Abstract

In international comparison, Germany can be characterised as an inclusive Bismarckian welfare state with a broadly based middle class. Since the mid-1990s, however, the economic basis of middle-class prosperity and security has been crumbling. The article investigates the development of the German middle class from a labour market perspective. The explosion of the low-wage sector, as well as an increasingly unequal distribution of working time among households, is weakening the economic basis of the middle class. These developments came along with an erosion of the previously inclusive wage system, which was caused by the deregulation of the labour market and the weakening of unions' bargaining power.