02:06 GMT +326 September 2018
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    Neonationalism Takes Roots Amid Rising Poverty in Germany

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    Germany's current economic model is inefficient. It leads to the growth of nationalism, because the unstable financial situation encourages people to seek answers in ideology, German economic expert and chief economist at UNCTAD Heiner Flassbeck said in an interview with Sputnik Germany.

    The expert believes that an increase in wages in Germany should become more tangible than before. Only in this way can German authorities eliminate the growing financial inequality, he argued.

    In particular, Flassbeck criticized reforms undertaken under the "Agenda 2010" program, a series of changes aimed at restructuring the German welfare system and labor relations.

    According to the expert, it is "absolutely clear" that inequality significantly increased in recent years as result of these reforms. The gap in wages and incomes has weakened domestic economic development and at the same stimulated the growth of exports.

    Since its reunification Germany has pursued a wage restraint policy which could have given workers certain advantages without harming the economy, the expert argued.

    "We would have observed a more intensive growth of the domestic economy and a slower development of exports," the expert stated, adding that Germany's long focus on "the export strategy" had negative a impact on other European countries as well.

    One of the consequences of such policy is "a huge number of problems in the monetary union." "Merkel forgets about this when she talks about economic growth," the expert argued.

    The German strategy contributed to the deterioration of the economic situation in other countries which resulted in the spread of nationalism across Europe.

    According to Flassbeck, economic disparities also threaten the cohesion of German society.

    "On the one hand, there is super-wealth, on the other — still terrible poverty. It's a shame for such a wealthy country as Germany!" the expert stated.

    In Flassbeck's opinion, the country's authorities should pursue a policy "in which wages will annually be increased by 5% irrespective of the level of income." For the population with low income this indicator can be even higher.

    The "Agenda 2010" includes a number of reforms that were initiated by German authorities in order to reduce unemployment in the country. The program was partly successful, as the unemployment figures have fallen. However, experts argued that the structural changes led to the rise of economic inequality and became one of the reasons behind the current European debt crisis.


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