Earnings in East Germany vs West Germany

20.04.2017 09:50|Conotoxia.com

People in Poland tend to envy Germans earnings, which are approximately four times higher. However, the German labor market has its problems as well. The differences between average wages in particular west and east states are at approximately 50%. A commentary from Bartosz Grejner, Cinkciarz.pl analyst.

Bartosz Grejner, analityk Cinkciarz.pl

According to the Polish Central Statistical Office (GUS), the average gross wage in the Polish company sector for February 2017, was at the level of 4304.95 PLN. The difference between the states with the highest and lowest earnings (mazowieckie and warmińsko-mazurskie, respectively) was at 38.5%. However, the average result is significantly overvalued by earnings in Warsaw. If we compare warmińsko-mazurskie to dolnośląskie (the second best state regarding earnings), the difference between these states will be at 24% (according to the GUS data for December 2016).

Former border has established earnings

What does this have to do with German salaries? At first sight, the average gross wage in Germany is similar to the average gross wage in Poland. However, it has been expressed in euros (3.7k, according to Destatis). Therefore, this may show how large the gap between Polish and German salaries actually is. But, the German labor market has its own problems. The differences between wages in states of the former German Democratic Republic and the states of West Germany cast shadow over the German labor market.

The German reunification brought hopes that the East German states will quickly catch up with the West German states when it comes to economic matters. The former German Democratic Republic quoted an intense increase in production and the public sector’s demand. However, this increase wasn’t equal for every sector.

According to the German Institute for Economic Research (DIW), employee productivity in East Germany is at 79% of the West German average. Additionally, taking into consideration that the average working time in West Germany is longer, this percentage may even reach 74%. Low productivity in East Germany is mainly caused by an unequal development of particular sectors, as well as by a lower amount of workplaces for qualified specialists.

The average monthly wage in West Germany is 29% higher than in East Germany. As far as the difference between mining sectors, it is only at the level of 8%. The difference between the building and IT sectors is at the level of 23% and 40%, respectively. The difference between the industrial processing sectors is at the level of 47%, in favor of West Germany.

Less profits for women

It’s also worth focusing on the disproportion between men’s and women’s salaries. According to Destatis, men earn approximately 22% more than women in West Germany. What’s interesting is that this index is only at the level of 4.4% in East Germany.

Despite the significant differences between East and West Germany, the German labor market is very attractive regarding both wages and social welfare benefits. Moreover, according to the latest Eurostat report, only four countries in Europe have a higher minimum wage than Germany (1498 euro) – Luxembourg, Ireland, Holland and Belgium.

 


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