30th anniversary of German reunification

Labour market drawing closer together in the east and west

02 Oct 2020 | Press Release No. 45

30 years after the fall of the Berlin Wall, a lot has changed on the labour market. After three eventful decades in which the country has overcome the challenges posed by reunification, the largest labour market reform in history, the German labour market is now feeling the effects of the corona pandemic.

The structural changes in the east of the country had to be cushioned in the 1990s. While the unemployment rate in the west hovered between 8% and 9.5% in the late 1990s, it climbed to over 15% in the east – with a temporary high of 17.8% in 1998.

Following a new high as a result of labour market reforms, the unemployment rate fell significantly until 2019 and now stands at 6.4%.

When the labour market reforms began in 2003, the previously hidden unemployment rate became apparent when social welfare benefits and unemployment benefits were consolidated as basic security benefits. While the unemployment rate in the east was subsequently around 18% until 2005, it stood at 8% to 9% in the west of the country.

The ongoing pandemic poses particular challenges for the labour market throughout Germany. The way in which we tackle the situation will mainly depend on the further development of the infection rate and further economic cuts.

Aside from the general developments, it is worth taking a special look at the situation facing women. When it comes to female employment, the east of Germany is leading the way. While the female employment rate has traditionally been high in east Germany, the west of the country is slowly returning similar figures.

However, the female employment rate has risen on both sides of the country over the years. The west has been catching up over the years, but women are still more likely to be employed in east Germany (61.5%) than in west Germany (56.5%).

With the exception of Bavaria (60.3%), the female employment rate in west German federal states was sometimes well below 60% in 2019. With the exception of Berlin (55.3%), the employment rates in all east German federal states was above 60%.

The leading state was Saxony, where 65.2% of women were in employment subject to social security contributions. The levels in Thuringia were 63.6% and were measured at 63.2% in Brandenburg. 

By contrast, women in the west German states of Bremen and North Rhine-Westphalia were trailing far behind: 51.3% of women in Bremen were in employment subject to social security contributions; the same can be said for 53.3% of women in North Rhine-Westphalia.

Although the female employment rate is still higher in the east of Germany, the west of the country has caught up somewhat over the years. However, the difference has remained largely stable in previous years.