Lidia Conde | Germans are champion savers. In 2020, 330 billion euros, 100 billion more than the previous year. Despite the crisis, most of them are still in work. Unemployment has hardly increased. And the pandemic is making them save even more. Since 1995, the percentage of income saved in private households has ranged from 9-11%. That has changed with the virus. For the past year, families have been saving 16.3% of their income. Without going on holiday and without restaurants, people are opting to buy dogs (now up at 10 million, an increase of 15%), a sauna for the house, a swimming pool for the garden or good wines. Or a better sofa than the old one in order to be able to sit in front of the TV.
Property is an insurance against individual life risks such as unemployment, old age, illness, etc. In countries with strong social states, citizens feel more secure and invest less in their future. Social expenditure relative to GDP is almost 30% in Germany and 25% in Spain. On the other hand, German households have less net income to build up their own wealth because a lot of tax money is flowing in. According to the ECB, a key factor is the acquisition of real estate. And the fact more is bought in Spain than in Germany has to do with “institutional differences and individual preferences.” Germany is a country of renters, the Cologne-based economic institute IW also confirms.
In Germany having equity is more exclusive than in Spain, Italy or France. Net income (not the average but the more precise median value) amounts to 1,869 euros. Germans do not tend to invest in stocks or real estate. Less than half the population owns real estate. The reason for these differences compared to the southern countries is, according to the Wealth Report, the social state. “Generous public benefits in healthcare, education and retirement pensions lead people to invest less for their retirement.” They feel that their future is secure. Something that is not so true either. The same trend is registered in countries with a strong social state. “The more the welfare state, the less incentive to build up one’s own wealth,” according to the ECB. On the other hand, these welfare states provide acquired rights with regard to social systems and benefits such as good public education at schools and universities.
Germany is a wealthy country, but a large part of the population does not share in this wealth. Thirty percent of Germany’s wealth is in the hands of 1% of the population. They are the rich. On the other hand, just over 40% of Germans own less than $10,000 of wealth. And 5% have nothing, only debts. In Spain, “only” 19% are in the same precarious situation, with less than ten thousand euros. On the other side there are the wealthy: 1% of Spaniards and 2.4% of Germans have more than one million euros.
Inequality can also be analysed with data from the Global Wealth Report (October, 2019); while Germans have average wealth of $217,000 per person, if we look at the median (the wealth of the household that is right in the middle of the set of households, arranged from least to most), Germans have per head only $35,000. These are data from the 2019 Gini Index, which measures inequality. That imbalance leads to the fact that in Germany the Gini percentage amounts to 81.6%; while in Spain it is lower (less unequal), at 69.4%. In Spain, the average wealth per person is $207,531. The Spanish median is $95,360 per head, almost three times higher than in Germany.