The pride, price and problems of peaceful German unification
By Oei Eng Goan
The Federal Republic of Germany invited 11 Asian journalists last month to visit a number of German cities, research institutes and economic locations. The journalists came from Japan, South Korea, India, Pakistan, Thailand and Indonesia. Joining the 14-day tour was The Jakarta Post journalist. Below is his report.
BONN (JP): Of all the histories of western European countries in the 20th century, Germany's is the most unique, because of its aggressive wars, humiliating defeats, miracle of postwar economic recovery and peaceful yet costly process of unification.
The Wende -- the great change brought forward by the unification of the Federal Republic of Germany (West Germany) and the communist-styled government of the German Democratic Republic (GDR) on Oct. 3, 1990 -- did bring euphoria and pride to most German people.
Families were reunited, homes were rediscovered. The former East Germans could now speak, work and choose their leaders freely without any political regimentation. In short, both East and West Germans exuded optimism towards reshaping their country to become the biggest democracy in Europe.
Now, nearly six years since the Wende, the Germans realize that the unification has created not only financial burden, but also psychological problems. While Germans in the west (or Wessis) have to pay higher taxes for reconstruction in the former GDR, Germans in the east (or Ossis) feel that so many standards have been imposed on them that they cannot participate much in the country's renewal.
Questions -- like whether western Germany's annual transfer of 150 billion Deutschemarks (DM) or about US$ 102 billion to eastern Germany really causes the country's present economic problems, or whether the German people have succeeded in ironing out their differences in cultural values -- can best be answered by the Germans themselves.
"The catching-up process in eastern Germany has come to a standstill, while the continued need for massive transfer to eastern Germany is the prime reason for the tight fiscal situation," Ludger Lindlar, a researcher of the Berlin-based Institute of Economic Research, told a group of visiting Asian journalists recently.
Lindlar was referring to the austere economic policy the federal government has adopted to counter Germany's weak growth and massive budget deficits of 49.5 billion DM last year, which were only slightly improved from 50.6 billion DM in 1994.
Predictions of a "gloomy" economic situation in the united Germany, -- now with a population of 81 million in 16 federal states, including five new states from the former GDR -- were also made last month by the Hamburg Institute of Economic Research and the Institute of World Economics in Kiel.
The slow recovery in the eastern region is due to its outdated industry, while its companies -- in the words of economist Axel Nitschke of the Association of German Chambers of Industry and Commerce (DIHT) in Bonn -- "are on the right path, but some of their targets are still a long way off".
Other important factors underlying the problems are high labor costs and solidarity subsidies and funds for the elderly and the unemployed allocated from taxes paid by both the employers and employees.
Under German law, the hourly wage is set around 40 - 70 DM -- equal to the monthly salary of workers in some developing countries like Indonesia -- making it difficult for German enterprises to compete with those in other countries which can make cheaper offers.
High wages, together with the aftermath of the recession that hit Germany and other industrialized countries in 1993, have forced many German companies to lay off hundreds of thousands of workers to achieve their rationalization programs. The giant corporation Daimler-Benz alone laid off some 75,000 workers. It was estimated that 150,000 jobs were shed in the country's automobile industry that year.
Problems of unemployment, therefore, surfaced and even today -- with around 3.5 million people unemployed -- the federal government has not succeeded in bringing down the 10 percent level of joblessness to a single digit percentage point.
"Corporate staffing plans for 1996 will not bring any relief to the labor market (in Germany). It is true that more than half of the companies plan to maintain the current payroll, but in both western and eastern Germany, the intention of trimming the work force is more pronounced than it was last autumn," another DIHT official told The Jakarta Post.
Every cloud, however, has a silver lining, and the same is true in the case of Germany.
The federal government's fiscal policy measures, which came into force at the beginning of this year, have helped stimulate private consumer spending.
The measures of exempting income tax up to a minimum subsistence level, the rise in child benefits -- known also as "improvement in tax equalization of family burdens" -- and price stability have shored up some 15 billion DM to households.
Sales successes were also achieved by numerous German enterprises, which have made considerable efforts in reducing their production costs by resorting to cheaper foreign suppliers.
Many German manufacturers agree that "the share of imported components in Germany's export products has improved the perceptibility" that they now could boost their sales, while few of them could even penetrate new markets in countries where the economy grew strongly, such as those in Southeast Asia. Meanwhile, incoming industrial orders from abroad -- particularly from Germany's traditional trade partners -- have also increased.
Above all else, however, the prejudice between the Wessis and the Ossis is also dying down. The stereotype of "bossy Wessis" and "lazy Ossis" is diminishing
The Ossis have now proved themselves to be as diligent and skillful as their "cousins" in the West. Having learned to live in a democratic, market-oriented society, more and more Ossis are now participating in the country's renewal.
"All in all, many Germans are happy with the unification, despite its high cost," commented a young diplomat, who is a west Berliner. A number of officials from the former GDR also aired similar views.
A 30-year-old part-timer for a government agency in Frankfurt, Andreas Lobenstein, told the Post that it has become some kind of fashion in Germany now "to complain about the tremendous cost due to reunification".
"People in quite highly develop countries (such as Germany) like to complain that they are so bad off ... that life is getting worse and worse although by international standards, they are really well-off."
Lobenstein said that if the Germans were now faced with the choice of lower taxes or unification (higher taxes), they would choose the latter anyway. "I am deeply convinced that 99 percent would prefer a united Germany," he said.
Germany, obviously, needs another few years before it achieves successful results from the unification. Many predict that the newest successful achievement will come in the year 2000, when Berlin will once again become the country's capital city.