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2010: Czechs at the same level as East Germans in 1990

4. 10. 2010 16:28
After 20 years, Czechs have reached the same economic level which was given to East Germans by Kohl at the time of the reunification

Prague/Berlin - Helmut Kohl is not shy about voicing his skepticism about the success of Germany's reunification he directed as Chancellor of Germany (1982-1998). On the occasion of the 20th anniversary of German reunification, he admitted that things are progressing slower than he expected.

However, in spite of their problems, the economic situation in the five federal states that were formerly East Germany can in fact be envied by some. For example, the neighboring Czech Republic.

The average Czech family can buy only half the things the average family in former East Germany can buy. These are the data from 2008.

While the average Czech has a yearly budget of EUR 5,500, the average East German has EUR 15,500, and his western colleague EUR 20,000.

Read more: Economic recovery: Czech Rep lags behind Germany

Germany-Germany income gap

The disappointment about the success of the reunification revolves around the fact that the income gap between the former German Democratic Republic and the western part of Germany is narrowing at a slower pace than expected. 

Germany's Federal Statistical Office said that in 1991, the average income in East Germany was EUR 5,500 lower than in West Germany. After 20 years, the gap has narrowed by mere EUR 1,000.

Read more: Twenty years after: the story of East German refugee

Czechs lag behind East Germans

What needs to be taken in account is the fact that Czechs buy goods which are 1.5 times cheaper than in former East Germany. The average income in the Czech Republic thus equals EUR 7,700 a year in Germany.

The income gap between the Czech Republic and former East Germany has actually widened since the beginning of the 1990s when the average Czech had his yearly income EUR 3,000, which was only EUR 5,000 less than the average East German.

The last year's data show that during the recession, the gap between the Czech Republic and former East Germany has been widening at a faster pace.

Early 1990s transformations

The gap has originated during the era of post-communist economic reforms in the early 1990s. In Germany, Chancellor Helmuth Kohl allowed East Germans to exchange their currency with a one-to-one exchange rate, which caused the income of East Germans increase by tens of percents.

In former Czechoslovakia happened exactly the opposite. Current Czech President Václav Klaus, who was then a finance minister, introduced a floating exchange rate, which caused a 50 percent inflation rate and an adequate decrease of the Czechoslovak living standard, with the average income in Czechoslovakia being only 1/3 of the average income in East Germany.

Since then, the average income in both countries has increased by 66 percent. This means that after 20 years, Czechs have reached the same economic level which was given to East Germans by Kohl at the time of the reunification.

Read more: Lost Generation: Young Czechs hit by unemployment

Unemployment problem

However, Kohl's social engineering caused a sharp increase in unemployment. Few were willing to employ East Germans for West German salaries. When only one of 20 Czechs was unemployed, one in five was looking for work in former East Germany.

But even this problem was partially solved by the Hartz-IV social reform and measures introduced by Chancellor Angela Merkel in the wake of financial crisis. Today, the unemployment in East Germany is 12 percent, in the Czech Republic 9 percent.

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autor: Petr Holub | 4. 10. 2010 16:28

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