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Living Conditions in the New Federal States (January 1997)

Four years after unification, the results of a study on inequality and social policies in the former GDR showed considerable differences between the old and new federal states. Developments in the economic situation, income and wealth distribution, and the labor market are summarized below.

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Unification is Complete – Support for the East will Continue

The equalization of living conditions in the Western and Eastern federal states remains a challenge for politics and society in all of Germany.

German reunification was an extraordinary historic process. The question, however, is whether the equalization of objective living conditions and [the equalization] of subjective assessments thereof has already happened, too, or whether we, in this expanded German society, are still far removed from this.

Shortly after unity was achieved, the Science Council proposed establishing a “Commission for Research on Social and Political Change in the New Federal States” [Kommission für die Erforschung des sozialen und politischen Wandels in den neuen Bundesländern or KSPW] and giving it the task of undertaking an academic examination of the transformation process that had already started during GDR times. In the first phase of its activity, this interdisciplinary commission made up of sociologists, political scientists, psychologists, jurists, and economists used funds from the German Federal Ministry for Education, Science, Research, and Technology and the Ministry for Labor and Social Affairs to promote, in particular, research projects by East German social scientists to reclaim and preserve previously inaccessible data and diverse, unpublished information; in doing this, the commission sought to provide an impetus for the enrichment of the East German social science research landscape. In the second phase, the KSPW’s activities focused on drafting six summary reports aimed at tracing various dimensions of the transformation process up to 1995. Some of the major findings from Work Group II’s report on inequality and social policy are presented below.

The report examines fundamental developments in the socio-structural and sociopolitical dimensions of the transformation process in East Germany and sheds light on sociopolitical issues and the groups affected by them. Social policy played a particularly significant role in the changes to the political, social, and economic order that occurred in East Germany as a result of unification. Social policy’s decisive role in the transformation of the system consisted not only of a sociopolitical “buffering” of the economic and employment problems that emerged as a result of the transformation. As part of the intra-German integration process, social policy also – especially with respect to labor market policy and pensions – took on the role of ensuring the acceptance of the system transformation through [the issuance of] very large West-East transfer payments that brought income and social benefit levels up to the high standards in West Germany. This is the proper context for viewing the high West-East transfers, which, in net terms, amount to about 120-140 billion DM per year; this represents between four and five percent of the West German GDP.

The following major findings on the course and current status (as of 1994) of the transformation process can be noted:

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