Thirty years after reunification, divisions between East and West Germany persist

The Berlin Wall falls, November 1989. Image: Getty.

The ghost of the Berlin Wall lives on 30 years after its collapse. It sweeps through the statistics on immigrant populations (higher in the west) and on poverty, pensioners and electoral support for the Left Party Die Linke and for far-right parties (all higher in the east). Persistent east-west division intersects with class divides, as well as historical and present forms of institutional racism. This provides the backdrop for the particular success of far-right parties in Germany’s eastern provinces.

In the years that followed unification, eastern Germany slipped from being one of the most industrialised regions of Europe to one of the least. Average productivity had long been lower than in the west. In 1945 the zone that became the German Democratic Republic (GDR) was occupied by a weak and war-ravaged superpower, the Soviet Union, which plundered its industries and infrastructure.

In contrast, the Federal Republic of Germany (FRG) was pulled into the US sphere, with its much larger markets. It benefited from immigration flows – including from the GDR – and from self-reinforcing logics of agglomeration, whereby increased investments attract further capital and skilled workers, and so on in a virtuous circle.

The GDR also suffered from the general crises of the Soviet bloc. The Soviet system that took shape in 1928 had enabled Russia, an abysmally poor society, to industrialise rapidly during the interwar era. But with globalisation from the 1960s onward, Soviet bloc enterprises were handicapped by their weaker ability to internationalise sales and operations. In the 1980s, crisis hit the region and the Soviet bloc’s trade networks collapsed.

Economic divide

On unification, the conservative government of Helmut Kohl set the exchange rate of the Ostmark to the Deutschmark at 1:1 – a 300-400 per cent increase in the value of the Ostmark. Profitability for eastern firms could be maintained only if costs were reduced accordingly, but this was impossible given that all other input prices and overheads were themselves subject to the revaluation. No enterprise could withstand that shock unaided.

The Kohl government of the early 1990s adopted a blasé attitude to deindustrialisation in the east. It set up an agency, the Treuhandanstalt (nicknamed the “Handover Agency”) that oversaw the fire-sale privatisation of eastern enterprises and land – including the sacrifice of perfectly viable firms. The sell-off was accompanied by legal and illegal corruption and was heavily tilted to the interests of western businesses.

Helmut Kohl oversaw German reunification. Image: Wikipedia / Bundesarchiv / Thomas Uhlemann/creative commons.

Beneath the German flag-waving, the pickings of unification were taken by the largely western rich. Overall, only 5% of Treuhandanstalt businesses were sold to easterners, 85% to westerners. Germany’s economic divide resumed, with senior management and the bulk of high-value activities located in the west.

The “great handover” combined with agglomeration logics to ensure that Germany’s western states attracted the bulk of capital and skilled migrants – this expanded local markets and, in turn, attracted further investment and immigration. Meanwhile, the declining regions of the east experienced emigration and stagnation, depopulated ghost towns and the wholesale demolition of housing.

Stuttering attempts to close the gap

The German government attempted to counter this east-west divide in two main ways but both also reinforced underlying differences. One was the construction of the east as a low-wage territory and neoliberal testing ground. In a bid to attract investment, employers were encouraged to experiment with practices that the stronger trade unions in the west would block. National collective bargaining agreements were ripped up in the east. This undermined workers’ strength and morale throughout Germany, but the extremes were in the east, particularly in Saxony, which suffers Germany’s highest rate of circumvention of collective agreements.

The other was state expenditure. “Solidarity” transfers of wealth from west to east were very substantial. This helped salaries and per capita GDP in the former east rise to around 80 per cent of the west in the early 2000s. But the gap has stuck at roughly that level ever since, and is predicted to continue or even widen.

West-east transfers are rather like giving fish to someone after taking their fishing rod. Because most of the east’s assets were appropriated by western interests, much of Germany’s transfer spending goes from western taxpayers to the east, then boomerangs back in the shape of rent and profits. To this extent, the transfer is from western workers to western proprietors, recycled through eastern infrastructure projects and welfare recipients.

Second-class status

Inequality and poverty are relevant to the higher levels of racism found in the east. So too are the recurring crises and insecurity that have wracked eastern Germany since unification, and the global slowdown that followed the 2008 financial crisis.

However, reference to regional socioeconomic cleavages and crises only takes us so far. After all, the right-wing, nationalist Alternative for Germany (AfD) party receives strong support in low-unemployment Zwickau (in Saxony). It polls better in the wealthy western states (Bavaria, Baden-Wurttemberg) than in the poorer Ruhr. Its support is, according to several studies, stronger among higher income earners and the self-employed than blue-collar workers, with fear of economic decline and alienation a strong psychological factor.

A key piece of this puzzle is found in the tangles of nation and immigration. In 1990, eastern Germans voted for FRG citizenship. In economic terms, as we’ve seen, something closer to annexation was the outcome. In political terms the hope was for full and rapid equality. “We are one people” was the chant on the streets as 1989 passed to 1990.

But politically, too, East Germans have experienced a form of annexation. Sweeping transformations were rammed through with little reference to public opinion or even parliament. Unification itself was accomplished by fiat, under the “annexation” paragraph of the federal constitution.

Westerners were appointed to most positions of power in the east, including senior civil service posts, professorships, and the top jobs in industry and the armed forces. East Germans were plunged into a quasi-immigrant position. They had left their Heimat behind and found themselves in a strange country. Their social furniture was suddenly upended. Their cultural capital (certificates, knowledge, etc) was devalued. Experiences of disorientation and dislocation were ubiquitous. East Germans, in journalist Toralf Staud’s words, “emigrated while remaining rooted to the spot”.

The analogy is loose, given that easterners did not face racism. Nonetheless, the perception of second-class status was hard to avoid. Perhaps, they thought, we are not “one people”?

Scapegoating immigrants

Grievances at discrimination can translate into a desire to rebuke elites and central government. And to some extent the Left Party Die Linke is the beneficiary. But where labour institutions and solidarities are weak, as in much of the east, non-German immigrants can be scapegoated.

Labour and immigration policies pre-1989 explain the east-west distinction here. In the FRG, racism and sexism were dominant ideologies in the postwar decades. There was appalling discrimination meted out to economic immigrants and asylum seekers. But rapid economic growth combined with the sluggish rise in women entering the workforce from the 1960s through the 1980s meant immigrants were recruited on a substantial scale. Decade after decade, they fought for their livelihoods, made friends with colleagues and neighbours and won their integration from below. Bigotry was pushed back.

Percentage of Germans without a migrant background (2016). Image: Underlying lk / Wikipedia/creative commons.

The GDR experienced the reverse. The official ideology was egalitarian and, on the face of things, anti-racist and anti-sexist. Women entered the workforce during boom times. But few immigrants arrived and those that did come were subject to brutal state discrimination and segregation. Few were permitted to settle, and the post-1989 economic collapse ensured the picture did not change. Trade unions were banned, and solidarity in workplaces centred on the (invariably white, German) work team.

Given that contact with immigrants generally undermines xenophobia, far-right parties are enjoying success in areas of low immigration, especially the east. Against expectations, the AfD receives strong support from some immigrants, but of a specific category: the German-heritage “late re-settlers” from Russia and Eastern Europe.

Many of these trends exist in Germany’s western states too, including the rise of the AfD. There is also a longstanding distrust of mainstream politicians and institutions. This is nourished by a perception that elites have feathered their nests and dumped the consequences of unification and economic crisis on the rest. The west has also experienced a rise in poverty – indeed, the east-west poverty gap is actually lower now than ten years ago.

Similarly, an “overwhelming majority” of people in Germany, according to a recent Eurobarometer report, hold that income inequality is excessive. So, together with anti-racist activism in East and West alike, the potential for a politics that cuts across “ethnic” divisions is clear.

The Conversation

Gareth Dale, Senior Lecturer in Politics and International Relations, Brunel University London.

This article is republished from The Conversation under a Creative Commons license. Read the original article.


To see how a city embraces remote work, just look to Helsinki

A deeply rooted culture of trust is crucial to the success of remote work. (Sean Gallup/Getty Images)

When I speak to Anssi Salminen, an account manager who lives an hour outside Helsinki, he’s working from a wooden platform on the edge of a Finnish lake. With a blanket laid out and his laptop set up, the sun low in the sky, Anssi’s remote work arrangement seems blissful. 

“I spend around half of my time working somewhere else other than the office,” he says. “I can work from home, or on the go, and I also travel to the Netherlands once a month and work from there.

“The emphasis in my work has always been that it doesn’t matter when or where I work, as long as I get things done.”

For many people around the world, the shift to remote work was sudden, sparked by the coronavirus pandemic. Finland, however, is finding the transition much less significant. Before Covid-19, the Nordic nation already displayed impressive levels of remote working, with 14.1% of its workforce reporting usually working from home. Only the Netherlands has a comparable percentage of remote workers, while the UK lagged behind at 4.7%, and the US’s remote workforce lingered at around 3.6%

Anssi works for one of many Helsinki-based companies that offers its employees flexible policies around when and where they work. That arrangement is in part due to the Finnish capital’s thriving start-up scene. In spite of being a relatively small city by global standards it is home to over 500 technology start-ups. These companies are leading the way when it comes to keeping employees connected wherever they choose to work.

“Our company has a completely location-free working policy,” says Kasper Pöyry, the CEO of Helsinki-headquartered software company Gapps. “All meetings are made available for online participants and facilitated accordingly. Some employees have worked extensively from abroad on a working holiday, whilst others prefer the comfort and social aspects of the well-stocked office. Whatever works for our employees is what works for the company.”

Like Gapps, many Helsinki-based firms are deeply preoccupied with providing the necessary technology to attract talent in a vast and sparsely populated country. Finland has only 15 inhabitants per square kilometre, and companies understand that in order to compose teams of specialised expertise, they may have to seek talent outside of the city. Local governments take a similarly proactive stance toward technological access, and Helsinki offers free, unrestricted, high-speed Wi-Fi from city-wide hotspots, while the country as a whole boasts some of the best coverage in Europe. 

But encouraging remote work isn’t just about optimising the potential of Finland’s workforce – companies in Helsinki also recognise that flexibility has clear benefits for both staff and employees. 

“The idea of a good work-life balance is ingrained in Finnish culture,” says Johannes Anttila, a consultant at organisational think tank Demos Helsinki. “It goes back to our rich history of social dialogue between labour unions and employers, but also to an interest in delineating the rules of working life and pushing towards people being able to enjoy their private life. Helsinki has been named the best city in the world for work-life balance, and I think that this underlies a lot of the mentality around remote work.” 

For Peter Seenan, the extent to which Helsinki residents value their free time and prioritise a work-life balance prompted his move to the city ten years ago. He now works for Finnair, and points to Finland’s summer cottages as an example of how important taking time to switch off is for people in the country. These rural residences, where city residents regularly uproot to enjoy the Nordic countryside, are so embedded in Finnish life that the country boasts around 1.8 million of them for its 5.5 million residents

“Flexible and remote work are very important to me because it means that I don’t feel like I’m getting stuck in a routine that I can’t control easily,” he says. “When I’m working outside of the office I’ll go down to my local sauna and go ice swimming during the working day, typically at lunchtime or mid-morning, and I’ll feel rejuvenated afterwards… In winter time especially, flexibility is important because it makes it easier to go outside during daylight hours. It’s certainly beneficial for my physical and mental health, and as a result my productivity improves.”

The relaxed attitude to working location seems to pay off – Finland is regularly named the happiest country in the world, scoring highly on measures such as how often its residents exercise and how much leisure time they enjoy. With large swathes of unspoiled countryside and a national obsession with the outdoors, sustainability is at the forefront of its inhabitants’ minds, leading to high levels of support for measures to limit commuting. In January, Finland passed a new Working Hours Act, the goal of which was to help better coordinate employee’s work and leisure time. Central to this is cementing in law that employees can independently decide how, when, and where they work.

Yet enacting the new ruling is not as simple as just sending employees home with their laptops. For Kirsimarja Blomqvist, a professor of knowledge management at LUT University, perhaps the most fundamental feature that remote work relies upon is a deeply rooted culture of trust, which Helsinki’s residents speak of with pride. The anecdotal evidence is backed up by data which suggests that Finland boasts one of the highest levels of trust and social cohesion in Europe, and equality and transparency have always been key cornerstones of political thought in the country.

“Trust is part of a national culture in Finland – it’s important and people value it highly,” she explains. “There’s good job independence, and people are valued in terms of what they do, not how many hours they work for. Organisations tend to be non-hierarchical, and there is a rich history of cooperation between trade unions, employers, and employees to set up innovative working practices and make workers feel trusted and valued. 

“It’s now important that we ensure that this trust can continue to be built over technology, when workers might have been more used to building it face-to-face.”

As companies begin to look hopefully toward a post-Covid future, the complexities of remote work are apparent. Yet amid issues of privacy, presenteeism, and social isolation, the Helsinki model demonstrates the potential benefits of a distanced working world. The adjustment to remote work, if continued after the crisis, offers a chance to improve companies’ geographical diversity and for employers to demonstrate trust in their workforce. On these issues, Blomqvist believes other cities and employers can learn a lot from Helsinki.

“People are now beginning to return to their workplaces, but even as they do they are starting to consider the crisis as a jumping point to an even more remote future,” she says. “The coronavirus pandemic has been an eye-opener, and people are now interested in learning from Finland’s good practices… We are able to see the opportunity, and the rapid transition to remote work will allow other countries to do the same.”

Katie Bishop is a freelance writer based in Oxford.