Why not on the exporting old they are finally braked Thank you Trumps policy

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Why not on the exporting old they are finally braked Thank you Trumps policy

The Shame of Europe: Germany exploits its workers
German Economic News, Joachim Jahnke Published: 29.03.14, 00:25 hrs 171 comments
Germany clears its workers. The low wage sector is booming in hardly a European country, as in Germany. There can be no longer any question of a social market economy. The German workers pay the price for unrestrained globalization.

German wage developments show the clearest signs of the gradual decline in the social market economy. Special keywords are: wage quota, globalization, low wages, low wage traps, stockpiling.

Since the year 2000 the German average wage has been under special triple pressure. This was, firstly, the low wage sector sponsored by the Federal Government, primarily by refusing legal minimum wages and by facilitating temporary work.

Secondly, it was the dismantling of unemployment benefits under the Hartz laws, which encouraged more and more workers to accept every job.

Thirdly, it was the growing competition of low-wage countries, such as China, which was also promoted by the Federal Government through EU trade policy. As a result, the average wage was no longer able to adjust to price developments and certainly not to the development of productivity.

The share of wages reached its upper turning point at the annual national income in 1973 and then steadily declined to the provisional low point around 2007, although it recovered somewhat, but only because the world credit crisis also means that the income from entrepreneurship and wealth is quite high Strongly.

Productivity has risen by about 14 percent since 2000, and by as much as 85 percent since 1970. This was achieved by more work pressure on the one hand and by more and more industrial machines on the other hand.

According to Korea and Japan, Germany has the highest use of industrial robots per employee in international comparison and more than twice as much as in the USA. But even skilled workers have seen little in their payroll. Their gross monthly income rose by only 1.2 per cent, in a mere 7 percent.

The development of income from work is particularly unsocial when compared with company and property income and its development. Over the longer period since the year 2000, this inflated inflation has increased by an impressive 30.3 per cent, while the net wages and salaries per employee still oscillate at minus 0.3 per cent.

Finally, in the case of wages the increasingly strong differentiation is to be taken into account according to benefit groups, which leaves a large part of the employees with an even worse wage development. The salaries of the executive staff, especially with the company bosses, rose particularly sharply, and to a much lesser extent among the so-called "highly qualified specialists".

The Executive Boards of the 30 German DAX companies succeeded in raising their average income to 5.33 million euros by 2012, more than a hundred times the average salaries of their company employees.

For the other performance groups it looked much worse than with these two top groups. Here, another unsocial trench rages within the labor income. It is added to the main ditch between work allowances on the one hand and income from entrepreneurship and assets on the other.

In the international comparison of Western European countries, Germany had the worst wage growth in Western Europe (excluding Greece) between 2000 and 2013 and also compared to the USA. It is especially bad that Germany, together with Austria, has the highest wage discrimination in women in Western Europe.

The development of wages and many social benefits is closely linked to the development of consumer price inflation. In Germany, the trade unions primarily aim to compensate for the loss of purchasing power as a result of the expected inflation or inflation in the past.

The social pensions and pensions in the public sector are then oriented towards wage developments. Social benefits, such as Hartz-4, are directly linked to the consumer price inflation. Thus the calculation of the rate of inflation is crucial for the social distribution in Germany.

But this is the place where official policy under Schröder's red-green coalition in 2002 and 2003 has introduced two major innovations, both of which have a much lower rate of inflation than most people, especially at the lower end of the income scale , Is felt daily.

Until the end of 2002, the inflation rate in Germany was calculated separately for each household type. Thus, in addition to the price index for higher-income employees and employees, there was an index for middle-income workers and the price index for low-income retirees and welfare recipients.

Of course, the cost of living for the various types of household has been very different. While e.g. The price index for the higher income groups rose by 9.7 percentage points from 1995 to the end of 2002, low-paid earners had to bear a loss of purchasing power of 11.2 percentage points during the same period.

However, at the beginning of 2003 this breakdown was abolished in favor of a single consumer price index. This index is clearly below the price rise felt by many people.

s a result, the company has had to bear around 7 per cent more inflation than the official calculation .

Income development up to Q3 2013. Values ??at prices of 2000, net wages and salaries adjusted by consumer price, corporate income adjusted for GDP inflation. (Source: Destatis Graphic: Joachim Jahnke)
Income development up to Q3 2013. Values ??at prices of 2000, net wages and salaries adjusted by consumer price, corporate income adjusted for GDP inflation. (Source: Destatis Graphic: Joachim Jahnke)

Secondly, the so-called "hedonistic" method of price calculation was introduced in 2002, following the example of the US, where statistics have been manipulated for many years. The Federal Statistical Office takes into account the assumed increase in quality of products and sold this as a "quality adjustment" of the statistics.

Price developments will then be reduced if the Office accepts a quality increase. When e.g. The clock frequency has risen in the case of a new computer model, this is taken into account by the Federal Statistical Office as a price reduction. Similar fictitious price reductions in German statistics are given, e.g. For used cars, washing machines and televisions as well as for real estate.

So the presumed prices for many articles in the official price statistics are falling more and more, even though the sales prices have not reduced or even increased accordingly. Unlike in Germany, however, there is a much-respected private calculation of the real inflation rate in ShadowStats. The official statistics have since then since 2000 been about 3 percentage points below that calculated by ShadowStats.

This double statistical change was therefore part of the Schröder reforms. The trade unions, which want to show their successes in the bargaining negotiations, are, of course, more oriented on the artificially downward official inflation rate.

Overall, the global economic integration of Eastern Europe and the large emerging economies of China and India, which began around 2000, with a population of approximately 2.7 billion people, has changed the relationship between capital and labor in the world in principle and for very long periods.

For example, according to Harvard professor Richard Freeman, the number of workers in the global economy has doubled from 1.46 billion to 2.93 billion without capital spending on capital (as opposed to speculative capital). More than half of the increase in manpower and probably 80 per cent of the export-relevant labor force is attributable to China alone.

China has extremely low labor costs and, with the exploitation of its roughly 250 million migrant workers, is attracting more and more industrial production from the world, while at the same time putting pressure on wages in the old industrialized countries.

In China, there are only the state trade unions that are more committed to corporate management than workers' rights. The right to strike is not recognized, so that only wild strikes can take place. Until now, social security has been only rudimentary, despite all the plans, so that workers have to save money for all destinies.

A study by the Boston Consulting Group showed that, in the year 2000, the pay of a Chinese worker was still about 3 percent that of an American worker. This share has risen to 4 percent in 2005 and 9 percent in 2010.

In the Chinese city of Guangzhou, where a large export industry is located, the average monthly salary for Boston Consulting is between 405 and 473 US $ (equivalent to 355 euros), which includes the poorly paid migrant workers. The monthly minimum wage was 2012 for Shenzhen, one of the main export centers, at 240 US $ / 180 euro.

In particular, the German government has pushed China's rapid entry into the World Trade Organization, which has been designed for market economies, and has thus played a decisive role in opening up the markets of the old industrialized countries to export markets.

Similarly, the exploitation of low wages in countries such as Cambodia was made possible. There, in 2013, a textile worker employed for European fashion houses just earned 80 US $ / 58 euros a month.

For similar reasons, German industry and federal government were also interested in a rapid enlargement of the EU by the backward low-wage countries of Romania and Bulgaria. The labor costs in these countries in 2012 were just under 17 per cent, or nearly 14 per cent, of those in Germany.

Even before the end of the EU transitional regime, all barriers fell from 2014 onwards and work was free to take place, the inflow from both countries to Germany had risen sharply. After the visa-free entry was established in 2007, the number of arrivals arriving from both countries each year jumped from 45,000 to 523,000 in 2011.

Great Britain, which had joined the EU as well, especially for the rapid admission of both countries into the EU, now bemoans the immigration wave. In mid-2013, almost one-third more came from the UK than in the previous year, and for the next five years, 50,000 new arrivals are expected every year. Both the low production costs in these countries as well as the immigration have, of course, a pay-off effect on Germany as well as on other countries of the old EU.

The threat of employers' relocations or closures, made possible by the unrestrained globalization and now credible, has considerably weakened the trade unions. The largest German companies are still far more international than the average of their competitors abroad. In 2011, the DAX 30 companies had only 41.6 percent of their employees in Germany. In the commercial economy as a whole, the domestic share of sales since 2005 has fallen further to below 53 percent.

According to Eurostat last figures for 2010, Germany has the highest percentage of low-income in Western Europe. No other country is so divided in labor income and is deepening this crack ever further. Even the official institute for labor market and professional research states:

"Nearly a quarter of all German employees received a low wage in 2010, ie less than 2/3 of the average wage. On the basis of hourly wages, the lowest wage quotas for Germany, with a share of 24.1 of all employees, are the highest among the comparative countries, unless one ignores Lithuania. "

In the last year of 2011, the Lowschers earned less than 9,14 Euro gross per hour. These are more than eight million people. The group of low-wage workers in Germany is mainly women, whose low-wage share is one third, and part-time employees with a share of 40 per cent.

Since 1992 the proportion of part-time employment has also risen from just under 3 per cent to almost 11 per cent in men. Especially younger employees under 30 years of age, with a share of more than 36 per cent, are almost only able to earn a career as a low-income employer.

Employees who can be counted as the core area of ??the "first" labor market, ie over 30-year-old full-time men with domestic citizenship and permanent contracts, completed education or studies, are often among the low-paid earners; More than 6 percent of this group are already affected. Even among the full-time employees who are subject to social insurance, the proportion of low-income people has constantly increased over the last 20 years.

More and more people have to take a second job and continue to work after the end of their lives, mostly because they do not earn enough money with the first one. At the end of last year, 2.7 million people earned their income from a regular main job with a minijob. Thus, 9 per cent of all employees subject to social insurance were working in a second job. This share has more than doubled within ten years.

The state is openly subsidizing employers in Germany by raising wages below the Hartz-IV level. This results in the so-called "Aufstocker". The average hourly wage of the stockers is € 6.20

Even among the workers at risk of poverty - the working poor - Germany has one of the highest shares in Western Europe with almost 8. If Luxembourg and Switzerland are counted as special cases with a particularly high average wage as the basis for the calculation of the poverty threshold, the share of workers affected by poverty is higher in Germany, Greece, Spain and Italy than in the crisis countries.

The low-wage sector in Germany was always praised as a good starting position in the regular labor market. This march is generally disregarded statistically. As early as 2005, the figures of the federal government showed that it was a "low wage trap". In 2013 the Institute for Vocational and Labor Market Research (IAB) of the Federal Agency for Employment as a result of a new investigation of the 1.4 million Aufstocker reported:

"Minor and temporary employment, temporary work or low-paid jobs rarely pave the way for unskilled employment."

In 2011, only 17 percent of the previous year's stock-pickers were no longer dependent on Hartz-4 payments, 61 percent were further stock-ups and 22 percent had no job and only lived on Hartz-4. This is the sad truth. The average hourly wage of the Aufstocker reaches only about one third of the German hourly wage.

In the same way, the 87,000 long-term unemployed persons were to be reintegrated into the labor market by the program of civil service, which was set up by the Minister of Labor von Leyen. Only 20 to 25 per cent had landed in jobs subject to social insurance after leaving the civil service and up to 23 per cent had simply disappeared completely from the statistics.

Germany is one of the finest in the development of unit labor costs, which consist of labor costs and the development of productivity, which have fallen by 3.5 per cent since 2000, while they rose by 2.5 per cent, for example, in France.

In this way, Germany is pushing down the payroll force in the Eurozone more and more, contributing decisively to the Eurozone, which threatens the euro. France, in particular, is the most important German partner. Benoît Hamon, Minister for Social Economy and Solidarity, complained in September 2013:

"I want Germany to play fairly with an economic model that is not based on a competition based on the principle of who can pay the workers the lowest wages. I am tired of hearing exhortations for labor market reforms when some countries in Europe are approaching the EU employment direc - tives and underpinning their workers. I want Germany to have a social policy where competitiveness does not depend on 400 euro jobs. We allow workers to fight 7 euros against those who earn 10, 11 or 14 per hour. This can not work in the same territory. This is not possible. That will not do."

Joachim Jahnke, born in 1939, studied law and economics with postgraduate studies at the French Administrative College (ENA), joined the Cabinet Vice-President of the European Commission, the Federal Ministry of Economics and Technology last as Ministerialdirigent and Deputy Director of the Foreign Economic Department. European Bank for Reconstruction and Development in London, most recently until the end of 2002 as a member of the Executive Board and Deputy President. Since 2005 editor of the "Infoportal" with critical analyzes of economic and social development (critical of globalization). Author of 10 books on this subject, of which most recently "Euro - the impossible currency", "I say only China .." and "Once upon a time a social market economy". His societal criticism is based on sound and long-term insider experience.

His book on the end of the social market economy (275 pages with 176 graphical representations) can be ordered under the ISBN 9783735715401 in the book and mail-order business for 15.50 euros, at Amazon here.

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