Germany's East-West Gap Narrows on Jobs but Persists on Wealth
Eastern Germany has largely closed its employment gap with the west, but household wealth, earnings and demographics still lag, feeding political shifts.
More than three decades after the former East Germany merged with the wealthier West, the country's defining economic divide has shifted. The once-yawning gap in unemployment has narrowed sharply, yet households in the east still hold roughly half the wealth of those in the west, and the disparity looks set to endure across generations.
Employment has largely converged
In the first 15 years after reunification, the collapse and painful restructuring of state-owned industry made access to work the sharpest fracture between the two regions. Eastern unemployment peaked near 20% in the late 1990s, almost double the western rate. As the economy stabilised, the gap closed. By 2025, registered unemployment in the east stood at 8.6%, compared with 6.4% in the west.
Employment rates show even greater convergence. In 2025, 75.9% of working-age people in the east were employed, trailing the west by just 1.6 percentage points. Among women, the gap has disappeared entirely: 74.1% in the west are in work, against 74.0% in the east.
Incomes have moved closer, but a gap remains
Household incomes in the east have risen substantially since 2008 and faster than in the west. Median disposable income in the eastern states, including Berlin, climbed from about 82% of the western level in 2008 to roughly 92% by 2024. In cash terms, that was about €25,900 in the east against roughly €28,100 in the west — a difference of around €2,200 a year.
Earnings tell a similar story. In 2025, median gross annual earnings for full-time employees were €46,013 in the east excluding Berlin, compared with €55,435 in the west, a gap of €9,422. Lower living costs, particularly for housing, partly offset the difference. Asking rents in states such as Saxony, Saxony-Anhalt and Thuringia run about 30% to 40% below the national average.
The wealth divide is far wider
The gap in assets is much larger than the gaps in income or employment. In the eastern states, including Berlin, average net household assets — covering property, investments, pension savings and goods — rose from €61,200 in 2013 to €125,500 in 2023. Over the same period, average net assets in the former western states increased from €140,300 to €257,100.
Eastern households therefore held just under half — around 49% — of the average wealth of western households in 2023, a shortfall of roughly €132,000 per household. The disparity is also likely to persist across generations.
A shrinking, ageing population
The demographic legacy of reunification is most visible in population trends. The east has lost a far larger share of its working-age residents, driven by the post-reunification exodus of younger people, lower birth rates and faster ageing. In 2022, people aged 18 to 64 made up 57.5% of the population in the eastern states excluding Berlin, compared with 61.6% in the west.
From 1991 to 2024, net migration from east to west totalled about 1.2 million people, excluding Berlin. Since 2015, the east's population has continued to decline while the west's has grown. Lower private investment adds to the challenge: firms in the east invest around a quarter less per worker than those in the west, according to the Ifo economic institute.
Those lingering disparities have fuelled resentment in some quarters, with residents viewing them as a sign of second-class status. They have also helped drive support for the far-right Alternative for Germany, which won this month's Saxony-Anhalt state election and is hoping to make gains in Mecklenburg-Western Pomerania on September 20. With an older, shrinking workforce and weaker investment, the remaining gaps in pay, wealth and economic capacity may prove harder to close.