The Diakonie criticizes state relief according to the watering can principle and presents a crisis plan. Those in need should receive a supplement of 100 euros per month for a limited period of time.
Food prices rose more than 12 percent in June compared to the same month last year.
Turn off the heating or spend the money on groceries? Diakonie Deutschland is convinced that this scenario can become reality for many low-income people in Germany in winter. The welfare association therefore proposes an emergency plan. According to a study by the German Institute for Economic Research (DIW) commissioned by Diakonie, it is low-income households in particular that are disproportionately affected by the current price increases. In June, inflation in Germany was 7.6 percent. Food prices increased by 12.7 percent and energy prices by 38 percent compared to the same month last year.
The Diakonie has therefore brought into play a crisis surcharge of 100 euros net per month for the most needy people, limited to six months. These include, for example, people on welfare and people working in the low-wage sector. The crisis surcharge worked out specifically helps in a particularly dramatic situation, said Diakonie President Ulrich Lilie. In the case of single parents, for example, the new burdens could be reduced by two thirds. The total cost of the proposal is therefore 5.4 billion euros.
“The lowest-income 20 percent of society must raise two-thirds of their money to pay for basic needs such as housing, food and household energy,” said Lilie. In addition, this group has almost no reserves. For the richest 10 percent, spending on basic needs accounted for just 44 percent. “The burdens are therefore very unevenly distributed.” The DIW studies are based on calculations of data from the Income and Consumption Sample (EVS) and the Socio-Economic Panel (SOEP).
Although Lilie refers to the effect of the relief packages launched by the federal government, she emphasizes: “We have to get away from the watering can policy.” High earners also benefited from the tax-financed relief. Together with DIW President Marcel Fratzscher, Lilie called for the burden of the crisis to be shared across all shoulders. Anything else would be dangerous for social peace in Germany, says Lilie.
A third of Germans have almost no reserves
Fratzscher said that in addition to short-term instruments, there must also be structural reforms. This is the only way the state can react more quickly to crisis situations. He described the much-criticized tank discount as “the original sin of all measures”. This is completely ineffective and ecologically nonsensical.
Germany has one of the largest low-wage sectors within the OECD. According to the current definition, also used by the federal government, this includes anyone who earns less than two-thirds of the average hourly wage – currently 11.50 euros. According to the OECD, around 20 percent of all employees work in the low-wage sector. It is particularly difficult for this group to build up reserves for emergencies. According to the Federal Statistical Office, a third of all Germans have almost no reserves.
Even if emergency programs cushion the acute burden, Lilie and Fratzscher advocate long-term measures. Lilie sees the reintroduction of an income-related solidarity surcharge as an instrument for reducing the costs of the crisis.