Former East Germany sinks into economic backwater

Susan Gall didn't want to move to Munich. The young administrative assistant would rather have stayed in Halle, a city of 250,000 with a photogenic old town in what was once East Germany. But despite a college degree in business administration and language training in English and French, she couldn't find work in her home city.

Jobs in the "new states," as East Germany is now called, are becoming harder and harder to find. In a growing trend, hundreds of thousands of young eastern Germans have streamed westward since 1997, with 215,000 leaving home in the year 2000 alone.

This outflow of youth, says Christine Ostrowski, a Bundestag representative from Dresden, is turning the east into the equivalent of a retirement home. Already, she says, companies are complaining that the eastern states don't have enough qualified workers or sufficient infrastructure and are choosing to invest elsewhere - a situation that she says encourages even more young people to leave.

"There are empty schools in some towns," she says. "There are over one million empty apartments in the east. Whole cities are dying. We need to do everything we can to keep the young people here."

Analysts say that this migration of young workers threatens to undermine eastern Germany's economy for years to come.

Dr. Rüdiger Pohl, president of the Institute of Economic Research in Halle, sees even larger implications. "Germany cannot afford to be carrying around the economic deadweight that is eastern Germany. Germany is the largest economy in Europe. For an economically stable and politically secure Europe, Germany has to turn around its slow economy."

Since reunification in 1991, the German government has spent over $1 trillion on providing social services and rebuilding the infrastructure of the former communist East Germany. In the early and mid-90s, western help led to a booming economy in the east, led by the construction sector as long-neglected cities were restored and modern apartments were built.

Construction needs have since been met, however, and nothing has emerged to take this industry's place. Since 1998, eastern salaries have begun to drop relative to the west and are now less than 70 percent of western incomes. Unemployment, meanwhile, has risen to 17.6 percent - almost 10 percent higher than in western states.

"Economically," says Dr. Pohl, "you can still speak of there being two separate Germanys. There is the rich west, with all the famous companies like Siemens, BMW, and Mercedes. And then there is the poor eastern brother."

In an attempt to minimize the bad news, many point to an opposite migration - from west to east. But these transplants tend to be retirees returning to their eastern roots or mid-career managers moving temporarily to the east as advisers to eastern German companies. Overall, the net loss for the east is growing rapidly and reached a total of 185,000 since 1995, with over half of that exodus coming in the past two years.

"There are only old people and unemployed people left in Halle," Ms. Gall says. "You can see it when you walk on the city streets. When new stores open, you know which ones will go out of business. A fashion shop, for example. There aren't enough young people in Halle to keep such a shop in business."

The search for work is not the only reason young people are leaving eastern Germany. Because most large factories in the east have been idle since the restructuring that followed reunification, most of the on-the-job training programs, vital in Germany for those wanting to learn a trade, are in the west.

Otavio Seyer is training to become an electronic tool technician and travels 720 miles round trip each weekend between his training program in the Krauss-Maffei locomotive factory, near Munich, and his hometown of Potsdam, near Berlin. Seyer would like to stay in Potsdam after graduation, he says, because he feels out of place in Bavaria and sometimes has trouble understanding the local dialect. But, he is becoming resigned to a future in the west. "In the area of Potsdam," he says, "there are no jobs to be had. If you do get a job it will probably be poorly paid. Here, it is pretty much 100 percent certain that I can get a job after my training program."

Politicians have begun to take notice of the growing gulf between east and west. Bundestag president Wolfgang Thierse created a stir last year by stating flatly that the east is on the brink of economic crisis, a statement he repeated last week. Edmund Stoiber, a candidate for chancellor in this year's elections, opened his campaign in February with a "fact-finding" tour of the five eastern states.

Representative Ostrowski, too, is looking for solutions. "Nothing less than a radical change is necessary," she says. She has proposed moving western factories to the east and redrawing state borders to increase the east's political clout.

Ironically, Germany's economic success stories are exacerbating the problem. Both Bavaria and Baden-Württemberg, two states in the south of Germany, have more job openings than workers to fill them. The so-called "bacon belt" around Munich, with its many high-tech and media firms, is a magnet for Germans from other areas and boasts the lowest unemployment rates in the country.

Meanwhile, the Bundestag voted earlier this year to extend the "solidarity pact" that sends close to $80 billion eastward each year, a policy that is unlikely to change soon, says Rudolf Hickel, professor of economics at the University of Bremen and author of two books on reunification.

"I think that the transfer of money from the west to the east will continue for a very long time," he says. "I don't think we can look for an improvement in the situation much before 2019 or 2020."