Merkel cabinet accused of concealing growing German poverty gap

BERLIN Wed Mar 6, 2013 5:17pm GMT

Germany's Chancellor Angela Merkel reacts during a news conference at the Visegrad Group meeting in Warsaw March 6, 2013. REUTERS/Kacper Pempel

Germany's Chancellor Angela Merkel reacts during a news conference at the Visegrad Group meeting in Warsaw March 6, 2013.

Credit: Reuters/Kacper Pempel

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BERLIN (Reuters) - Chancellor Angela Merkel's cabinet claimed credit on Wednesday for keeping the gap between Germany's rich and poor relatively narrow, but the opposition accused it of covering up widening social divisions in an election year.

Unveiling a 550-page report on poverty delayed by months of disagreement within the government, the labour minister said the overall picture in Europe's largest economy was good thanks to low unemployment levels and wage increases.

The report said that, at 15.8 percent, the risk of poverty in Germany was under the EU average of 16.9 percent. Income inequality was lower than the OECD average, it said, on a par with France and the Netherlands but behind Scandinavian states.

"By international standards we are doing well. We are among the countries who compensate most for inequalities through tax and social transfers," Labour Minister Ursula von der Leyen told reporters.

The report, which covers the period 2008-2011, also said that income inequality had remained about stable since 2005, the year Merkel took office.

However, that statement replaced an earlier version of the report which included a reference to a decrease in the lowest wages in the last decade which pointed to a growing gap.

Von der Leyen said Germany's jobless rate of 6.8 percent, its lowest level since reunification in 1990, was the main ingredient for success.

"Work is the best tool with which to fight poverty," von der Leyen said, adding that the government had to do more to help women to work full-time and to reform pensions, although that was unlikely to happen before the September 22 national vote.

Merkel, riding high in opinion polls, is keen to reassure voters - especially those in the political centre - that her policies are working and that the euro zone debt crisis and bailouts for states such as Greece have not hurt too much.

Von der Leyen said, however, that the effects of the debt crisis would only be seen in future reports.

"CLUMSY FABRICATION"

Opposition lawmakers vilified the report, saying it painted a false picture, especially after Economy Minister Philipp Roesler, head of Merkel's liberal Free Democrat (FDP) coalition partners, insisted on changes to give a rosier picture.

"The report is a clumsy fabrication," said Social Democrat (SPD) General Secretary Andrea Nahles. "The government can falsify its own report but not the reality."

The SPD, campaigning for a national minimum wage, pointed to passages widely reported by German media as having been watered down, including sections on the unfair distribution of private assets and growing inequality.

The report did say the richest 10 percent of households possess more than 53 percent of the overall net assets while the lower half of households owns just 1 percent.

Von der Leyen said the row with Roesler over the wording had detracted from a wider debate on its content.

DGB union association board member Annelie Buntenbach said although unemployment had fallen, Germans were seeing greater poverty and a growing gap between rich and poor.

"After the disreputable drama over the report, it cannot be expected that the government will draw the right conclusions and improve fairness," she said. Her comments were echoed by leaders of charities for children and poor people.

Asked on German radio about accusations that he had tried to disguise reality, Roesler said it was "election bluster".

"Things are better than ever in Germany. We are the growth engine for Europe and the world is looking at us," he said.

(Reporting by Madeline Chambers, editing by Gareth Jones and John Stonestreet)

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