The social democratic model exists mainly in Scandinavian countries (Norway, Sweden, Denmark) and is paid for mostly through taxes, which allows it to provide a high level of services for all. The liberal model of the United Kingdom provides a low level of benefits but also lower taxes; it relies on the private sector to aid the poor and encourages the unemployed to take whatever work is available. (This model is similar to the welfare system of the United States.) The corporatist model is used in most other countries in continental Europe, including France and Germany, with benefits coming through employers from individual contributions.
Schifferes emphasizes that the main difference among the three models and the countries in which they are implemented lies in their differing views of poverty and the poor. In the United Kingdom, as in the United States, the poor are considered "deserving" or "undeserving" of government aid depending on their lifestyle. In both the social democratic and corporatist models of welfare, poverty is viewed as either a result of inequality and injustice or a circumstance that can happen to nearly anyone. It is believed, therefore, that everyone deserves the opportunity to receive aid if necessary.
Poverty is a global issue: it exists everywhere to some degree, regardless of what welfare model a country uses. According to Schifferes, about one in five UK households and one in eight German households are poor. Rates of child poverty are even higher, affecting one in four children in Britain and as many as 35% of children in parts of the former East Germany. Even Scandinavian countries have not eradicated poverty entirely, but they do have the lowest poverty rates in the European Union and some of the lowest in the world, averaging around 5% overall and less than 5% for children.
The United Kingdom
By the middle to late 1990s the United Kingdom had one of the highest poverty rates in Europe and among developed countries. An estimated 4.6 million children—one out of every three—were poor. The overall poverty rate was double what it had been in the late 1970s. According to the United Nations Development Program's Human Development Report 2005, this was the result of government policies of the 1980s that caused income inequality to increase at a remarkable rate: the wealthiest 20% of British society saw their annual incomes increase ten times more than those of the poorest 20%. In Making a Difference. Tackling Poverty—A Progress Report (2006), the United Kingdom's Department for Work and Pensions (DPW) reported that the number of people receiving unemployment benefits had risen 50% between 1979 and 1997; in addition, the number of single parent and disability benefits claims had tripled.
In response, the government initiated a radical anti-poverty campaign in 1999, the main goal of which was to eradicate child poverty in Britain entirely by 2020. The results have been encouraging. As part of the BBC News Online's special series on poverty in the United Kingdom, "Breadline Britain: The Welfare State Sixty Years On," Evan Davis reported in his article "UK Poverty Line Is Moving Target" (March 9, 2006) that the program had successfully moved about 100,000 British children per year out of poverty. However, Britain's relative method of calculating its poverty line meant that if incomes increased across all levels of society the line would likewise rise, resulting in even more people living in relative poverty. The answer, and the challenge for the government, suggests Davis, lies in increasing the incomes of poor people at a faster rate than the incomes of the wealthier members of the society.
Twelve million people—about one in five—in Britain are poor, according to a joint report from the New Policy Institute and the Joseph Rowntree Foundation (Guy Palmer, Jane Carr, and Peter Kenway, Monitoring Poverty and Social Exclusion 2005, 2005). Britain's Department for Work and Pensions reports that families with children make up the greatest proportion of poor people in the United Kingdom (33%), and married couples without children represent 11%. Nineteen percent are unmarried people without children, while 18% are single people with children. The remaining number of those living in poverty in the United Kingdom are elderly people, 12% of whom are married and 7% of whom are single. The Luxembourg Income Study, an international cooperative research project that tracks income in thirty countries, reports that in all, 21.8% of British people live below 60% of median income (the typical European poverty measurement), which contrasts sharply with 14.1% in France, 13.1% in Germany, and 12.3% in Sweden.
Germany
Although Germany is one of the largest economies in the world and was extraordinarily successful in recovering from the economic, infrastructural, and social disasters wrought by World War II and the Nazi Party's control, the country fell into economic stagnation in the early 2000s. By early 2005 the unemployment rate was the highest it had been since the 1930s, according to BBC News Online ("German Jobless Rate at New Record," March 1, 2005). In December 2005 the unemployment rate had dropped, from 12.6% to 11.2%, before rising again to 12.2% in February 2006. The country's weak economy caused not only joblessness but, increasingly, outright poverty, especially among families with children.
In September 2005 Sabine Dobel reported on Expatica.com ("Going without in Wealthy Germany") that more and more Germans—the poor, the elderly, children, and the disabled—are suffering from malnutrition as a result of unemployment and cutbacks in government aid. Incidences of middle-class people removing food from dumpsters for their own consumption are on the rise in German cities, according to Dobel. Perhaps most alarming are reports that as many as 20% to 30% of people admitted to hospitals in Germany are malnourished, particularly sick children. In an ironic twist indicative of the urgency of the German situation, in March 2006 the Tawfiq Hospital in Malindi, Kenya—the twenty-sixth poorest country in the world—sent volunteer aid workers to Berlin to distribute coffee and tea to hungry Germans waiting in breadlines during Germany's unusually cold winter. The group Medical Direct Help in Africa was "shocked into action after discovering that even people in a rich country like Germany could lack sustenance" ("Kenya Offers Aid to Third World Germany," Deutsche Welle, March 6, 2006).
The Cologne Institute for the German Economy argued that the high unemployment rate had resulted in a drop in the German standard of living, but that relative unemployment was not really rising ("German Think Tank Says Joblessness behind Poverty," Deutsche Welle, March 7, 2006). In fact, the Institute maintained that the German method of measuring poverty—setting the poverty line at 60% or less of average monthly income—was the real problem, for much the same reason that British researchers criticize the United Kingdom's poverty line calculation: across-the-board income increases cause the poverty line to rise, meaning that more people fall below it. At the same time, with incomes in the highest economic category rising faster than those in the middle and low categories, income inequality has grown in Germany as it has in other developed countries.
As of March 2006, 16% of Germans lived below the nation's poverty line. Deutsche Welle reported in February 2006 ("Germany Serious about Minimum Wage," February 24, 2006) that two million poor Germans have full-time jobs. As of 2006 Germany did not have a minimum wage law—an issue that has stirred up a heated debate across the country. Other European Union countries have a minimum wage, but the idea instituting one in Germany has the nation split: many union leaders are calling for a high minimum wage, while others argue that this would result in the loss of more jobs.
The minimum wage issue is part of a larger controversy across the country regarding the government's proposed labor and social welfare reforms, known as Hartz IV. These reforms would increase the workweek from its traditional thirty-five hours with no pay increase. In addition, Germany's generous unemployment benefits would be strictly limited, and the power of labor unions would be curtailed. Proponents of the reforms argue that the long history of Germany's brand of capitalism—characterized by an extremely high level of social welfare programs—is over, and government guidance of economic markets must give way to an entirely free market system. Opponents of the reforms believe they will only increase the country's rapidly rising poverty rate.
Child poverty in Germany is an especially serious issue. Miles Corak, Michael Fertig, and Marcus Tamm reported in A Portrait of Child Poverty in Germany (Institute for the Study of Labor, March 2005) that the
Figure 6.2 Child poverty rates relative to the overall population and adult households without children, Germany, 1991–2001
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