existential crisis

In times of fading optimism

  • Why it matters

    Why it matters

    Surveys show that though the average German feels content, many worry about big issues and whether or not these worries are rational, they are likely to impact the country’s upcoming federal elections in September.

  • Facts

    Facts

    • Three-quarters of Germans say they are content with their lives, yet two-thirds of them also worry about the future.
    • The number of low income and part time workers is rising in Germany as are numbers of Germans taking two jobs to make ends meet.
    • An aging population, low interest rates and rising inflation are all causes for concern for German savers, many of whom will find it hard to avoid old age poverty.
  • Audio

    Audio

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Experten: Armut macht Kinder krank
Confidence in the future: A child on a swing near apartments in Cologne. Source: DPA

On a lonely hillside in the Thuringian Forest, Robert Kress, 34, steers his car past gray, concrete blocks that look as if a temperamental giant had carelessly thrown them there.

In fact, the blocks were what was left of Communist-style, prefabricated houses that have stood empty for years. Where kindergartens, a drugstore, a savings bank and a supermarket once stood, now there are only piles of snow and an icy wind.

“Here!” Mr. Kress shouted, making a sweeping gesture with his outstretched arm, as if he were casting an invisible fishing rod. “This is where the ‘cannibal’ once stood.” Outside his car window, there were only empty fields. He drives on, through the area where he spent his childhood. A full 30 seconds later he says, “and this is where it ended. Huge, right?”

The “cannibal” is what Mr. Kress calls the towering residential buildings that the eastern German city of Suhl once erected to house a growing number of workers. That was back when the city was home to a number of manufacturing plants for the automobile and firearms industries.

After the fall of Communism, the companies that once employed so many of Suhl’s residents went bankrupt and people began to leave. That exodus continues to this day. In 1995 there were 50,000 left the city; in 2015, there is a population of 36,000.

A third of Germans perceive their country as on the road to a major crisis. Only 46 percent of Germans look forward to the future.

Nowhere else in Germany has the median age risen so quickly as in Suhl. Demographic prognoses suggest that it will continue to rise, as the population dwindles, and as young people decide to move to other, more prosperous parts of Germany. As for the “cannibal” of Mr. Kress’ youth, it was torn down years ago.

During the last state elections in the German state of Thuringia, a whopping 50 percent of votes in Suhl were cast for either the far-left Left Party, the far-right Alternative for Germany party, or the neo-Nazi NPD party. All are parties that are fundamentally opposed to the liberal democratic and market-oriented system of government that has defined post-war Germany since 1945.

And those were only the people who bothered to vote. Half of all eligible voters avoided the ballot boxes altogether that day. A reasonable conclusion would, therefore, be that more than half of people living in Suhl would like to reject prevailing conditions in Germany.

It’s places like Suhl that make Germany suddenly seem a lot more like other countries in which the dissatisfaction of the middle class has already rattled the political establishment and brought populist politicians to the fore. In the Netherlands, for instance, Geert Wilders’ far-right Party for Freedom could emerge as the strongest faction in parliamentary elections on March 15. In France, moderate candidates like Emmanuel Macron or François Fillon will somehow have to prevent the xenophobic populist Marine Le Pen and her right-wing National Front party from surging to power on May 7. There was also Brexit, made possible by the votes of older, less educated and lower-income citizens who wanted to stick it to bureaucrats in London and Brussels.

Of course, the most deafening outcry so far came from the United States when Donald Trump, backed by legions of working-class voters in rural parts of the country, was unexpectedly given a mandate to rule. His election showed the world just how powerful an angry group of voters can be.

From 1980 to 2012, the average adjusted income of a working-class American has declined by $1.30 to $15.61 an hour. One-fifth of all Americans, or around 46 million people, whether they’re showing up to work in a tie or not, rely on food stamps.

That’s the reality in the U.S. In Great Britain, the polarization between the upper and lower classes has intensified. At the same time, France is struggling with weak growth, high youth unemployment and a welfare state that is increasingly failing in its assurances of providing “égalité et fraternité” – equality and fraternity – to all.

Anywhere the middle class has begun to see prosperity and comfort seep away, disruptions in the political system have been quick to follow. When what one author refers to as “the sleeping giant” – that is, the middle class – awakes, established politicians are the first to go. They are often replaced with representatives from the left, but more often from the far right. All of a sudden, the basic constants of a common, Western society – the North Atlantic defense community, European integration, open borders for goods and labor – seem extremely fragile. All of those hard-won luxuries are questioned by the Trumps and Le Pens of the world.

But what about Germany? Will Europe’s wealthiest country also succumb to middle class dissatisfaction and face the danger of the populist tsunami?

One thing is certain: Dissatisfaction is simmering all around Germany, not just in troubled regions like Suhl. According to figures from pollsters at the Allensbach Institute, a third of Germans perceive their country as on the road to a major crisis. Only 46 percent of Germans look forward to the future.

Neo-Nazis March In Berlin
Rise of populism: German neo-Nazis and other right-wing activists march in Berlin in 2016 to protest Angela Merkel's refugee policy. Source: Getty

“In light of our economic development, a level of optimism of around 60 percent would be normal,” said Renate Köcher, who heads the Allensbach Institute, a pollster. Nearly half of all Germans are apparently pleased about the regional successes of the far-right Alternative for Germany, or AfD, party, because they see it as a protest against the political establishment.

Also of interest: The sudden, recent surge in the popularity of the new, surprise candidate for the job of German chancellor, presented by the Social Democrats. The sudden popularity of that candidate, Martin Schulz, just shows how desperate people are for change; so far Mr. Schulz, who was based in Brussels until recently, has only spoken vaguely about social justice yet, in terms of voters, he’s already catching up with the current chancellor, Angela Merkel, who’s served steadfastly for years.

Obviously something Germany has in common with the U.S. are the hopes its citizens place in the coming of a political Messiah. Sure, more people than ever before have jobs in Germany, but these jobs are often based on limited contracts, you need two of them to make ends meet. Low interest rates and dwindling funds for retirees are fueling the risk of poverty as people get older. Add to that people’s fears of new waves of refugees, more crime and a loss of control by the German government and suddenly, some no longer feel safe.

To be fair though, even in places where the situation may seem dire – such as Suhl – conditions in Germany aren’t nearly as bad as they are in the U.S. Local man, Mr. Kress, says he’s relatively satisfied. He works as a bicycle lacquerer, praises the peace and quiet and the affordable rents and jokes about how this is the only place in the world a McDonald’s hamburger joint had to close due to lack of custom. “If you work in a sensible job here, you are secure,” he adds; Suhl has an unemployment rate of only 5.4 percent.

So there is low unemployment. But at what price? In the former East German states, which are typically more economically depressed than the states that were once West Germany, around 41 percent of full-time workers are laboring in the low-wage sector. In all of Germany, the number is 21 percent.

According to the Organization for Economic Co-operation and Development, or OECD, a low wage is defined as being less than two-thirds of the average worker’s gross pay. In 2014, that level was €10 per hour or €1,993 a month.

From 2000 until 2010, real wages in Germany stagnated or sank. It wasn’t until recently that people’s wages began to climb again. Much of that was attributable to low inflation. In 2015, the real wage index grew by 2.4 percent; in 2016, it grew by 1.8 percent.

One thing that has grown considerably over the years is the number of people who have more than one job – from 2 percent of employees back in 1991 to 5 percent now.

The share of temporary workers has fluctuated between just under 8 percent and a solid 9 percent for years. Fears of job losses have seeped into the psyches of the middle class. There was a time when unemployment benefits were paid out for three years after someone lost their job but since Germany’s welfare reforms that has been cut down to one year. After that, the most a jobless person can hope for is €409 a month.

German inequality is writ large in the country’s education system, where your chance of getting a decent education depends very much on your country of origin.

But the German state does more than most other countries to mitigate differences in income. It’s true that gross wages and assets are relatively unequally distributed in Germany. There are many people who earn a little, and a few who earn a lot. Indeed, there are only a few industrialized countries in which the rich-poor disparity is greater than it is in Germany.

But if one looks at net income, it’s an entirely different story. Once the government performs some income redistribution through taxes and levies, the inequality drops significantly. Germany suddenly appears much more egalitarian than the average country in the OECD.

Even the often maligned phenomenon of old age poverty isn’t as acute a problem in Germany and is a fate most often affecting people with immigrant backgrounds. While the risk of poverty for elderly people without an immigrant background stands below the average at 11 percent, for German citizens with an immigrant background, that number quickly rises to 29.4 percent. For migrants without a German passport, it can be as high as 40.2 percent. Similar figures apply to the self-employed or freelancers after retirement.

In coming decades, as the Baby Boomer generation retires, it will become more difficult even for average wage earners to avoid old age poverty. Funds for retirement benefits are already drying up. Low interest rates coupled with rising inflation are making it necessary to put higher amounts of money aside in order to save for the twilight years.

Where German inequality is stark is in the country’s education system. Hardly anywhere else in the western world does your chance of getting a decent education depend so much on your country of origin, or that of your parents. According to the Bertelsmann Foundation, a non-profit and think tank, while there are fewer adolescents quitting school early, and more young people are achieving university entrance qualifications, there is still rampant inequality in schools.

“The level of educational success still strongly depends on social origin,” said Nicole Hollenbach-Biele, a senior expert at Bertelsmann.

Ninth-graders who come from a higher social strata are two years ahead of their less privileged classmates on average, when it comes to mathematics, for instance, she said.

Social advancement may be difficult in Germany but the country is ahead of countries like the U.S. and Great Britain when it comes to class divisions.

This is reflected in the fact that 75 percent of Germans say they are content with their lives. On the surface, anxiety about the future and contentment with one’s own life would seem contradictory. But in fact, German fears about the future, so often expressed in polls and surveys, aren’t always in reference to their own lives but to their society as a whole. While three-quarters of Germans may be happy, they worry that their country and society is in trouble.

Some of that anxiety stems from incidents like that on New Year’s Eve in Cologne in 2015. That night many women celebrating around the main train station were groped and assaulted by a gang of men with immigrant origins.

“That New Year’s Eve in Cologne had such a striking effect because people suddenly had the feeling that they were no longer the master of their own house,” said Ms. Köcher of the Allensbach Institute.

The next time people gathered in Cologne to ring in the new year, the police had the situation under control. But it doesn’t take a wild night at the train station to make you anxious. A perfectly normal evening there can have the same effect.

In the evening, after all the commuters have come and gone, there is a change in the station. Once the crowds disperse, homeless people seeking shelter in the station are far more obvious. Some sit on benches, others sleep or talk to themselves loudly.

A man working for the station’s security detail explains that during the winter months, homeless people may stay in certain parts of the station. The security staffers keep an eye on them, trying to ensure there is no trouble.

A slender, middle-aged man stood watching the scene on a recent evening. He identified himself as a train conductor and said that every evening, he watched as homeless people dug through garbage cans to find something to eat. He worried that, under the influence of alcohol or drugs, the homeless people could become violent.

The situation in Cologne is not unique. Many of the verbal assaults and petty crimes that take place there might just as well be taking place in other German cities. Germans believe the crimes go unreported and they don’t find their way into official statistics; they worry that the police won’t be able to protect them.

In western Germany, increased anxiety has to do with the rising number of refugees – even though statistics indicate that this fear is not justified. The inverse is also true: There are some places in eastern Germany where having a “foreign appearance” has become a liability. The most extreme example is Jamel, a town with a well-documented neo-Nazi scene. There, it’s impossible to live peacefully if you’re not an adherent of the far-right.

In some rural areas, “many people feel abandoned by their politicians,” said Wolfram Axthelm from the German Wind Energy Association, who frequently visits town hall-style meetings about planned wind farm projects. “People are growing more frustrated by the fact that their state representatives hardly ever make an appearance – not to mention their federal representatives in the Bundestag.”

As in other countries, Germans are also looking askance at what they see as political hypocrisy: For example, recent news reports showed that German politician, Christine Hohmann-Dennhardt, a member of the Social Democratic party, earned around €12 million for a stint on the board of Volkswagen; she was the board member for integrity and legal affairs.

But whether a critical mass of Germans will ultimately drift to the fringes of the political spectrum in protest against the status quo remains to be seen. Whether places like Suhl will manage to become attractive destinations for younger people again is also uncertain. Robert Kress is going to do everything he can to stay in Suhl even though his girlfriend would rather move.

There are clearly many reasons for Germans’ fear, foreboding and anger, some of which aren’t rational – although it wasn’t the rational that put Donald Trump in power.

 

This story was prepared by Hans Eschbach, Anna Gauto, Martin Greive, Christian Rickens, Donata Riedel, Frank Specht, Peter Thelen and Simone Wermelskirchen. To contact the authors: eschbach@handelsblatt.com, greive@handelsblatt.com

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