Berlin was once the economic and financial center of Germany. Over the years the city’s economy has suffered severely. After reunification in 1989, Berlin hoped to become one of Germany’s economically thriving cities again. Unfortunately, until today, the city still has one of the lowest incomes per capita of all metropolitan regions in Germany and huge debts. The unemployment rate in Berlin circles around 11.6%, whereas the average rate in Germany is around 6.6%.

Factories and neglect
Berlin is founded at a geographically beneficial location. As several trade routes crossed the river Spree here, Berlin quickly became a commercial center. The Industrial Revolution transformed the city’s economy into Germany’s heart of machinery manufacturing and it developed an important chemical industry sector. Companies like AEG, Siemens, Osram and Schering made Berlin the most important industrial city of Germany. Towards the end of the nineteenth century Berlin also became Germany’s banking and financial center.

Like many other cities at the time, Berlin too suffered of the Great Depression during the 1930’s. It revived as a center of weapon production during the Nazi regime. After the War Berlin was not only completely devastated by bombings and robbed of most its talented workman, it was also divided into two parts. West Berlin turned into an isolated island in Eastern Germany and was cut of from any economical trails to other Western countries. In the East, the economy suffered under the economic decisions made by East Germany’s socialist planners.

After the Wall fell in 1989, Germany’s government had big plans for Berlin: the capital of Germany. The government moved from Bonn in West-Germany to Berlin and the city was to become the portal to Central- and Eastern Europe. Big investments were designed to help Berlin’s economy grow again.

But the economical growth that many were waiting for, didn’t come. Most of Germany’s economy had already settled in the South, in cities like Frankfurt and München, or Hamburg in the North. Warschau and Krakau became the gateways to Central- and Eastern Europe. And even though the government moved to Berlin, it didn’t bring huge economical growth along with it. Eastern Berlin was poor and lacked behind on the new capitalist structures. West Berlin was still depending on external allowances. Berlin needed a constant financial support from the other provinces in Germany. Some say, Berlin became addicted to financial subsidies from the rest of Germany.

Building on ruins
During the Wall not many people wanted to live in isolated West Berlin. Therefore, the West German government installed a rule saying that every young man that moved to Berlin, didn’t have to do military service. This resulted in many creative and alternative minded people moving to Berlin: people that were not necessarily driven by commercial gains.

After the Wall fell the infrastructure and architecture in Berlin lack behind in comparison to other German cities. Many people left in the hope to find better jobs. At the same time the city’s budget was declining now it had to cope with ‘two capitals’ in one city, containing four opera houses, three airports, two central train stations, and a double civil service.

The city today still finds it hard to hold on to young talented people. While many large companies have settled in other German cities, most well paying jobs are to be found there. Berlin is a very popular city for students from all over Germany to come to, but after studies most people search for jobs in other cities because of better career potentials. It means a great loss of potential workers. Today, Berlin is trying to attract big companies in order to make the city more attractive for people to come work here. But it is mostly the tourist industry that is experiencing higher growth rates every year.

Today Germany is famous for its stable economic state. Unlike many countries in Europe Germany doesn’t seem to be affected too much by the crisis. Berlin is still is the exception in Germany’s economic story. In Germany there is no such thing as a minimum wage. Especially poverty under older people is becoming a bigger problem, while retirement payments for lower incomes are quite slim and wealth care expensive. Many older people therefor still have jobs on the side after their retirement.

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