Perceived disadvantage in labor market: East vs. West Germany

The labor market in East Germany has made significant strides in recent years. However, the West still maintains an edge in terms of wages and productivity. According to a report by the Bertelsmann Foundation presented in Gütersloh, it is not surprising that more East Germans feel disadvantaged in terms of living standards compared to their Western counterparts.

Wage disparity and productivity gap

The median wage in East Germany stands at €3,157, while in the West it is €3,752. Although the wage gap has narrowed over the decades since reunification in the 1990s—from a 26% difference to 15.9% today—East Germans still earn less for their labor. This wage disparity is attributed to differences in productivity levels. While sectors like construction, retail, and services have seen productivity converge, the manufacturing sector in the East still lags, reaching only 76% of the West’s productivity levels even 35 years after reunification.

To address this issue, the authors of the Bertelsmann report suggest attracting large corporations to the East. “Large enterprises provide opportunities for research, regional suppliers, and business-related services,” the report states. This, in turn, would create higher-paying jobs in future-oriented professions.

Employment and unemployment rates

In terms of employment, there is near parity between East and West Germany. The employment rate in the East is 76.7%, slightly lower than the West’s 77.3%. The unemployment rate in the East has significantly improved from nearly 19% in the early 2000s to 7.2% today. However, it remains higher than the West’s current rate of 5.3%. Both regions share an equal proportion of long-term unemployed individuals at 34%.

Lasting impacts of historical events

The high unemployment rates and the migration of young people to the West following the 1989 reunification have left a lasting mark on the collective consciousness of East Germans. “The effects are still felt today, as public services in rural areas continue to diminish and many of those who were unemployed then now face old-age poverty. This contributes to the perception of ongoing disadvantage, even though the East German labor market is in a much better position today than it was 30 years ago,” says Eric Thode, a labor market expert at the Bertelsmann Foundation.