Germany’s working poor put Merkel on the defensive

Two women have given Germany's wan election campaign an emotional punch, attacking chancellor Angela Merkel at her most vulnerable point: the rise of Germany's working and old-age poor.

Christel Pawelski, a 70-year-old retired nurse, broke down in tears before Angela Merkel and a three million primetime television audience as she told her reward for 40 years of shift work and a broken marriage.

“I have €695 a month, €356 to live on after fixed costs,” she said. “I am not socially weak, Frau Merkel, I am poor. Have you forgotten us down here?”

Sitting opposite her, the German leader wore an expression you rarely see in public: helpless.

Pawelski is not alone. For the last week, eight million readers of Germany's Bild tabloid have followed extracts from a new book by 33 year-old author Undine Zimmer.

Unpaid internships
She grew up on welfare and struggled for years as an adult on unpaid internships, going shopping with €3 in her wallet. Zimmer is not the usual underclass welfare recipient you see in the German media – she's fluent in three languages with a degree in PR and literature – making all the more poignant her portrait of a childhood without Sunday roasts, holidays or even an occasional kebab.

“For me my parents are the invisible heroes of this country who have to battle for their survival every day, who have kept their dignity despite often feeling humiliated,” she said.

For anyone who thinks Germany is an island of prosperity in the euro crisis, the public confessions of Pawelski and Zimmer are a rude awakening. For Merkel, promising voters "another four good years", they are electoral dynamite.

In the last decade the Germany we knew – a prosperous place of expensive cars and high-end kitchens – has been quietly rewired. While still a well-off country with record low employment of under 7 per cent, it is also a country where a growing army of working poor reach into public bins to reclaim bottles and collect the 10 cent deposit.

Germany is a place where anyone on the dole for more than a year drops down from two-thirds of their last salary to the welfare minimum of €382 plus housing and other benefits.

While welfare is tough, work is not always much better. Jobseekers who are taken on by companies are often handed a short-term work contract as well as directions to the nearest welfare office.

Over 1.3 million working Germans are so-called “Aufstocker”, earning so little they are entitled to top up their salaries to bring them up to the minimum level of the “Hartz” welfare system.

The average hourly wage of an “Aufstocker” is €6.20, some 60 per cent work less than 22 hours a week in precarious employment. These so-called mini-jobs, with a typical €400 monthly payslip, are free of tax, healthcare and social welfare contributions.

A recent study by the Institute for Employment Research (IAB) confirmed what anecdotal evidence already made clear: Germany’s labour market is splitting in two, between traditional, permanent employment and precarious, contract employment.

The IAB research said that one in four German workers is on a low income, classified as less than two-thirds of the median. In a study of 17 EU countries, only Lithuania fared worse.

“The Hartz system is being abused by companies as an open-ended wage subsidy that distort the price of fair-paying work,” wrote the Germany’s federation of trades union (DGB) in a recent report. It warns that Germany is facing a time bomb as millions of low-wage mini-job employees face old-age without any pension contributions.

Germany's three main opposition parties have launched an electoral attack on the government's record of social cohesion and have promised to introduce a statutory minimum wage if elected. The Social Democrats (SPD) and Greens want €8.50, the far-left Linke want €10.

"We have the biggest low-wage sector in Europe: bigger than Cyprus, bigger than Greece, " said Gregor Gysi, lead candidate for the Linke, in a televised election debate on Monday evening watched by 18 million people.

Rainer Brüderle, heading the campaign of the ruling Free Democrats (FDP), deflected the attack by saying that low-paid work was often a road back into the labour market.

His liberal FDP is vehemently opposed to state intervention in the labour market, arguing that employers and unions are best-placed to strike differentiated wage deals based on regional factors such as the cost of living.

But Green Party politician Jürgen Trittin countered that the free market was not working because employers were deliberately pitching their wages low to avail of "Aufstocker" top-up payments.

Last year Germany spent €4 billion in such welfare payments.

"Other countries like Britain and the Netherlands have minimum wages and in Germany we have hairdressers who cut hair for €4.50 an hour," he said.

Vowed to intervene
The chancellor, sensing danger, has vowed to intervene and set a minimum wage floor in sectors where no tariff agreements exist.

At the end of the television discussion she promised Christel Pawelski, if re-elected, to set up a commission to examine Germany’s new working poor. Insisting it was not a campaign stunt, she said: “I’m not mad, I’m not going to make a promise before millions of witnesses and not keep it.”