Germany: Country Pulse (April 2010)

Hot topics in April 2010 – Discounters emerging trustworthy, Life’s a gamble and Poverty everywhere?

Discounters emerging trustworthy (April 2010)

Despite a seemingly never-ending series of food scandals and revelations of chains like Lidl spying on their staff in recent years, food discounters are considered the most trustworthy industry by German consumers. Bottom of the list are banks, financial services and insurance companies. This is the finding of market research carried out for weekly paper, Welt am Sonntag, for its survey of the month.

1,067 Germans were interviewed and asked for their level of trust in discounters in eight industries: cars, banks, insurance, building, telecom, air and rail travel. On a scale from one (don’t trust them at all) to five (full confidence), discounters achieved a 3.3 rating, banks and insurances a meagre 2.1, air travel was rated 3.1 and car manufacturers 3.

About 17% of those polled expressed “nil confidence” in all financial institutions, while only 4% trust banks and 2% the insurance business. Another survey conducted by Cologne-based Institut für Handelsforschung (Institute for Retail Research) puts Aldi at the top of German food retailers, with a 72% vote of confidence. Edeka, the leading supermarket chain, comes in second, while Kaiser’s (a subsidiary of the Tengelmann Group) convinced only 42% of consumers.

Life’s a gamble (April 2010)

One in two Germans regularly takes a gamble, including the lottery, spending €28 million altogether in 2009. But the real winners are gaming parlours. The profits may be peanuts compared to some other businesses, but it’s a steady income. The more insecure the job situation, the more gaming arcades are littering Germany’s high streets. In 2007, gamers spent just over €4 billion here, rising to €4.5 billion in 2009 in the 6,000 locations across Germany. While people are gradually losing interest in football tables and fruit machines – their share was €155 million in 2007 going down to €100 million in 2009) – computer games are the real magnets. All this small-time gambling and gaming happens at the expense of casinos with their stricter legal barriers to game-a-holics. As a consequence, the gaming arcades are turning into a greenfield industry with massive multiple-concession “lounges”.

Poverty everywhere? (April 2010)

For young people launching themselves onto the German job market, the danger of falling into the poverty trap is growing. This is what a recent study by the German Institute for Economic Research (Deutsches Instituts für Wirtschaftsforschung, DIW) shows.

It is mainly the widespread use of recent graduates for a “Praktikum”, an unpaid or low-pay internship, that increases the risk of being poor. By 2008, about 14% of Germans, 11.5 million people, lived in poverty, one third up from ten years before. “Poverty mainly strikes young adults and households with children”, DIW expert Markus Grabka, one of the authors of the study, explains.

About a quarter of the 19- to 25-year-olds were living below the poverty line which is defined by the EU Commission as having less than 60% of average disposable income. 36% of families with more than four children and 22% of those with three children are at risk, while more than 40% of single parents are poor. Currently, there are heated discussions in Germany about the levels of transfer payments, the so-called Hartz-IV support and child benefit, but these only alleviate poverty, they don’t eradicate it.

The DIW experts recommend greater investment in education and better childcare facilities, to enable people to take care of themselves. They found that 90% of the long-term unemployed under 56 years of age were ready to take any job at a moment’s notice, while half of those over 56 were unwilling to take a new job, partly because they didn’t expect to get one.

More worryingly, one-sixth of the under 25-year-olds were “not interested” in a job offer, which seems to confirm the suspicions Germany’s vice-chancellor Westerwelle voiced recently. He became an object of anger and ridicule when he compared the jobless “scroungers” to decadent Romans before the fall of the Empire.