We are since '89
all articles
Nearly three decades ago, the Wall fell, the inner-German border disappeared. Since then have the two parts of the country grown together, from an economic point of view?
First of all, the living conditions have become quite similar. Calculated in euros, gross wages in 1991 were still twice as high in the west as in the east. This distance has become much lower in 2019.
Arne Kulf / THE MIRROR
Gross wages in euros (Federal Statistical Office)
However: east and west have rarely grown together, growth patterns differ greatly. It is also striking that the new federal states were able to catch up economically, especially in the first years after reunification. Overall, however - a comparison of the Institute for Economic Research Halle (IWH) shows - the economy in the East developed better in eleven years than in the West (more statistics can be found in the book "United Land" of the IWH).
Arne Kulf / THE MIRROR
This is particularly drastic in the balance sheet of the current boom circle of the German economy as a whole. The number of jobs in Germany has increased rapidly in recent years, the number of gainfully employed has increased since 2005 from about 39 million to last 45 million.
The job market: To date, the clear-cut is not compensated
More jobs usually mean higher economic activity and more economic power. However, the new jobs were created almost exclusively in the West: The number of people in employment in the west increased from 33 million to 38 million from 2005 to 2018, whereas in the five East German territorial states it increased by only 300,000 to 5.9 million. What's more, compared to 1991, there are still around 800,000 fewer jobs today.
What happened in the East since 1990 is called "transformation from a planned economy to a market economy" in research. However, this abstract description does not even capture the momentum of the shifts that took place in the beginning. Not only jobs were eliminated, but entire occupations. Within a few years, the economy had to make up for a structural change that had taken place casually in the West for decades, from the industrial to the service society. In 1989, almost 50 percent of industrial workers worked in the East, compared with 26.6 percent in 1991 (28.7 percent in the West).
Shares, percentages - these too are abstract, very cool descriptions of massive vibrations. One example: When the Treuhandanstalt began privatizing the former state-owned GDR enterprises in 1990, more than four million people worked in these companies. When the Treuhand broke up again in 1994, just 1.5 million jobs were left.
Arne Kulf / THE MIRROR
Economic balance of German unity
Although many new jobs were created in the services sector, unemployment rose rapidly. Between 1993 and 2007, it was consistently over 15 percent for a decade and a half, triggering a wave of emigration to the west. It mainly took off in the mid-1990s, at a time when many East Germans realized that an improvement would not be fast.
Demographics: To the west - the jobs behind
The population loss was massive. Four East German territorial states have lost a double-digit percentage of their population since 1991. The only exception is Brandenburg, because the surrounding area of Berlin benefits from the immigration.
Arne Kulf / THE MIRROR
The move westwards - to Bavaria, for example - was a solution for many East Germans and their families for their problems. For their homeland states, however, this development has created a new problem under which the economy is suffering: the shortage of skilled workers . Although the upswing of recent years has created new jobs to a lesser extent in the new federal states than in the west. But even to fill these positions often lack the appropriate people. Demographic change will be a new brake on the East German economy.
This also limits the possibilities to further reduce the distance to the west. In fact, in the new economies, the economy in the first five years after reunification has made great progress in terms of productivity. The catching-up process has come to a halt since then. So far, not a single state of the Federal Republic of Germany has reached the level of productivity of the Saarland - that country that ranks last in terms of productivity in the West.
Arne Kulf / THE MIRROR
The productivity gap: consequence of an unfavorable economic structure?
The reasons are manifold - and difficult to fix. At any rate, it does not depend on the investments of the companies. In 1990, for example, the machinery of many eastern companies was in poor condition. Since then, this has changed fundamentally: gross fixed capital per employee has meanwhile risen to 88 percent of the western value - despite lower economic power in the East.
Some economists point out that East Germany has a less favorable economic structure than many regions in the West: Large companies tend to have a much higher productivity than small businesses. This is true in the East as in the West - but the new countries have to deal massively with the fact that there are a lot fewer large companies there.
The wave of privatization in the early 1990s has also given rise to a very specific ownership structure: only five percent of companies went to East Germans, while 95 percent of companies went to investors from the West or abroad. Many of the eastern companies were therefore integrated into existing structures.
As a result, areas such as research and development and other high-quality activities are very rarely located in locations in eastern Germany.
Arne Kulf / THE MIRROR
Productivity is lower in the new Länder - across all farm sizes (source: IAB Betriebspanel, IWH)
The Institute for Economic Research in Halle also mentions another explanation: the " efficiency of the company organization". This is quite bulky, but it certainly contains explosives, because behind this is the assumption that businesses in the East are structurally less well organized. The IWH also mentions one possible explanation: companies have become accustomed to low wages and lavish subsidies for jobs they have received - and therefore too little incentive to work more efficiently.
The East therefore lacks strong locomotives in many places: corporations, but also medium-sized enterprises in the province, which have grown thanks to globalization and their own export strength to companies with billions in sales. In the west there are many in many regions - in the east they are very rare.
A look at the central distribution of the 500 largest German companies shows that while in East Germany about 20 percent of the population live, but there only 36 major companies have their headquarters, which corresponds to a share of seven percent.
Arne Kulf / THE MIRROR
Source IWH
All new posts "Wir wir '89" once a week by e-mail .
Subscribe to the newsletter right here:
However, there are numerous indications that the underlying structural differences with the West are historically conditioned - and sometimes even older than German unity and even the German-German division.
Thus, the economic power in the more rural Mecklenburg-Vorpommern was already lower in the 19th century than in the national section. Some researchers, such as the Görlitz social scientist Raj Kollmorgen, also point out that some of the structural differences between East and West have already developed in the Middle Ages.
More on the subject:
