Closing the gap

After two decades of being at the receiving end of massive financial aid and pro-active government policies, Germany's former communist east is still lagging behind the economic power of more prosperous western Germany, although the gap is gradually closing, according to a government report published on Wednesday.

The aim of the report was to take stock of general developments between eastern and western Germany to find out if "the nation was still on track to create equal living conditions for all, as is guaranteed by the German constitution", said Interior Minister Thomas de Maiziere.

"Our efforts to forge real unity in Germany is a success story with much light but of course also with some shadow," said de Maiziere.

Economic gap closing

In terms of economic development, the formerly depressed eastern region has made "impressive strides", according to the report.

State support for private sector investments to the tune of 55 billion euros (US$ 73 billion) since 1990 has increased productivity in eastern Germany from 43 percent to 73 percent, compared with productivity levels in western Germany.

This has resulted in a more than doubling of average incomes in the east to the current level of about 15,500 euros annually, which represents some 83 percent of the western wage level.

Eastern unemployment has also dropped considerably from a peak of 17.9 percent in 1997 to the lowest post-unification level of 11.5 percent, or 969,000 jobless people, reached this year.

The economic development of eastern Germany "amounts to a small economic miracle", Interior Minister de Maiziere said, adding, "due to less dependence on exports, the region is even sustaining the upheavals of the current economic crisis better than western Germany".

Demographic challenges

Job development in eastern Germany is increasingly marked by a shortage of labor in general, the report said.

This was partly due to low birth rates in the 1990s, as well as a massive "brain drain to western Germany".

Since unification in 1990, about 2.7 million people have left the region, while only about 1.6 million moved to the east.

Equal living conditions elusive

In spite of huge investment in public infrastructure, equal living conditions between east and west were "difficult to achieve, and still also vary between different regions in western Germany", Maiziere said.

As far as schools, modern transport and communications infrastructure, and childcare facilities were concerned, the east was on a par with the west. But the tax income of communities there was "still not high enough to make the region sustain itself alone", de Maiziere said.

"Therefore, eastern Germany continues to need the financial transfers guaranteed within the framework of the 'Solidarity Pact' with western Germany until 2019", he said.

Under the Solidarity Pact, eastern Germany is guaranteed financial transfers amounting to 156.6 billion euros between 2005 and 2019.

"By that time, the richest communities in eastern Germany have a good chance of catching up with poorer regions in western Germany", said de Maiziere.

Author: Uwe Hessler (dpa/Reuters)

Editor: Susan Houlton