Where work is no longer worthwhile in Germany

by Professor Dr Eberhard Hamer, Mittelstandsinstitut Niedersachsen e.V.

Over the past two weeks, the author has had several dramatic conversations about the living standards of the interlocutors. Dramatic news from this: At the lower edges of the middle and lower classes, the standard of living or even the existence can no longer be secured through personal contribution. There is a dramatic increase in the number of cases in which the net income from work slips below social benefits.
  This affects most in the lower income groups and in eastern Germany. Anyone who earns 1,200 to 1,300 euros net for hard work often lives at the subsistence level, especially as a single parent or a single earner with several children. The interviewees have calculated that after deducting rent, heating, electricity, water, insurance and car costs, they often have less than the Hartz IV rate (440 euros) available per month for consumption, while the “Hartz IV” also get an apartment, clothing, heating, etc. from the state and have no commuting costs.
  An East German driver complained:
  “I have 1,160 euros net a month for my family. To do this, I have to be on the highway eight hours a day, accept all the risks, be afraid of every police check, whether all the regulations have been observed, and being reproached by customers or the boss if I do not meet the deadlines due to traffic jams.”
  A gardener with a child complained: “With 1,300 euros net plus 450 euros from my wife’s earnings, we don’t have 500 euros a month after deducting fixed costs. And now the fuel prices for both of us are rising by more than 100 euros per month as well as the food prices, so that our livelihoods are getting smaller and smaller. We’ve been thinking for a long time whether it wouldn’t be more profitable if we both become ‘Harzers’, get the housing and fixed costs from the state, no longer have two car costs and prefer to earn something on the side.”
  A journeyman plumber who was looking for an apartment and wanted to get married soon was particularly vitriolic. He couldn’t find an apartment and should have furnished it on his own; but he was familiar with several cases in which immigrants were given not only an apartment but also the facility from the state, although they never worked here and probably never will.
  Rising inflation and a possible economic crisis will exacerbate such marginal group problems. Then there will not just be hundreds of thousands, but millions, whose existence and therefore standard of living is slipping and who will be dependent on social benefits. If you also take into account that more than half a million immigrants make a living in our social system every year, it is already certain that the current level of social benefits for individuals can no longer be guaranteed, even if due to inflation social security contributions rise.
  Paying even higher social contributions is already no longer possible, especially for the two million small businesses and self-employed people, puts them in the gap between personal and social contributions, too.
  In future, the state will have to pay social benefits not only to Germans, but also to an additional half a million additional immigrants every year, which puts public social finances in a double bind between falling social contributions and increasing social demands.
  Not only is the lower edge of the lower class threatened to crumble into the social system, many self-employed people now earn less than Hartz IV. The lockdown alone has destroyed more than half a million self-employed people who previously paid taxes and social security contributions and are now struggling with the subsistence level or have to drop into the social network. They weren’t just self-employed and small business owners. We estimate that around 10 to 20 % of medium-sized entrepreneurs in Germany are frustrated, would like to quit and are only active because they do not see any livelihood security to risk the break.
  At the weekend, a master electrician (with two employees) complained to the author that he “wanted to finish at the end of the year”. Reason: the bureaucracy of approvals and controls that is growing over his head, the widening gap between achievable prices and employee costs (three times the net wage) as well as the illness of an employee lasting several weeks, which leads to a cost burden that drain the already low profit of this year. The corona restrictions in customer traffic were now the last line for his decision.
  A master carpenter from East Germany with four employees gave up because he was no longer making a profit in the second year due to Corona and wood prices, so he and his employees “had to be hard-working from morning to evening for less than Hartz IV”. In contrast to his colleagues, he would not even have had a lack of orders and could now close his company without losses. He probably doesn’t need social assistance because he has a tenement house.
  The Mittelstandsinstitut Niedersachsen expects that of our five million entrepreneurs, not only 160,000 to 200,000 will emigrate from Germany because of the poor general public data, but another 100,000 will give up their independence, summed up 300,000 to 400,000 businesses would be closed this year and the following. The loss of around half a million entrepreneurs would lead to public revenue losses of 8 to 9 billion euros and, above all, hit the social security funds.
  The tendency towards a decreasing number of service providers, i.e., decreasing taxes and social security contributions, and vice versa, an increasing number of social benefit claimants with a further influx of social immigrants can only be financed in the short term, will force drastic corrections from the coming government and it will force to reduce the standard of living of large parts of the middle and lower classes.
  Our gender hippie generation has not only vilified our top performers as “disgusting white Germans”, but also set themselves up for a diverse life of pleasure and fun without performance and voted accordingly. However, they will soon be caught up by the economic reality, namely that social benefits can only be financed from productive performance and that ecological dream and social life is less and less affordable if the despised top performers stop performing.  •

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