Report shows Germany′s east coping better than west in financial crisis | Germany| News and in-depth reporting from Berlin and beyond | DW | 11.06.2009
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Report shows Germany's east coping better than west in financial crisis

According to a German government report, the country's former Communist states in the east are weathering the global financial crisis better than those in the west.

Construction cranes in the eastern German city of Leipzig

Parts of eastern Germany such as the city of Leipzig have seen a construction boom in recent years

The annual study, presented by Wolfgang Tiefensee, the Social Democrat minister responsible for development of the eastern states, showed that the depressed eastern states were gradually catching up with their western neighbors.

Despite soaking up billions of euros in subsidies, Germany's eastern states still suffer from higher unemployment and lower productivity and per capita wealth. Migration is also a big problem. But it appears that Germany's deepest recession since World War II is having an unexpected side effect.

"So far, the East has not been hit as hard," Tiefensee said.

"Twenty years after the peaceful revolution and the fall of the Wall, the achievements of the East Germans are being recognized in 2009," Tiefensee told reporters after presenting the report to the cabinet.

Smaller enterprises aiding eastern states

Wolfgang Tiefensee presents the 2009 Unity Report

Tiefensee presents the 2009 Unity Report

Tiefensee said that the eastern states are home to a larger proportion of smaller firms which are more flexible than big companies and less dependent on exports, which have slumped in the last few months. He pointed in particular to the technology sector, where growth is higher in eastern states, especially in the solar energy sector which is strong there.

Meanwhile the manufacturing industry in the west, which is heavily reliant on exports, has borne the brunt of the global downturn.

Tiefensee noted that the western states' "unprecedented solidarity" with the east, including more than one trillion euros in subsidies since national unification in 1990, had been crucial to getting the region back on its feet.

Gross national product per person in the east rose to 71 percent of that of a westerner last year, compared to 67 percent in 2000, the report said.

Industry in the east has grown by 7.5 percent over the last three years, compared to 4.3 percent in the west.

Unemployment still a Germany-wide problem

Tiefensee said that while unemployment had stayed roughly stable in eastern states in the last year, it had risen to 6.9 percent in May in western states from 6.4 percent.

An unemployment office in Germany

Unemployment has stabilized in the east but is still high

Dspite the positive figures, divisions between eastern and western Germany are still wide. Jobless figures are still twice as high in the east as in western states and long-term unemployment is a major problem. Unemployment stands at 13.3 percent in eastern states and is likely to rise further still in the coming months.

Job migration is also a big problem. Young people, especially women, tend to abandon the east in search of work, leaving some areas as a wasteland. About 90,000 people ditched the east for the west each year in the recent past, against just 40,000 people moving east.

"We have come a long way, but there is still a lot of work to do," Tiefensee said, adding that so-called "solidarity tax" payments to the east would likely continue for another decade, until 2019.

By that time, he said, some of the eastern states could even overtake poorer western regions in terms of gross domestic product.

Opposition accuses minister of election games

Opposition parties seized on the report to accuse Tiefensee of scoring points for his Social Democrats, the junior partners in Germany's ruling coalition with Chancellor Merkel's conservatives, ahead of the September general election.

"It is a clumsy attempt to win votes in the east when you tell people that the rest of the job will be finished in 10 years," expert on eastern affairs for the liberal Free Democrats, Joachim Guenther, said.

nda, AFP/Reuters

Editor: Sonia Phalnikar

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