Shock therapy lays waste East Germany

April 17, 1991

By Will Firth

BERLIN — In the former German Democratic Republic, 787,000 people were registered as unemployed in February. This took the rapidly rising unemployment rate to 8.9%, compared with a stable 7.0% in west Germany.

The situation will worsen drastically in the new financial year, when a majority of the 1.9 million workers currently on short-term work get turned onto the street. Another 200,000 to 300,000 east Germans commute to work in adjacent areas of west Germany, and in the second half of 1990 alone 110,000 people moved west looking for jobs.

These changes represent massive shock therapy for the 16 million inhabitants of this Tasmania-sized territory, which until recently was a model, front-line member of the eastern bloc.

Wherever you look, the entire industrial complex is being dismantled. Even once flourishing state enterprises are being broken up or closed down. For example, the highly polluting potassium industry and uranium mines in the south-west have been shut down, but very few workers of the combined 25,000-strong workforce are being kept on for the desperately needed clean-up operations.

Massive open-cut brown coal mining, on which the GDR's energy production was largely based, is being phased out. Shipbuilding in Rostock, the automobile industry near Chemnitz, electronics in East Berlin, the chemical industry in the Leipzig-Halle region, the state airline INTERFLUG — the list of entire industries being dismantled goes on and on.

This applies to the GDR's collectivised factory-agriculture as well. Food production did not so much collapse as get monopolised by western food chains. Over 75% of consumables are now brought in from west Germany.

Western corporations have taken over the potentially profitable enterprises and abandoned the rest, already in poor condition after 40 years of centralised economic mismanagement. The workforce, 8.5 million strong in September 1989, could well be halved by the end of 1991.

No precedent

The situation can't easily be compared with depressed areas like Detroit or parts of the northern UK. What makes it unique is the fact that the population has no experience of being economically redundant. The abrupt changes have produced shock and extreme social tensions.

There was potential for self-management initiatives in the vacuum created by the collapse of centralised planning following the revolution of late 1989. But attempts at workplace takeovers and new management by the employees, like those sporadically registered in Western countries, were few, far between and only short-lived. Desperation seems to have stayed within the bounds of protest and individual angst. No wonder: both enterprising spirit and radical traditions of self-management were suffocated in Stalinist East Germany. Workers' organisations were transformed into or specifically created to be compliant "transmission belts" of state policy. And now they are accepting, albeit grudgingly, the petty pragmatism of the money market.

Creating or simply maintaining jobs under the new market rules is in most cases dependent on imports of capital and/or equipment from the west. Like Portugal or Greece in the European Economic Community, east Germany is now a cheap wage zone. Award wages equal to those in west Germany aren't scheduled to be paid until 1994. And that's just the deal negotiated between the federal government and the hierarchy of the German Council of Trade Unions: without rank-and-file action, who knows how long it will be until they're paid?

Little investment

Despite wages being around half those of west Germany, new investment has been sluggish. In part this is due to investors being put off by the chaotic legal situation. In many cases, property rights are unclear. Infrastructure is still of low standard, and some regions have severe environmental problems.

One advantage of the uncertainties around property is that many community organisations and small businesses have been able to move into empty buildings. Some of these "squatters" have been able to get official recognition as tenants/users, but others have been evicted.

With the ongoing collapse of state enterprises, many municipalities are hard hit when local factories or farms close down and there is no more revenue for essential service funding. Some municipalities have over 60% employment.

Between 40% and 60% unemployment is expected this year in the south-eastern state of Saxony. The unorthodox Christian Democrat premier of that state, Kurt Biedenkopf, has been pressing his western cabinet colleagues for a better deal to make the transition a bit less painful. But elsewhere the shock-therapy mentality prevails.

Parallel with other Eastern European countries, women are by far the hardest hit by the new "democratic" structural changes. Profit-oriented patriarchal thinking by the "new" (often the same old) managers very often leads to women being the first to be made redundant and also the first to be crossed off the list of new job applicants as "unreliable females who might get pregnant and leave us in the lurch". The old "women in the home" ideology is rearing its head again.

International Women's Day in the east was marked by a further turn away from the "kitchenware and red carnations" tradition of the Stalinist regime to a sober and militant stance by progressive women's organisations. Priority No. 1 is improving women's basic material position — creating jobs, re-establishing slashed kindergarten places, getting back free and harassment-free abortion services.

The non-parliamentary opposition has a lot of work to do to stabilise its identity and develop its potential for action. Flights of radical optimism are scarce, and the most attainable goal is the "reformist" one of wringing concessions from the corporate and government machines of the new Ger-money.

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