News

Now‘s the time to plan for the future

28 Apr 2021

The coronavirus pandemic is exacerbating inequalities in the school system, says economist Monika Schnitzer, but adults are also experiencing the crisis in very different ways.

On a living room table there is a laptop on which a child is working, next to it there are various school utensils and an open book from Bavaria.

© imago / Fotostand / K. Schmitt

Monika Schnitzer is Professor of Comparative Economics at LMU and a member of the German Council of Economic Experts. In the following interview, she discusses the social repercussions of the coronavirus pandemic in Germany.

What effect has the coronavirus pandemic had on the level of social inequality in Germany?

Monika Schnitzer: There are several sectors in which the pandemic has reinforced existing inequalities and, in this respect, I would single out the area of education. Long before the crisis, it had become clear that, in Germany, educational performance is strongly dependent on one’s social background – and the pandemic has made that situation worse.

Children have now been out of school for a period of 6 months on average. This means that the quality of their education has been dependent on the quality of the remote learning aids their schools could provide. If these were not particularly good, then the digital devices and connections at home, and how much support they received when they get into difficulties with their assignments will have been the determining factors. In such a situation, children in families with low incomes are at a great disadvantage, if their parents are unable to give them the help they need – either because they don’t have enough time because they have to go to work, or because their own level of education is not up to the task.

The upshot is that, in the long term, this will have significant negative effects on their future job prospects, as studies in the economics of education have shown. Success on the job market is tightly correlated with one’s level of education and training.

One often hears references to a ‘lost generation’ in this context. Is the expression justified?

There is a danger that things could turn out like that. That’s why it is vital that everything possible – and more – be done to close the gaps that have opened up. Even before the advent of the virus, educational outcomes in Germany were not terribly satisfactory. Great efforts must be made to ensure that this situation does not get worse, and that the current inequalities of opportunity do not become entrenched.

This will require integrated and concerted programs, and it is imperative that planning in this sector begins now. We need more personnel to teach children more effectively in smaller groups. We need better training models for teachers so that they can make more effective use of digital media.


What about adults in the workforce: Are they also being exposed to higher levels of inequality during the pandemic?

The pandemic has certainly enhanced the discrepancy in average income of women relative to men. Several factors have contributed to this development. Unlike the financial crisis, the pandemic has had a large impact on the service sector, in which many women are employed. They are now much more dependent than before on short-time allowances, which are often lower than those paid to men. In such a situation, thanks to the splitting of income-tax liability between married couples, the spouse who is in tax category 5 has less net money than if the same gross salary is taxed in category 4. However, the short-time allowance is based on the net salary. Two people who earn the same gross salary therefore receive different amounts of short-time allowance depending on their tax class. Since women in particular work in the lower tax class 5, they are at a disadvantage here.

In addition, in the absence of other options, it has been mostly the mothers who have stayed at home to look after their children when schools were closed. One reason is that they are more likely to work part-time than their spouses and usually have the lower-paid job in the partnership. – And that in turn is attributable to the fact that they are usually the younger party, have had less time to make a career and have therefore concentrated more on the children.

Given that they have shouldered the burden of caring for their children during the pandemic, they will also have fallen behind in their careers, and this too will have a negative effect on their future chances on the job market.

In terms of the impact of the crisis, are there marked differences depending on the sector involved?

In some sectors, many workers can no longer earn as much as they did before. That’s particularly true of single parents and low-wage earners. They have little enough to get by on, even under normal circumstances, and now find it even more difficult to make ends meet.

But other groups have also been hit very hard. These include those who work in the cultural sector, and freelancers who run businesses on their own. Many of the latter, including many women, will have been forced to close their shops. The hospitality and hotel sectors also belong to this category. Here, many people work on a seasonal basis or have mini-jobs – and they are often migrant workers. Those with mini-jobs are also in a precarious position, because they receive neither short-time allowances nor unemployment benefit. Here again, women are overrepresented.


One sometimes has the impression that everyone now works from home. But that applies only a specific segment of the workforce, usually the better off. Is this a contributory factor to the discrimination of the underprivileged, because it effectively means that the risk of infection is not equally shared?

Certainly! There are only so many jobs that can be done in a home office. The model isn’t applicable to the retail sector or to manufacturing. These are the workers that are particularly at risk of being infected by the virus. In addition, many of them depend on public transport to get to work, or work in enterprises in which protective measures are not taken sufficiently seriously.


Measures have been introduced to compensate for wage losses owing to the pandemic. How effective do you think these measures have been?

A lot has been done to provide financial help and, on the whole, these measures have been quite effective. But of course, some sectors have been hit particularly hard, and not all have received as much support as others. Workers in the hospitality sector are now on short time. This scheme itself is a very effective way of helping firms to avoid having to let workers go during a downturn, and losing qualified workers who will been needed when the crisis has passed. When the pandemic arrived, the mechanism was rapidly activated in order to enable firms to retain the workforce, and it has undoubtedly been a great help.

Firms have also received other forms of aid, as loans and even as direct subsidies. One big problem was that these schemes were implemented far too slowly. Higher levels of digitalization would have been of benefit, and that issue is now being tackled. But in spite of that, there will probably be some businesses that fall through the cracks – and will need more government support.

Have these supports been sufficient?

That largely depends on how long the crisis lasts. In terms of their available capital, businesses were, on average, in a better position than they were when the financial crisis erupted. Equity-to-assets ratios are now higher, especially in small and medium enterprises. But the longer the crisis continues, the more difficult their situation will become, particularly in the hospitality, hotel and retail sectors.

At the same time, it’s important to determine the extent to which these developments are a reflection of a deeper structural transition. Especially in the retail sector, many of the businesses that are now in a difficult position were not doing terribly well before the crisis struck, and have not adapted effectively since. They will find it very difficult to survive. But, here too, the picture is highly heterogeneous. Some businesses have adjusted quickly, have set up a website and now sell their wares online, or provide click-and-collect options.

How do you view the future: Are you optimistic or pessimistic?

With respect to the economy, I’m fairly optimistic, provided that the vaccination campaign continues at a reasonable pace. One of the reasons for this optimism is that some sectors have been given a sharp reminder that they must raise their game, particularly with respect to the digitalization. A large number of firms has taken the opportunity provided by the crisis to reposition themselves strategically. New concepts and new business models have been tried out, and these developments will certainly boost the economy.

But in the educational sector, especially among the young, I do worry that the negative effects of the pandemic have not received the level of attention they deserve. So far, education has not been given the priority it deserves. As a proportion of GDP, we in Germany invest less in education than does the average member of the OECD. In this regard, there is much room for improvement. It all depends on whether or not the proper priorities will be set.

What are you looking for?