Responsible Credit and Over-indebtedness - The German Situation with respect to Trade Union Activity; Presented by Prof. Dr. Udo Reifner/ Oliver J. Haas, To the: International Labour Office Over the last two decades over-indebtedness has become one of the major social problems in Germany. It is estimated that every tenth household is over-indebted, in absolute numbers 3.13 million house-holds (2002). From 1994 to 2002 the number of over-indebted house-holds increased by 57%. People with serious debt problems suffer from stress they cannot cope with. Therefore physical and mental deteriora-tion frequently results from over-indebtedness. Over-indebtedness is often a feature of the working poor, reinforcing a perception of socio-economic dependency, jeopardizing the employment situation and de-creasing the perspectives for jobless people to create income. Over-indebtedness means social exclusion and an increase in vulnerabil-ity. For the social partners, over-indebtedness implies high and lasting welfare costs. It also has negative macroeconomic consequences, be-cause outstanding debts will not be amortised and because without in-tervention and counselling the over-indebted will fail as self-dependent economic agents in general. In the end, over-indebtedness undermines decent work and in particular wage protection. Taking on debt is a normal and constructive practice, as it opens oppor-tunities for education and enterprise activities. Credits contracted in the earlier periods of one’s life can usually be paid back in later periods when the individual enjoys a regular and stable income. However this does not apply to everyone: job loss, business failure or illness can lead to over-indebtedness and worsen the actual protection of one’s income flows. Decent work and income protection are general aims of the ILO, and the rising problem of over-indebtedness should be a concern to ILO constituents. Because the effects of over-indebtedness increase the burden to all social partners, new answers based on solidarity have to be found. The ILO with its tripartite structure can therefore make an im-portant contribution to identifying and disseminating good practices in the responses to over-indebtedness in an international context. This report shows how over-indebtedness is regarded, how it usually appears and which households are frequently most affected. Further-more, it will identify the different possible strategies to tackle over-indebtedness. Based on this critical assessment the report will point to future areas for innovative practices and partnerships. Credit is an important financial service that helps to fulfil the aims of personal needs to cope with critical situations. Credit and access to it is necessary, however not every debtor can make good use of debt. In most cases over-indebtedness has multiple causes. This report fo-cuses on income-related causes of over-indebtedness. Deteriorations in individual living conditions or a business crisis with job losses can lead to income poverty. Inversely, poverty can indicate over-indebtedness. To explore this vicious circle and to identify and separate cause and ef-fect, this report analyses the latest and yet unpublished research results in Germany. Germany is a strategically interesting research area for the issue of over-indebtedness. It is the biggest European credit society and its eco-nomic situation and financial markets have changed intensively over the last decades. The down-turning employment market and the economisa-tion of consumer credit have led to a dramatic increase in over-indebtedness. Furthermore the availability of data is comparably good as the German Government publishes reports (though infrequently) and the central credit registration (Schufa AG) cooperates with scientific in-stitutes researching the extent and development of over-indebtedness. In contrast to the relatively high political awareness, the social partners do not regard over-indebtedness as a common problem. The aim of this project is to generate more awareness of the issue of over-indebtedness in the industrialised countries. We can be sure that this modern problem will also arise in developing countries, especially because Microfinance, and therefore credit, is one of the most effective methods to create income circles and establish a local economy. The flipside of this approach to build up credit societies is that it also creates a risk that over-indebtedness may in some cases also appear. To reduce and to mitigate over-indebtedness with strategic measures in social partnerships can therefore be seen as a global task requiring consider-able attention in the 21st century. The International Labour Organization is a suitable place to deal with over-indebtedness issues politically, because preventing and reducing over-indebtedness yields substantial net social benefits for workers, em-ployers and governments. The ILO with its tripartite structure provides a suitable framework for dealing with over-indebtedness in social partner-ship. This report combines desk and field research. The first part is based on available data published by the government or scientific institutions. Important sources are “The Federal Government's 2nd Poverty and Wealth Report” and the report on over-indebtedness by the central credit registration (Schuldenreport - Schufa AG). This empirical material is used together with specialised literacy (see “c. Bibliography”). Along-side the addition of some very recent reports, the seven major unions in Germany and some other selected companies were also questioned and a survey used to find out how the social partners currently deal with the issue of over-indebtedness. ID: 37747 Autor(en): Reifner, Udo und Haas, Oliver Erscheinungsdatum: 24.05.06

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Erzeugt: 03.07.06. Letzte Änderung: 18.09.06.
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