I suppose the most obvious answer to your question would be the Holocaust undertaken by the Nazis as the book progresses. However, let's delve a little deeper into what this means:
- Empathy: Empathy is the ability to understand somebody's situation from that person's perspective. It is different from sympathy, which is feeling sorry for someone but not necessarily understanding how they feel. During the Holocaust, Nazis and Germans who were bystanders (people who see something unjust happening but do nothing to intervene) did not have empathy for people persecuted during the Holocaust. They did not attempt to understand their situations at all. What is interesting about the main character in The Boy in the Striped Pajamas is that he in fact does feel empathy for one of the people being persecuted by the Holocaust. This makes him different from most of his friends and family, and it ends up revealing why it is so important to have empathy.
- Othering: Most Germans, Nazi or otherwise, during the Holocaust did not feel empathy for persecuted people because of a process called "Othering". This is the process that people use to categorize somebody as "like me" or "not like me". If a person is "not like me", it is easy to accept that you do not understand them and that they are completely different from you - even in ways that do not make sense. Because of othering, most Germans believed that people who they considered "not like me" were naturally bad or that they did very bad things.
- Assimilation or Conformity: Othering is easy to practice when the difference between two groups is very clear. What makes these differences clearer is the practice of assimilation or conformity. This is when you try your best to be like, sound like, act like, and appear like the people within the same group as you. Most Germans during the Holocaust conformed to the Nazi ideal, making it easy to Other and therefore not empathize with people who did not or could not assimilate to the kind of person whom the Nazis said was "good".
The reason the Holocaust was a social issue that shaped The Boy in the Striped Pajamas is because Germans had no empathy for their victims, whom they othered because the victims did not or could not conform.