Germany after Merkel could be less tolerant
Rising inequality has contributed to fragmentation in society, fuelling right-wing populism
fter 18 years, Angela Merkel stepped down as chairwoman of the Christian Democratic Union, Germany’s main ruling party since 2005. And Annegret Kramp-Karrenbauer who follows Merkel will inherit a fractious party.
The stability (and even monotony) associated with German politics under Merkel is coming to an end. Her retirement marks a deepening crisis of the German political system that threatens not just the future of the country, but of the European Union.Explanations for this shake-up often begin and end with Merkel. Her handling of the so-called refugee crisis and her downbeat, aloof style alienated large chunks of the electorate. The gradual weakening of the centrist parties has in turn fed polarisation and the fragmentation of the electorate.
But Merkel, for all her power and influence, is just one politician. Germany’s new political crisis runs much deeper. It stems from an economic system that has resulted in stagnant wages and insecure jobs. The erosion of Germany’s postwar settlement — a strong welfare state, full-time employment, the opportunity to move up in the world — has created a populace open to messages and movements previously banished to the fringes.
As with its politics, on the surface Germany appears to be an economic success story. Its GDP has grown consistently for nearly a decade; unemployment is at its lowest since reunification in 1989. In amassing trade surpluses, Germany has enjoyed several advantages: an advanced manufacturing sector; the ability to get primary products and services from other members of the European Union; and being in the eurozone, which effectively gives the country a devalued currency, making its exports more attractive.
But the system has come at a cost. To maintain their competitive advantage in the global market, companies held down wages. Though for skilled workers in the export-oriented manufacturing sector pay remained stable, or even rose, less-skilled and low-wage workers suffered. This was made possible by decentralising collective bargaining in the 1990s, which greatly weakened the power of unions.
The other, more alarming reason underlying the country’s political crisis — connected to, but distinct from, the economy — is the erosion of the German social model in recent decades. Though never as socially inclusive as the Scandinavian countries, postwar Germany had a comprehensive welfare state and robust labour unions, ensuring that citizens from the lower strata could achieve a decent living standard.
Thirty years later, this society has vanished. Average real incomes declined for nearly 20 years beginning in 1993. Germany not only grew more unequal, but the standard of living for the lower strata stagnated or even fell. The lowest 40 per cent of households have faced annual net income losses for around 25 years now, while the kinds of jobs that promised long-term stability dwindled.
The number of precarious jobs like temp positions has exploded. At the height of postwar prosperity, almost 90 per cent of jobs offered permanent employment with protections. By 2014, the figure had fallen to 68.3 per cent. In other words, nearly one-third of all workers have insecure or short-term jobs. Moreover, a low-wage sector emerged employing millions of workers who can barely afford basic necessities and often need two jobs to get by.
The German middle-class is shrinking and no longer functions as a cohesive bloc. Though the upper-middle class still enjoys a high level of security, the lower middle contends with a very real risk of downward mobility. The relatively new phenomenon of a contracting — and internally divided — middle class has set off widespread anxiety.
Instead of a single elevator, Germany today now resembles a bank of escalators in a department store: one escalator has already taken some well-to-do customers to the upper floor, while for those below them, the direction of travel begins to reverse. The daily experience of many is characterised by constant running up a downward escalator. Even when people work hard and stick to the rules, they often make little progress.
These fears of social decline also accelerate xenophobia. There can be no doubt that a majority of Germans welcomed the new immigrants, just over two million in number, who arrived in 2015. But significant sections of the lower middle and the working class disapproved. When ascent no longer seems possible and collective social protest is almost nonexistent or ineffective, people tend to grow resentful. This has led to accumulated dissatisfaction with the old major parties, the Christian Democrats and Social Democrats.
West Germany’s three-party system of the postwar era is now a six-party system, making the formation of stable coalitions much more difficult, a condition exacerbated by the declining vote shares for the major parties. The rightpopulist Alternative for Germany, whose leading figures flirt with racist language and tolerate fascists among their ranks, has entered every state parliament. Formed in 2013, it is now one of the loudest voices in national politics, effectively the opposition.
The Greens too appear to be profiting from disenchantment with the main parties, attracting voters who prefer centrist politics but no longer trust the Social Democrats and Christian Democrats to stand up to the far right, or to improve living standards. Traditional loyalties no longer hold. As Merkel’s political career nears its end it seems clear that the economic and social regime over which she presided is breaking down. Rising inequality has contributed to fragmentation in German society, fueling right-wing populism and fundamentally reordering the country’s politics. What comes next is anyone’s guess.
Instead of a single elevator, Germany today now resembles a bank of escalators in a department store: one escalator has already taken some well-to-do customers to the upper floor