Studies of Economic Change

Point of time

By finding out the accepted relation between the average (lower) income and the level of social welfare (poverty line) according to step 2 it is possible to determine - at least qualitative - the critical level of the employment rate below which the social cohesion of the society is in danger.

That this critical point is achieved within the next years is getting obvious by looking back at step 1:

It is the case if there is an intersection of the critical employment rate (step 3, part B) and the employment rate which is caused by the increasing unemployment rate (step 1, part B). The worst case takes place under these circumstances. Without an intersection of both lines the social cohesion might not be affected. But this should not be connected with a licence for political passivity.

How can this critical point be avoided?

1. By shifting the blue line to the bottom:
   This means by reducing the level of social welfare. But this cannot be accepted as a solution as social security should be considered as a human right.
2. By shifting the red line to the top:
   This means by increasing the wages. But unless the society is confronted by a high unemployment rate this is a contradiction by it self as the low wages are caused by high taxes and duties due to the high unemployment rate.
3. By reducing the accepted relation between the average income and the level of social welfare:
   This can be realised by increasing the social pressure on the unemployed. Examples are making people fear the future, finding scapegoats, establishing a primitive culture by the mass media and the entertainment industry, and other repressive measure which belong more to autocratic and dictatorial states. These are all unacceptable political visions which do not fit to civilised and democratic societies of enlightened citizens.

Consequently the only solution to avoid the worst case of a social breakdown is the increase of the employment rate by reducing the unemployment rate. But the decrease of the unemployment can - as shown in chapter 3 - only be achieved by reducing the hours worked.