“We’re redrawing the economic map in Germany”

For years, economic development in eastern Germany has lagged behind the rest of the country, but a series of massive business expansion projects is turning the tide. The national government’s commissioner for eastern Germany, Carsten Schneider, discusses the growing momentum in those regions.

December 2022

Former German Chancellor Helmut Kohl famously promised blossoming landscapes for the east after German reunification in 1989-90. How well do you think that promise has stood up?

Carsten Schneider: Right now we’re witnessing the redrawing of the economic map in Germany. Eastern Germany is profiting from companies in key technologies investing billions in new locations and creating new industrial jobs. Tesla’s factory in Grünheide near Berlin is already up and running. Great progress has been made on the CATL battery production facility in Thuringia. And Intel has decided to come to Magdeburg – there’s still a lot to do, but the perspective is more than rosy. Politicians at the national and regional level have created the conditions necessary to make eastern Germany a leading economic area, for example, in hydrogen technology.

Germany needs international companies to expand to and within the country – that’s especially true for key technologies like electric mobility, robotics and biotechnology. Why should international companies set up shop in the east?

CS: Eastern Germany has advantages that have played a central role in companies’ decisions to locate subsidiaries there. They include the availability of land, a headstart in terms of renewables and a central location at the heart of Europe. Moreover, eastern Germans are very positively disposed toward industry. And there’s a modern infrastructure and very good universities at the forefront of research and innovation in key technologies.

How does the government encourage international companies to come to the region?

CS: For starters, there’s Germany Trade & Invest, which – along with the economic promotion agencies of the Federal Republic of Germany’s sixteen regional states – markets eastern Germany and has performed well in the past. Of course, marketing isn’t everything. Sometimes financial incentives have to be offered, as was the case with Intel in Magdeburg. For Intel, the national government has taken on most of those incentives, in part because we want to become more independent from global semiconductor supply chains. Another factor is the complete determination of the eastern regional states that large projects succeed there. A good example is Tesla. The regional government of Brandenburg, and in particular its Minister for Economic Affairs, Labor and Energy Jörg Steinbach, put a lot of effort and professional expertise into successfully concluding a complicated permits process. Many people doubted that this would be possible. Brandenburg showed that it is.

Some parts of the east have a reputation for being rather skeptical about foreigners. How do you overcome that challenge?

CS: The biggest obstacle to the economic development of the east is the shortage of specialists and labor in general. We have to come together to address these structural impediments to growth, and part of that is being open to immigration. In some sectors, it’s barely possible to fill open positions. The 2021 Employment Office survey of eastern Germany commissioned by the Ministry for Economic Affairs and Climate Action showed that, even in the second year of the coronavirus pandemic, more than a third of eastern German companies were searching for highly qualified employees. Extrapolated, that meant 550,000 specialists were needed in the first half of 2021 alone. Skilled foreign workers aren’t competition. They’re a necessary supplement. And that message is slowly but surely getting through. We have to vigorously oppose xenophobic tendencies.

The stereotype is that people in the east speak little to no English. Is that true?

CS: I’d say that idea is obsolete. Maybe that was true in 1990 after many years in which school curricula in Communist East Germany had other priorities. But I’m sure that for the last 20 years or so, graduates in eastern Germany have spoken English just as well as elsewhere in Germany. In fact, the eastern German states generally do well in educational rankings.

 

Carsten Schneider has been a member of the German Bundestag since 1998. The 46-year-old is a member of Chancellor Olaf Scholz’s SPD party. Schneider’s constituency is in Erfurt in the German regional state of Thuringia. He has been the national government’s commissioner for eastern Germany since 2021. © picture alliance/dpa/Carsten Koal

 

Eastern Germany is still quite rural. Many young people move to the cities, some in the west. How are you trying to make the region a more attractive place to live?

CS: Eastern Germany is very attractive, and there are more and more returnees. There are lots of reasons for that. The cost of living is lower than in the west, as most property markets aren’t as badly overheated, schools are good and childcare is traditionally better than in many places in the west. Nonetheless, we have to keep at it and expand infrastructure in order to better connect rural regions. This is something we’re constantly working on.

Some demographic forecasts predict that the working population in eastern Germany will decline 10 percent by 2040. One solution is immigration. How do you cultivate a welcoming environment for international employees?

CS: I continually emphasize that we need an influx of both highly skilled and other kinds of labor. The national government is currently working on a strategy to attract skilled workers, and this issue will play a major role in it. I’m always arguing that we need to be more open to immigration both in society and in the economy. This will require a change of mentality in some regards. But I’m confident we’ll succeed if we all pull together.

In the wake of Intel’s decision to build its microchip “mega fab” facility in Magdeburg, the city announced plans to establish an International House with a welcome service. Is that just window dressing?

CS: There are similar welcome centers in other cities, for instance Berlin and Hamburg. These are eminently sensible institutions and have been very well received. Anyone who has ever lived abroad for some time knows the bureaucratic challenges that can entail. The welcome service is intended to support new arrivals in their early days in Germany.

Eastern Germany often has development projects and programs that cross regional state boundaries. The Leipzig/Halle Airport and the Lusatia Investor Center are two examples. How does that work?

CS: Economic promotion doesn’t begin and end on regional borders. Naturally, the states are friendly competitors, but in the case of those examples, they are also linked with one another. And states can pool their resources. The eastern German states have just decided to do this for a joint hydrogen interest group to make progress in this area together. I think that’s the right path to go down.

Where do you see the east in ten years’ time?

CS: The potential is enormous. The transformations we are facing are a chance for the east to set the pace for the entire country. People in these regions are used to change. They’re well educated, and eastern German infrastructure has widely and very skillfully been expanded. Those are factors that will play a role in years to come. If we continue to strengthen research and keep working at the forefront of key technologies, we can redraw Germany’s economic map in the long term to the benefit of companies and people living in the east.