For decades, industrial jobs have exited Germany at a steady pace; the slow process of globalization pushed work to countries with cheaper wages. German reunification hurried the process when ex-Communist industry collapsed in the states of the former East Germany after 1990. Hundreds of thousands fell out of the labor market, and now they're coming back to haunt Germany in the form of a new underclass.

A report released this week suggests that this underclass includes about 8 percent of all Germans. The issue has turned into a major debate about class in a social democracy founded on the basic premise that there should be no massive divide between rich and poor. Some people warn of a potential menace to democracy, and German papers on Wednesday are arguing about what to do.

"The genie has been let out of the bottle and it won't go away," warns the mass-circulation Bild newspaper. "More and more Germans are becoming dependent on the state." The core reason behind the new underclass, it argues, is mass long-term joblessness, much of it centered in the former East German states. As evidence, the paper points out that only 4 percent of people living in western Germany are identified as being part of the underclass, versus 20 percent of those in the former East Germany. Debating the existence of an underclass is unimportant, the paper writes -- "instead the politicians in (Chancellor Angela Merkel's) government should be asking what they can do to create new and stable jobs."

The leftist daily Die Tageszeitung takes shots at previous governments for not dealing with a growing poverty problem. The editorialist writes that more and more people are joining the welfare rolls. "Since the 1970s, governments have acted as if they had the right solutions, but the one thing these solutions have in common is that none of them have worked," the paper writes. The "real scandal in this debate" is that no one will discuss these failures. The paper takes on the creation of low-wage jobs in Germany known as "mini jobs" or "1-euro jobs," saying the miserable pay they provide can't help the underclass. Instead, it turns the jobless into the "working poor." The country faces the enormous problem of several million unemployed citizens for the long haul, the taz writes, which leaves two choices. Either you write them off and provide a basic social net, or you use tax credits to create a low-wage industrial sector and send the "working poor" back to proper work.

Writing in the center-left Süddeutsche Zeitung, Heribert Prantl argues that today's underclass is nothing like the poor of yore. At least people in those days had the common goal of climbing out of poverty –- when they were still called the "proletariat," and had intellectual heroes like Marx and Engels. "Back then they self-conciously called for a class war and founded unions and social democracy." But "mass unemployment has made (today's poor) meek and uncertain," the paper writes. "It has stripped them of their pride." Today's poor also have little in common: It could be the single mother who just can't seem to make it back into the work force, or the factory worker who has been rationalized out of a job. "Or it could be the hundreds of thousands, make that millions, of East Germans pushed out of the workforce who haven't found their way in the new society reunification created." And although the poor of a hundred years ago represented an opportunity, today's underclass could emerge as a threat. "The only party today's poor belong to is the party of non-voters," the paper warns. "It keeps getting bigger, but it has no political force. That's precisely why there is a fear that this (party) will turn into a destructive one. The reason is that democracy can't function if a growing part of society is no longer able to participate. A democracy that comprises of only two-thirds of society represents a danger to domestic peace."

The conservative daily Die Welt questions why politicians who claim to be experts on social issues and education are the ones leading this debate. The problem, argues the paper, is basically economic -- a question of how an economy should be adjusted to cope with globalization. Where do economic opportunities lie for people who have been part of mass layoffs? And how do you create jobs to cover the victims of welfare reform? German companies continue to be world champions at exports precisely because they have responded to globalization by moving operations to low-wage countries abroad. "While this may be unfortunate, it is also what allows these companies to remain competitive on the global market," the paper writes. "However, the flip side is becoming ever clearer: Millions of people, especially those in the deindustrialized former East Germany, are getting steamrolled" out of the labor market.

Globalization has indeed made the economic situation of many people more precarious, and more members of the middle class and the so-called underclass are being forced to deal with this, the paper argues -- so the government should ease strict worker-protection laws that make it difficult to fire workers. That's the only way they will be able to conduct the market experiments they need to find out where they can succeed in the global market. "The labor market must be liberalized at all levels," writes the paper, "so that companies can risk hiring workers without the fear that the costs of doing so could put them out of business."