Differences persist between eastern and western Germany

When the Berlin Wall fell on Nov. 9, 1989, the expectations of 16 million East Germans were sky high. They demanded liberty, civil rights and democracy when they spilled into the streets and upended the regime 25 years ago, but they also expected that unification would quickly deliver them material living standards on a par with those in West Germany. West Germany’s Chancellor Helmut Kohl promised as much when he claimed that unification would turn the east into “green pastures.” East Germans responded by voting en masse for the “chancellor of unification.”

But Kohl’s blinkered, full-speed-ahead unification of the two Germanies in 1990 left in its wake a Germany divided by economic disparities, resentment and social ills. Today Germany looks — and feels — much better than it did in the late 1990s and early 2000s, when this cleft was deepest. The united Germany has healed together as the German economy as a whole picked up over the last eight years. But the legacy of Kohl’s flawed and short-sighted unification strategy is still evident today, no matter how loudly the establishment crows about the Cinderella story of unification on this momentous silver anniversary.

Under Kohl’s firm hand, unification of the two Germanies was a one-sided takeover of the east by the Federal Republic of Germany, also known until then as West Germany.  Rather than merging the two countries over the course of several years or hammering out a new constitution together with its new citizens, the Federal Republic simply extended its borders eastward to the Oder-Neisse border, incorporating the territory of the former German Democratic Republic into its (admittedly quite successful) postwar system.

The most pronounced gaffe was the east’s economic transition: Kohl insisted that the east take on the deutschmark in July 1990, even before unification, thus forcing its companies to compete with the west’s internationally renowned private sector on the open market from one day to another. The result was that the eastern industries, which had just begun privatization, bottomed out — and soon disappeared almost completely — while western German companies filled the gap. The remains of the socialist state’s enterprises were sold on the cheap, mostly to western German investors.  

Kohl, heralded around the world for helping end the Cold War, set the stage for a German disaster. The new country’s gemütlichkeit (loosely translated, “contentedness”) soured quickly as the five new states, as the east was called, spiraled downward.

The swift transition to a market economy inflicted enormous hardship on many citizens as the socialist state’s industry collapsed and joblessness shot up from virtually nothing to 19 percent in 1997 and stayed that high until beginning a decline in 2005. Cities shrank as its best and brightest cleared out, most fleeing to the west in search of work. Cities such as Wittenberg, Eisenhüttenstadt, Görlitz and many others became boarded-up ghost towns. The birth rate plummeted by half from 1990 to 1994. The suicide rate shot up. Even though Kohl originally promised that unification wouldn’t cost a thing, taxpayers, in east and west, footed — and will until 2019 continue to foot — the bill, in total more than $2.75 trillion since 1990. (I see the “solidarity tax” on my German tax return every year: 5.5 percent of taxable income.)

Fortunately and at long last, the darkest days are behind eastern Germans. Today unemployment in the east stands at 10.3 percent — about the average in EU Europe — and dropping, while in the western German states it’s 6 percent and relatively stable. There are boom cities in the east, such as Dresden, Potsdam, Frankfurt am Oder and Leipzig. Kids today don’t even use the old slang of Ossies and Wessies (easterners and westerners) or think of themselves in these terms.

In Germany today, unification is widely considered a success story. Only a few hard-bitten critics, like the novelist Günter Grass and followers of the democratic socialist Left Party, remain unconvinced of its virtues.

Yet statistics show that in many areas, vast discrepancies still exist between the east and the west — and not only in economic terms.

First, the good news, which is sensational in light of the catastrophic start: In addition to joblessness coming down by half, flight from the east, which peaked in 2001, leveled off in the late 2000s and has begun to reverse itself, leaving the eastern states with a population of 16.3 million, compared with 16 million in 1990 and just 15.1 in 2000. (Western Germany’s population is currently 65.5 million.)

Today it’s not uncommon for young westerners (or even foreign nationals) to look for work or study in the east, such as at Dresden’s state-of-the-art technical university. Regional industries such as computer-chip manufacturing in and around Dresden, automobile production, metallurgy and engineering have found regional homes that boast wages higher than the western average. Tourism and the renewable energy industry, too, have contributed to the upswing. Industrial production in the east is higher than it was at the height of the GDR and higher than that in France.

Life expectancy is now virtually identical in both sections: 78 years for men in the west and 77 in the east and 82 for women in both regions. The birth rate in the east, though still negative, is a notch higher than in the west. In math and science, the east’s secondary schools outpace most of their western counterparts. More women in the east work, and there are more day care spots for working families. (This is one of the few categories in which the west has had to catch up to the east. There were far more working mothers and day-care spots in socialist Germany than in the Federal Republic.)

Despite eastern Germany’s vast improvements after an arduous climb out of the black hole of the 1990s and early 2000s, significant inequalities become apparent on closer inspection. In terms of productivity, the easterners are only at about three-quarters of the western level (roughly on a par with Slovenia, Poland and Hungary), and per capita GDP is 71 percent of that in the west. The wages and disposable income of the average easterner is just 83 percent of that of his or her western counterpart, and for work paid by the hour, the average easterner’s wage is 77 percent of a westerner’s. Moreover, the east’s employment numbers have profited significantly from there being simply fewer young people applying for jobs — a result of a lower birth rate and emigration.  

Moreover, the economic success stories, such as Dresden’s microchip sector, are the exception, not the rule. The solar-energy industry was the east’s wunderkind several years ago but was undercut — and its jobs shed — when Chinese photovoltaic panels swamped the international market. The east’s personnel structures also look different: More of the jobs are low-level, low-paying and more susceptible to layoffs, say economist Karl Brenke  and his colleagues at the German Institute for Economic Research. Brenke argues that the eastern economy has undergone an impressive reindustrialization since the 1990s but is more fragmented than in the west. The firms in the east say their biggest challenge is finding skilled labor to fill positions.

Private wealth is one area where the different histories of east and west are especially evident. The average western German household boasts a value of $199,160, while the average eastern household is worth less than half, just $87,620. Only a third of eastern Germans own their homes, while in western Germany half do.

The eastern states surely won’t be all caught up to those of the west by 2019, when the solidarity tax expires. With Europe’s economic slowdown, the upswing in the east has slowed to crawl. The east’s rebound is not comparable to the Wirtschaftswunder (West Germany’s postwar economic miracle), which put the post–World War II Federal Republic on its feet in less than two decades. The east’s fragile new industries will remain highly susceptible to economic turmoil in the eurozone and elsewhere. The good news on the 25th anniversary of the Berlin Wall’s breach is welcome and long overdue, but an extraordinary success story it is not.