German unification remains a `work in progress`

A quarter century after Berlin’s infamous wall fell, Germany has summarised its unification to date as a political success but an economic work in progress.

An official study into the mammoth unification process found the per capita gross domestic product (GDP) in eastern states – the total goods and services generated annually, divided by population – has more than doubled since 1990 yet remains just two-thirds that of western states.

On the labour market, the eastern jobless rate is at a record post-unification low of 10.3 per cent yet remains higher than western Germany’s average of six per cent.

“We Germans, east and west, can be proud of what we’ve achieved,” said Iris Gleicke, special commissioner for the eastern states.“But the convergence process is moving forward only slowly, pessimists would say it’s come to a halt, so we cannot yet be satisfied with the transformation process.”

Infrastructure funding

A survey for MDR public television yesterday found that three quarters of eastern Germans said unification had brought more advantages than disadvantages, while one in four westerners see more drawbacks.

This year’s 25th anniversary of the Berlin Wall’s fall has prompted some western German politicians to demand an end to special infrastructure funding when the current programme expires in 2019. But Ms Gleicke warned this would undermine progress made to date, calling for a new investment programme from 2020 for weak economic regions, irrespective of location.

The report lists the challenges in knitting together two countries after four decades apart: about €34 billion was invested in crumbling eastern infrastructure; massive environment pollution, a legacy of heavy eastern industry, was reversed or neutralised; the renovation of ramshackle eastern cities is largely completed; the dramatic westward migration of young eastern jobseekers has been halted.

After registering double-digit growth in the 1990s, however, eastern states are now battling flat growth. The per capita tax take remains, on average, one-third below western levels and one-third of average eastern state budgets comes from external German and EU sources.

Attempts to attract big firms to the region have yielded only modest results, with eastern foreign direct investment just 12 per cent of the western total.

However, the east isn’t behind on all fronts: debt per eastern German head of population is just 41 per cent of their western cousins.

In Munich yesterday, the Ifo economic institute said “considerable progress” had been made since 1990 though it questioned whether the east-west gap would ever close.

“From 1995 to 2013, the economy of the ex-East Germany grew by 20 per cent, but by 27 per cent in the former West Germany,” it noted.

Differing opinions

The Ifo contradicts the government report’s hope that equal living standards for all, as anchored in the constitution, is a realistic goal. The Ifo report suggests weaker eastern German regions – and the continued east-west gap – are the product of structural issues over which politicians have limited influence, such as shrinking populations due to low birth- and high death rates.

Meanwhile, the MDR unification survey, conducted by the Infratest/Dimap agency, suggests differing opinions on the events of 1989-90 are now as much a matter of age as geography.

Those with the most positive views of German unification – 96 per cent – are eastern Germans aged between 14 and 29, followed by two-thirds of the 14- to 29-year-old western Germans. The most pessimistic about unification were in the 45 to 59 age group: every fifth easterner and every third westerner felt unification brought them more disadvantages than advantages.