In an interview in today’s issue of the German business daily “Börsen-Zeitung”, Alexander Ludwig, SAFE Professor for Public Finance and Debt Management, explains that social inequality in Germany has increased due to, among other things, globalization and technological progress. The purchasing power of the lowest 20% of income earners has dramatically decreased during the past decades, he said.
According to Ludwig, for reducing inequality it is essential to offer better career opportunities for lower income groups. This could mainly be achieved by a good education policy which improves social mobility. At the same time, social security systems have to be adjusted in order to prevent poverty amongst the elderly in Germany, Ludwig said. Poverty risks would even be compounded due to the low interest rate policy of the ECB as it would lower the returns of private pension provisions. Also, lower income groups would usually not invest in stocks or real estate.
