By Maria Martinez
BERLIN, Sept 17 (Reuters) – The economy of the former East Germany has transformed since the defunct communist state reunited with the vastly wealthier West Germany in 1990, but more than a generation on it still lags the west in some key areas.
While the once huge gulf in unemployment rates has closed, households in the former east still have around half as much wealth on average. People earn less, although they can also spend less on outgoings such as rent.
Some residents in the east view such lingering differences as a sign they remain second-class citizens. The disparities have helped the rise of the far-right Alternative for Germany (AfD) party in the region. After its victory in this month’s Saxony-Anhalt state election, it is hoping to make gains in Mecklenburg-Western Pomerania on September 20.
Following is a look at where the eastern German economy has largely caught up with the west – and where it hasn’t.
EMPLOYMENT HAS MOSTLY CONVERGED
For the first 15 years after reunification, Germany’s defining economic fracture was access to work after the collapse or painful restructure of state-owned industry in the east.
Eastern German unemployment peaked near 20% — almost double the western rate in the late 1990s. As the economy stabilised, the gap narrowed, and by 2025, registered unemployment in the east stood at 8.6%, compared with 6.4% in the west.
Employment rates show even more convergence. By 2025, 75.9% of those in the east of working age were in employment, trailing the west by just 1.6 percentage points. Among women, the gap has closed entirely: 74.1% in the west are in work versus 74.0% in the east.
HOUSEHOLD INCOMES MOVED CLOSER, BUT THE EAST STILL TRAILS
Household incomes in eastern Germany have risen substantially since 2008, and faster than in the west. In 2008, median disposable income in the eastern states, including Berlin, was about 82% of the western level. By 2024, it had climbed to roughly 92%.
But a meaningful gap remains. Median disposable income in the eastern states, including Berlin, was about €25,900 in 2024, compared with roughly €28,100 in the west — a difference of around €2,200 a year.
In 2025, median gross annual earnings for full-time employees were €46,013 in the east, excluding Berlin, compared with €55,435 in the west — a gap of €9,422.
While households in eastern Germany earn less on average, living costs are also lower, particularly for housing. Asking rents in eastern states such as Saxony, Saxony-Anhalt and Thuringia are around 30%-40% below the national average, helping to partly offset the income gap.
A WIDER GAP IN WEALTH
The east–west wealth divide remains far wider than the gap in household income or employment.
In the eastern states, including Berlin, average net household assets, including property, investments, pension savings and goods, rose from €61,200 in 2013 to €125,500 in 2023. In the former western states average net assets increased from €140,300 to €257,100 over the same period.
Eastern households therefore held just under half — around 49% — of the average wealth of western households in 2023, a gap of around €132,000 per household.
The disparity is also likely to persist across generations.
EAST POPULATION CONTINUES TO SHRINK
The demographic legacy of reunification is most visible in the population. The east has lost a far larger share of its working-age residents due to the post-reunification exodus of younger people, combined with lower birth rates and faster ageing.
This means eastern employers are trying to recruit from a smaller pool, while a larger share is beyond working age.
In 2022 people aged 18 to 64 made up 57.5% of the population in the eastern states excluding Berlin, compared with 61.6% in the west.
From 1991 to 2024, net migration from east to west totalled about 1.2 million people, excluding Berlin. Since 2015, the east’s population has continued to decline while the west’s has grown.
Lower private investment adds to the challenge. East German firms invest around a quarter less per worker than those in the west, according to the Ifo economic institute.
The east’s older, shrinking workforce and weaker investment could make the remaining gaps in pay, wealth and economic capacity harder to close.
(Reporting by Maria MartinezEditing by Alexandra Hudson)
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