According to a study by the ifo Institute, the middle class in Germany has shrunk. In a European comparison, it bears the highest tax burden. Middle-income people are “on the edge of their resilience”.
According to a study, the middle class in Germany has shrunk slightly in recent years. While 65 percent of the population belonged to the middle class in 2007, it was only 63 percent in 2019, according to a dated Research published by the Munich ifo Institutewhich the institute created on behalf of the Hanns Seidel Foundation.
The reason is that the edges of the center have shrunk both through social decline and through social advancement. Ifo researcher Florian Dorn explained that the moderate-appearing decline is actually considerable in a European comparison. While Germany’s middle class was still ninth in 2007 and thus in the top third due to its size, in 2019 it was only 14th and thus in the middle,” says Dorn.
“In the years after the financial and economic crisis, Germany was unable to keep up with the growth in the middle class in many other European countries and was overtaken by Belgium, Finland, France, Poland and Greece, for example.”
“More work only pays off to a very limited extent”
In a European comparison, the middle class in Germany bears the highest tax burden. “With a marginal burden of around 50 percent of gross income in the German tax and transfer system, people with middle incomes effectively only have half of the next euro they earn.
“More work and better performance therefore only pay off to a very limited extent in the middle class,” said Andreas Peichl, head of the ifo Center for Macroeconomics and Surveys. The ifo Institute sees people with middle incomes in Germany “on the edge of their resilience”. According to the study, this could jeopardize the future and sustainable performance of the social market economy in Germany.
80 percent of Germans consider themselves to be in the middle class
Over 80 percent of Germans classified themselves as middle class. In fact, in 2019, around 26.1 million households in Germany statistically belonged to the middle class, which corresponds to less than two thirds of all households.
The authors used the OECD definition for the calculations. Accordingly, anyone who has between 75 and 200 percent of the median income belongs to the middle class. For single people in 2019, this corresponded to a disposable net income of between EUR 17,475 and EUR 46,600 per year.
For childless couples, the range was between EUR 26,212 and EUR 69,900. Statistically, couples with two children belong to the middle class if they have an annual income of between EUR 36,698 and EUR 97,860.