25 years on, Germany’s east-west divide still palpable

PRENZLAU, Germany (AFP) - “There’s no such thing as a good wage here, not at an east German company.”

Twenty-five years since the fall of the Berlin Wall, those words bite in the frosty air of Prenzlau, a town in eastern Germany that encapsulates the ongoing, albeit narrowing, east-west divide. The man who utters them is Thomas Mielsch, who has just come out of the town’s labour agency.

The lorry driver grew up in Prenzlau, a 90-minute drive from Berlin. The capital of Uckermark, a rural region in the northeastern state of Brandenburg, Prenzlau has the highest unemployment in the country – 14.7 per cent in September, more than double the nationwide rate of 6.5 per cent.

“I’d move at the drop of a hat, but my wife won’t,” laughs the 46-year-old. Laid off by his previous employer, an east German-based transport firm that paid him a monthly wage of 1,580 euros (S$2,550) after tax for a 60-hour week, Thomas has just got a job with a Danish company.

“I’ll take home twice as much for the same work. I’d also earn a lot more if I worked for a company based in western Germany,” he says.

The lure of higher pay is hard to resist – “around a third” of his friends work in the west, only coming home to their families at the weekend. 

A quarter of a century after then chancellor Helmut Kohl promised “flourishing landscapes” in the five states that made up the former German Democratic Republic (GDR), the market economy has long supplanted the five-year planning of communism. Over the course of those 25 years, the west has pumped “between 1.5 and 2.0 trillion euros” into unification, estimates Thomas Lenk, professor of public finance at Leipzig University.

All wage earners in Germany pay a so-called “solidarity tax", a 5.5 per cent surcharge introduced in 1991 to help rebuild the dilapidated and bankrupt east. The tax has been extended several times and is currently due to run until 2019. Thanks to the levy, the pot-holed roads of Prenzlau and elsewhere in the former GDR are now safely resurfaced and the crumbling buildings refurbished.

But the gap between east and west still exists. According to the latest official data, unemployment in the five former eastern states stood at 9.7 per cent in September, compared with 6.0 per cent in the west.

Ten years ago, the jobless rate in east Germany had stood at 18.4 percent, twice the rate in the west. Household income in the west is around one-third higher than in the east, and personal wealth is almost double. And the east’s gross national product (GNP) is only two-thirds that of the west.

Yet Germany need not hang its head. Once dubbed the “sick man of Europe", the country has become the region’s economic engine. “The process still isn’t over yet, that’s clear,” but “there’s light at the end of the tunnel,” said Michael Burda, economist at Berlin’s Humboldt University.

The causes of the disparity and the weaknesses of the former GDR’s economy are well-documented. Transnational companies stayed in the west with its better working conditions and higher salaries, allowing them to hold on to a more skilled workforce. Prenzlau has no jobs for bankers or IT developers. The positions on offer at the labour office tend to be in agriculture, health care or tourism. But it is not like that everywhere in the east. 

Berlin, dubbed “poor but sexy” by its outgoing mayor, may still be dragging its feet, but other regions such as Saxony are much more innovative. In fact, there is now a north-south divide in Germany, with southern states such as Bavaria and Baden-Wuerttemberg the most economically dynamic.

That divide is increasingly noticeable in eastern Germany, said economist Burda. Some experts also say that the inequality between east and west is less significant than the disparity between cities and rural areas across Germany.

Hit by deep changes such as de-industrialisation, there are western regions that believe it is time to start re-directing some of the public money from the east back into a “reconstruction of the west”.

In the Ruhr region, once the beating heart of German industry, the town of Gelsenkirchen, for example, has a jobless rate of more than 12 per cent. Its mayor, Frank Baranowski, complained that more than “20 years after unification, policy is still geared to rebuilding the east”.