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February 21, 2011

2010 ended with German unemployment falling to its lowest level in decades, below the fabled 3 million mark. In the wake of German reunification millions of workers lost their jobs as inefficient East German state industry collapsed and the massive adjustment to a capitalist economy began; this monumental transition happened faster and more dramatically than in nearly every other former communist economy.
A “blossoming landscape of capitalism” predicted by then German Chancellor Helmut Kohl failed to materialize however, and it took nearly two decades for the newly united nation to stabilize and regain a sense of normality.

The early 2000’s saw a stagnant employment market ravaged by high costs and excessive rigidity, all of which contributed to a general economic malaise. Hard fought reform and a brutally painful transition period ended more than one political career. Unions and industry nationwide, however, agreed to freeze wages, thus allowing German competitiveness to leapfrog nearly all its main rivals. While Germany has always been known for quality, it suddenly was also cost effective.

German unemployment began falling in earnest mid decade after it peaked at roughly 5 million, well over 12%. It fell consistently after this point, and aided by creative government policy during the recession, stayed largely flat when rates in other nations ballooned in 2008 and 2009. With unemployment approaching 10% in most industrialised nations, and much higher in others (20% in Spain, 14% in Ireland), Germany’s began to fall again rather fast and by the end of 2010 wide spread labor shortages were being reported; entire regions enjoyed rates between 4 and 6%.

In early 2011 nearly a million job vacancies were reported throughout Germany, somewhat of a crisis of skilled labor and the rationale behind the government’s new aims to attract foreign workers this year. April will see the expiration of temporary stays on immigration from the EU member states that joined in 2004 and treaties signed with EU partners aim to transfer excess labor to areas of shortage. Spain, with a previously stated unemployment rate of over 20% is a perfect candidate to partner Germany for a mutual gain. Young Spaniards, many of whom are rather familiar with Germany already, can secure good paying jobs on a temporary basis whilst learning a new language and valuable skills.

Berlin, one of most popular destinations for young Europeans with an eye for living and traveling abroad, is well positioned to benefit. The city is becoming a major Global hub for media and creative networks. German prosperity and wealth in 2011 is in a very real way translating into greater political power (and preeminence) for Berlin from across the continent. Current political and economic trends all point to the city continuously affirming itself as a major player (and winner) in Europe and the world as a whole.