The difficult reconstruction effort
Decades after reunification in 1990, the East-West divide is still very much in evidence. Every year, the government publishes a report on the state of German unity. It shows that the gap between the former GDR and the former FRG is narrowing, but not disappearing. One of the main differences concerns wages. The average wage in the East is only 86% of that in the West. GDP per capita, meanwhile, is only 79% of that in the West. Unsurprisingly, the Länder with the highest GDP per capita are in the former FRG, with North Rhine-Westphalia at the top of the ranking, where most of the highly industrial Ruhr is located, followed by Bavaria and Baden-Württemberg. Conversely, the Länder with the lowest GDP per capita, excluding the micro-states, are in the east, with Mecklenburg-Vorpommern, Saxony-Anhalt and Thuringia. But this gap is narrowing, and the East is increasingly home to investors, industries and major corporations, such as Tesla in Brandenburg, or Intel in Saxony-Anhalt.
Another problem facing East Germany is demographic. From the fall of the Wall to the present day, four million East Germans, mainly young people, have migrated to the West, compared with 2.8 million in the opposite direction. The number of children per woman, which was much higher in the GDR thanks to Communist birth policies, fell below that of the FRG as soon as the Wall fell. So, while the whole of Germany is facing an ageing population, the problem is magnified in the East, where the working population is shrinking not only because of the falling birth rate, but also because of population movements. In the former GDR, people over 65 now account for 22% of the population. As a result, many East German states are struggling to find qualified workers, despite the influx of migrants.
But beyond economic and demographic issues, the Eastern states sometimes do better on social issues: the wage gap between men and women is less pronounced, real estate is more affordable, family facilities such as crèches are more numerous... In short, quality of life is often judged to be better in the East.
Overall, despite these notable differences, all the statistics show that the eastern and western Länder are moving closer together. Unemployment rates in some former GDR states are now comparable in every respect to those in the former FRG. Yet many people in the East feel neglected in comparison with their fellow citizens in the West. Young people show the greatest dissatisfaction in opinion polls, demoralized by less competitive wages, and the fact that Easterners are statistically less likely to reach top positions. This partly explains the success of far-right parties in these regions. The far-right AfD party, Alternative für Deutschland, is becoming increasingly popular with its populist promises. Its success is not limited to the East, however, so much so that some fear a potential victory in the federal elections. In January 2024, Germany witnessed massive demonstrations against the rise of the far right. This month, following the party's umpteenth political scandal, triggered by media revelations of a party plot to remigrate millions of foreigners, over a million people took to the streets of Germany, chanting "Don't let history repeat itself".
Europe's leading economy
By the end of 2023, Germany had become the world's third-largest economy, ahead of Japan. Within Europe, it is the leading power, with a GDP of 4,121 billion euros in 2023. Its GDP is thus 1.2 times higher than the European Union average. This solid economy was built around the country's strong industrial base, which still accounts for 20% of GDP and 16% of the working population. Today, Germany specializes in automobiles, chemicals and the engineering of machines and IT or technical products. The Mittelstände also play a key role in contemporary German society, to the point of being almost a peculiarity of its economy. By this term, our neighbors on the other side of the Rhine refer to stable, long-lasting family businesses that are firmly rooted in their local area. They can range from a well-established craftsman to a solid company with over a thousand local employees. They played a key role in Germany's post-war reconstruction, at a time when many of its major industrial firms had been wiped out. The Mittelstände settled in and took root, at a time when the Cold War meant that the big industries were unable to operate at full capacity. Today, the vast majority of German companies are considered Mittelstände, and they contribute around half of the country's economy, to the point of being considered its backbone.
Despite its strong industrial base, the German economy is now more focused on services, which employ 75% of the working population. Today's economy is also highly internationalized. Imports and exports account for around half of GDP.
However, despite its solidity, the German economy is facing major difficulties. The Mittelstände are weakened by rising interest rates and falling demand. Industry, meanwhile, has been hit by rising energy costs due to heavy dependence on Russian gas imports since the abandonment of nuclear power under Merkel. Last but not least, the falling birth rate throughout the country is severely reducing the workforce. In February 2024, Robert Habeck, Federal Minister of Economics, even declared: "The German economy is doing dramatically badly".
Germany and the migration crisis
The country has been particularly hard hit by the migration crisis affecting Europe since 2015, caused in part by the civil war in Syria. According to Eurostat, in 2015, Germany was the European country to receive the most asylum applications. Indeed, Merkel was quick to champion a humanist approach to welcoming refugees. On August 31, 2015, the Chancellor declared a " Wir schaffen das! " that has now gone down in German history. With this "We'll get there", she officially announced her willingness to welcome refugees. In August 2015 alone, 100,000 migrants arrived on German soil, and around 2 million since, mainly from Syria, Afghanistan, Iraq, Iran and Eritrea. While this number initially fell after 2015, it is now on the rebound again, with 300,000 asylum applications in 2023, the highest number since 2015.
Germany, supported by numerous charities, has made major efforts to integrate these new populations. In 2016, 36 companies, now joined by over 200 others such as Deutsche Telecom, Deutsche Bank and Lufthansa, set up the " Wir zusammen " ("all together") initiative to encourage the hiring of migrants. Deutsche Post (Germany's post office), which has a growing delivery market, has hired almost 5,000 refugees. Others, like Volkswagen, have organized German language courses and offered integration support. These initiatives are also motivated by the labor shortage inherent in Germany's aging population. By 2021, around half of all working-age migrants will have found a job.
However, migration policy remains a thorny debate in the country. The dissatisfaction of part of the population partly explains the resounding success of the AfD, the main far-right party opposed to immigration and the European Union. Faced with this criticism and the upsurge in illegal immigration, Chancellor Olaf Scholz has, for the first time since 2015, turned his back on " Willkommenskultur ", the German culture of welcome. At the end of 2023, he embarked on a policy of deporting illegal immigrants, and even reintroduced temporary border controls.
The energy transition
One of the major challenges facing Germany today is the energy transition, known asEnergiewende. Initiated in the early 2000s and intensified after the Fukushima nuclear disaster in 2011, this policy aims to reduce dependence on fossil and nuclear energies, in favor of renewable energies. The German government has set ambitious targets: to achieve 80% of electricity from renewable sources by 2030 and carbon neutrality by 2045. To achieve this, Germany is relying primarily on biomass, wind and solar power. So far, the gamble is proving a success: by 2023, over 50% of electricity will come from renewable sources. Finally, in April of the same year, the country shut down its last three nuclear power plants.
However, the war in Ukraine has highlighted Germany's heavy dependence on Russian gas supplies, and caused a sharp rise in energy prices. Beyond its impact on energy, the abandonment of nuclear power is also at the center of debate in Germany for its social impact. The plants, which are often concentrated in rural areas, are becoming a bone of contention between rural dwellers, who are opposed to these transformations, and urban dwellers, who support them for ecological and economic reasons.
