80% of Germans consider themselves to be middle class, but in fact this social stratum in Germany has recently shrunk to 63%. And, although the reduction looks moderate, compared to other European countries, it is significant, writes the German magazine Der Spiegel. Meanwhile, the middle class in Germany carries one of the highest tax and contribution burdens in Europe.
The middle class in Germany has recently shrunk somewhat, writes the German magazine Der Spiegel. While 65% of the population belonged to the middle class in 2007, only 63% of the population will belong to it in 2019, according to a study published on Monday by the Munich-based Ifo Institute. The reason for this is that the boundaries of the middle class are narrowing due to both rising and falling social levels.
Although the shrinking middle class appears relatively moderate, it is “significant” compared to other European countries, explained Ifo researcher Florian Dorn, who prepared the study commissioned by the Hanns Seidel Foundation, which is close to the CSU. “Whereas in 2007 the German middle class still ranked 9th and was thus in the top third based on its size, in 2019 it only ranks 14th and is thus in the middle,” the expert revealed.
The authors based their calculations on the definition of the group of industrialized countries. According to the definition adopted in the Organization for Economic Cooperation and Development, a person belongs to the middle class if he or she has between 75 and 200% of the median income at his or her disposal. For single people, this corresponds to a net disposable income of between €17,475 and €46,600 for 2019. For couples without children, the range is between €26,212 and €69,900. Couples with two children are statistically middle class if their income is between €36,698 and €97,860.
There seems to be a gap between people’s self-perception and their actual middle class membership, Der Spiegel notes. This is due to the fact that more than 80% of Germans identify themselves as middle class. In fact, according to Ifo, only about 26.1 million households in Germany were statistically classified as middle class in 2019. This corresponds to 63 percentage points – that is, less than two-thirds of all households.
According to the study, Germany’s middle class carries one of the highest tax and contribution burdens in Europe. According to Andreas Peichl, head of the Ifo Center for Macroeconomics and Surveys, middle-income earners are sometimes left with “effectively only half of the next extra euro earned” after a pay rise. More work and higher productivity in the middle class pays off “only to a very limited extent in net terms.” This also applies to people on low incomes.
At first, the Ifo Institute could not assess how the situation might have changed in the years of the coronavirus. The federal government helped businesses and consumers through the recession by providing relief packages. During the pandemic and because of high inflation, many people with little or no savings were forced to limit their consumption, according to the German magazine Der Spiegel.
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