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.

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