Gap between poor and wealthy widens

According to a Bertelsmann study, the economic power of German cities is very different. The pressure on poor communities is increasing.

Gap between poor and wealthy widens
dpa

Guetersloh (dpa) - Despite Germany's strong economy in the past few years, the gap between poor and wealthy municipalities in the country has widened, a study published Tuesday said. Large debt burdens and rising costs linked to the so-called Hartz-IV unemployment benefit scheme, as well as high budget deficits were putting weaker municipalities under pressure, the study of the Bertelsmann Foundation said. By contrast, those communities which were already in robust shape were benefiting strongly from the economic situation.

The study authors compared developments in Germany's ten wealthiest and ten poorest cities, using the share of Hartz-IV welfare recipients as the main indicator. The budget deficits of the poor municipalities came to almost one billion euros (1.12 billion dollars) between 2010 and 2017, whereas the wealthy cities showed a surplus of 3.6 billion euros.

Among the poorest areas were five cities in the industrial Ruhr region, including the city of Gelsenkirchen where almost one out of every four residents up to the age of 65 received Hartz-IV support. People over that age receive support from other sources that municipalities do not have to shoulder. In the other Ruhr cities of Essen, Herne, Duisburg and Dortmund, about one in five persons are Hartz-IV recipients.

By contrast, of the ten cities with the lowest Hartz-IV levels, eight are located in the southern state of Bavaria and two in the southwestern state of Baden-Wuerttemberg. Munich, the Bavarian capital, was in the best position, with only 4.5 per cent of the people requiring unemployment assistance.

The study's authors voiced their concern at the situation. "Alongside the economic strength of the cities, so too are the living conditions of their residents drifting ever further apart," said Bertelsmann expert Rene Geissler. If the economy were to go into decline, the situation threatens to become even worse. "A cooling off of the economy would immediately punch new holes in (cities') budgets and wipe out the past efforts," he said. 

The authors recommended that the federal government should boost its share of Hartz-IV support to more than 70 per cent, as against the current 50 per cent. In addition, the federal state should support weak municipalities more than before. "These cities cannot escape from their cash credits on their own," the authors said.