The Empirical Evidence: New Poverty
1.6 million poor in the Federal Republic of Germany
In past years, especially since 1969, government inactivity has caused the political responsibility for income and income distribution in the Federal Republic of Germany to shift more and more to the collective bargaining parties [i.e., trade unions and employer organizations]. Those in the government have largely forgotten that an employee, if married and with children, cannot live entirely from his wages, that is, the wages he earns at his workplace based on his performance. He is dependent on social income, for example, family compensation in the form of child allowances, housing subsidies, education subsidies, benefits that within the scope of social income through secondary income redistribution are financed by the state using tax revenues and distributed in accordance with the goals of its social policy.
The state, to be more exact, the federal government and the parties that comprise it, has not been able to fulfill this task in the last few years. The child allowance has not been increased from 1965 to 1975, aside for one single exception (namely, DM 10 for the third child). Even the child allowance reform in 1975 did not change the fact that child allowances are among the very few social benefits yet to be linked progressively to wage and salary levels.
Because of the very low income limit for housing and education subsidies, fewer and fewer families benefit from their intended social relief function. The inflationary battle over the distribution of the national income was fought almost entirely between unions and employers, whereby it turned out that neither side was able to negotiate lasting advantages at the expense of the other. [ . . . ]
The unions were also unable to balance the deficits in state social income policy through higher standard wage increases. These attempts, such as those undertaken by the ÖTV [public transportation union], proved unsuitable and harmful as regards economic policy. Here, too, the burden was carried by the socially weaker segments of the population.