Memorandum on economic policy: the unemployment lie

The German economy is growing. But the low-wage sector remains a major problem, according to the Alternative Economic Policy Working Group.

Job boom or not? There are different views on that. Picture: ap

The financial crisis has been overcome, and the economy is growing. So everything is fine in Germany? No – at least that’s the opinion of the "Alternative Economic Policy Working Group," which presented this year’s memorandum in Berlin on Tuesday.

Because precarious employment, underemployment and unemployment prevail in Germany. "The massive precarization of the labor market initiated in the first half of the 2000s decade with the Hartz reforms continues to progress," said Bremen-based economist Rudolf Hickel. At almost 25 percent, the low-wage sector has a shockingly high share in Germany, he added.

Nevertheless, the German government has reason to be pleased: Since the economic recovery, the unemployment rate in Germany has fallen to its lowest level since 1995, currently at 6.8 percent. Moreover, just last week, Economics Minister Sigmar Gabriel (SPD) revised economic growth upward to 1.8 percent. Nevertheless, mass unemployment still prevails in Germany – even if this is no longer perceived as such in public, Hickel noted.

In 2014, 2.9 million people were registered as unemployed, according to the Federal Employment Agency. In contrast, the figure of 3.8 million underemployed is rarely discussed. In addition, one in four employees in the low-wage sector is in atypical employment. The number of long-term unemployed also rose to 1.01 million in 2014.

In view of these figures, the working group is calling for a new economic stimulus and investment program. The minimum wage must be increased, a wealth tax introduced and public investments made. Without tax increases for the super-rich, however, the necessary investment program cannot ultimately be financed. It is possible and necessary to massively increase government revenues with tax increases without generating corresponding demand losses from the private sector.

Thus, the alternative economists largely stick to their demands and the criticism of recent years. Gelsenkirchen economist Heinz Bontrup does not accept the accusation that they always demand the same thing year after year. "Some say we’re boring, but what about the unchanged neoliberal policies? They bore us, too."

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