Former East Germany
July 15, 2007 9:02pm CST
Reports are wide-spread in the popular press that East Germany is suffering from high unemployment, poor economic conditions and social unrest in certain cases. How true are the reports? Is there any validity to the concern of economists regarding the demographic shifts, &C.?
22 Jul 07
I have also heard of that about East Germany, I think it is true, as high unemployment plagues most majority of former communist states (I know, I live in Hungary, a central European state formerly been ruled by communism for about 45 years). You might have read that some of those countries have only 4 or 5% unemployment rate. But don't be deceived. The active workforce (those working and looking for jobs(they are the so called unemployed)) in these state are pretty low, around 50%, whereas in the developed world it is around 70-80%. There are a number of reasons why people who do not have a job don't even look for one. First is that the proportion of the old people (above 60 years) are quite high, around 30% of all the people (they are often the sickly ones, putting a lot of pressure on the free health care systems of the region). Also this aging population has to be paid their pensions, which is also paid by the state. Many hungarian pensioners receive about 100 dollars monthly, of which many times half goes straight to medicines, also largely paid by the state. The population of children, who are in schools and thus cannot work either is around 15%. Almost all of them go to public schools, which are also financed by the state. This means that the remaining 45-50% have to support all this by the taxes that they pay. This results in high taxes, over 40% of all personal earnings are paid in taxes, and about 25% of gross profits go to taxes to the state. If the taxes would be lower than the budget deficit would be much higher. As the population is constantly aging this situation is going to get worse and worse. I don't know of any social unrest in East Germany, but I can imagine that it happens because of the seemingly unhopeful situation of many in East Germany and the former communist led (most people were not communist, it is only the government that the Soviet Union imposed on the states that it conquered during World War II) countries.