Status: 01/17/2022 12:26 p.m
16.4 trillion euros: This is how high the total private wealth in Germany is. But the absolute number says little about the distribution in society – and nothing about the comparison to other EU countries.
The young Italian Giuseppe Giorgio lives in the Irish capital Dublin. He has been working in the Opera confectionery on the outskirts of the city for six years. He left his native Italy for a better life in Ireland. Giorgio says: “I worked in Italy for many years but didn’t have a contract or social security. In Ireland I had a contract from day one and got a lot of support from the government. It’s much better here than in Italy.”
Ireland, a paradise for young people? Here people have more children than in most other European countries. Ireland is the second youngest country in the EU with many good jobs and few hurdles for starting a business. Maurizio Bruno, Giorgio’s boss, has been here since 2006: “I opened my shop in Ireland and it took me two days – for things that would have taken me months in Italy,” says Bruno. Today he supplies many cafés, which in turn supply the young people of the tech companies Apple, Facebook or Google.
What wealth do Europeans have?
Michael Grytz, WDR, Europamagazin, January 16, 2022
Germany is surpassed by many EU countries
Not so long ago, the country was still considered a crisis state in the EU. Ireland is in good shape today. But where does Germany rank in comparison? A look at the median wealth – i.e. the boundary between the wealthier half of society and the poorer half – is much more meaningful than, for example, total wealth.
When it comes to median net wealth, the Belgians are way up there. The Irish finish fifth in the EU, ahead of Giorgio’s old homeland of Italy, which is seventh. Germany is only in ninth place with 39,000 euros. One reason: Germans own little real estate. The figures come from a study by the European foundation Eurofound and were collected before the Corona crisis. Since then, however, real estate and shares have risen significantly in value in many places. Although their owners have become significantly richer, they represent only a minority overall.
The wealth situation of young people is even clearer: young Belgians are way up there, young Poles fifth, Ireland seventh, Italy eleventh. Germany comes second to last with 9600 euros. One reason: there are a particularly large number of young single households in Germany.
Too few incentives for wealth accumulation?
However, this explanation is not enough for wealth researcher Markus Grabka from the German Institute for Economic Research (DIW) in Berlin. Another reason is “that Germany has one of the largest low-wage sectors in a European comparison, so young adults cannot save any assets. Secondly, it is of course also the wealth accumulation policy in Germany, which has been neglected in the past. There were too few incentives, wealth was targeted build up,” says Grabka.
It is true that European comparisons are difficult due to a large number of different factors – cost of living, taxes, state subsidies, and sometimes a lack of data. Nevertheless, trends are discernible. Economic expert Grabka criticizes above all the great wealth inequality in Germany.
A basic inheritance as start-up capital
His suggestion: 20,000 euros basic inheritance for everyone on their 21st birthday. What would young people do with such seed capital? A survey gives very different answers. “Travel a lot and throw most of the money out the window,” says one young man, while another says: “I think I’d invest it.” A young woman says, “I would probably set it aside as equity for a property.”
Grabka qualifies: “Of course, they shouldn’t spend these purely for consumer purposes, but in a targeted manner, for example, for starting a course of study, for founding a company or for buying real estate, in order to fundamentally lay the foundations for building up assets for the entire youth at the beginning of life to improve.”
Apparently that’s easier in Ireland; the younger generation earns significantly more here than in Italy or Germany. Giorgio now wants to fulfill his dream of owning his own property; then his girlfriend should follow. Build a house, start a family, build up wealth: In Germany, even the first step is currently unthinkable for most young people.