social inequalities. To sum up, IG Metall sees the development of new concepts for an active distribution policy in these various areas as a core challenge for the reform and modernisation of social and economic policy. (Thorsten Schulten, Institute for Economic and Social Research, (WSI))

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