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The giant Swiss food company Nestlé jolted Berlin a few months ago by announcing that it is closing its candy factory in the German capital. The company will stop making "Yes" chocolate bars and lay off 450 people — another rainstorm feeding the flood of 250,000 manufacturing jobs that have been lost in Berlin since German reunification in 1990. With the city's unemployment rate at an astounding 18.4%, a dark mood of pessimism and angst has settled over Berlin as it struggles with a weak global economy, huge debts and unaffordable welfare provisions that have left the city bankrupt. Every month for nearly a year the two biggest problems cited by Berliners have been the threat of unemployment and concern about the city's shaky finances, according to the opinion researcher Forsa. Berlin's troubles are a severe disappointment to many from both east and west who hoped the capital's reunification would lead to a more prosperous future, and their frustration is now seeping into the city's cultural and nightlife. "There's a mood of great uncertainty," says Giovanni di Lorenzo, editor of the newspaper Der Tagesspiegel. "People know they will have to make sacrifices."
Heading the list of Berlin's problems is the financial crisis facing the municipal government. The Berlin city council, known as the Senate, will present its 2004 budget next week. According to Finance Minister Thilo Sarrazin, Berlin has a j46 billion debt and next year will run a whopping €4.3 billion deficit. By comparison, New York City is suffering its worst budget crisis in 30 years, but has only come up short by €2.8 billion. And New York has 8 million residents to share the pain, compared with Berlin's 3.4 million.
What makes it harder for Berliners to bear is that they are accustomed to the high life. The city has three opera houses, five symphony orchestras and three world-class universities, all paid for by the Berlin government; it has 3,000 more police officers than Hamburg, a region of comparable size, and 30% more civil servants. Some of this has to go. "The average Berliner has to accept less culture, moderate cuts in education and a drawing down of the police force," Sarrazin told TIME. "But to be honest, there has been mostly an adverse reaction."
The cuts are being felt. Public swimming pools have been closed, a new subway line has been abandoned midway through construction, and the city has imposed a hiring freeze, not replacing teachers or file clerks who retire or leave the city. The Berlin police force will hire only 100 new officers a year until 3,000 jobs have been cut through attrition. Berlin has withdrawn from the association of German public employers, which agreed to a 4% wage increase for civil servants nationwide earlier this year. Economy Minister Harald Wolf says Berlin is instead offering wage cuts in exchange for not firing thousands of workers. Roland Tremper of the Verdi public sector trade union calls this "a stab in the back for all employees."
The grim mood extends far beyond the arcane details of the city budget. Last week Berliners solemnly marked the 50th anniversary of a nationwide workers' uprising in East Germany that was brutally suppressed by Soviet tanks on June 17, 1953. Those workers were demanding freedom, but today there are plenty of people around who say they preferred life under the communists before the Berlin Wall fell in 1989. "If you ask me, they could put the Wall back up tomorrow," says Eveline Kulczak, 35. She has lost her prestigious job organizing fashion shows in eastern Germany, been deprived of her free child care, and been left with a pile of debts by her husband. "As a family, we were better off before the Wall fell," she says. "If I could afford to, I would leave Germany altogether." A growing number of Germans are doing just that.
Hardy Firl, 71, who spent three years in jail for his part in the 1953 uprising, also feels let down by what happened after the Wall fell. "I hated the East German system, but I am not really happy with the way things turned out after 1989," Firl says. "Back then at least the streets were clean, we took care of each other, and you didn't have to be afraid to go out at night."
Parts of the city are experiencing levels of poverty that were previously unknown in Germany. A 1999 report on the East Berlin neighborhood of Hellersdorf estimated that 15% of the population lives below the poverty line — defined as a household income that is 50% or less of the national average. A large number of those are children. Bernd Siggelkow, a pastor in Hellersdorf, says Western politicians made big promises to the residents of East Berlin, but they were not fulfilled. "People here thought, 'Now the West is coming with all its glitter and gold,'" Siggelkow, 39, says. "But in the wake of unification came unemployment and a dramatic rise in broken marriages. A generation of neglected children is growing up here."
Even in West Berlin the mood is hardly upbeat. Julia Wahn, 30, who just finished her teacher training, is still looking for a job and has few prospects because of the education-budget cuts. "Germany is worse off today than a year ago and Berlin is the worst place to be," she says. "I have lots of friends who are unemployed. They make do for a while, but most move away eventually." Stefan Linse, 34, used to be a salesman in a boutique on the city's upmarket shopping street, the Kurfürstendamm: "I lost my job because people think twice before spending their money on extras like expensive clothes or dinner at a restaurant."
Even Berlin's famous nightlife has been affected by the glum mood. Mike Stolz, co-owner of Guppi, a trendy bar in the Prenzlauer Berg neighborhood, complains that there has been no growth in his business. "People come here but consume less," Stolz says. "I have let part-timers go because I can't afford them anymore." Stolz, 37, sees a plus side to the downturn: mediocre night spots can no longer make it and only the quality places survive. Josef Laggner, 37, owner of the Lutter & Wegner restaurant in East Berlin, says he has to seek out customers. "West Berliners don't go out to dinner very much anymore and East Berliners stay in their neighborhoods," he says. "I have to attract convention goers, business groups and tourists."
Despite its malaise, Berlin has some solid achievements. The city has built clusters of knowledge-based industries in the software, media and biotech sectors. Hans Estermann, managing director of the Berlin Business Development Corporation, says the city has attracted about 1,500 jobs in the first five months of the year. Among the new arrivals: factories for DaimlerChrysler, BMW and the U.S. electronics giant Motorola. Still, Berlin will have to do a lot better if it is to make a dent in its stubborn unemployment figures. And Stefan Krätke, author of Berlin: Metropolis Between Boom and Crisis, is worried that the cuts in the city budget will impact the sectors in which Berlin is strong. "The financial consolidation is now threatening the few islands of economic growth," Krätke says. "They are making severe cuts in schools and medical research centers, which give strong support to life-sciences development."
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Berlin's problems can be traced back to the subsidies — amounting to half the total budget in West Berlin — the city once received for its businesses, schools and culture. As a capitalist island behind the Iron Curtain, it was seen as a special case, deserving of special support. Now all that has changed. After the East German government was swept away in 1990, the subsidies were phased out. It became too expensive for companies to run factories there. "Berlin's citizens were very spoiled in the time of the divided country," says Sarrazin. The massive job losses that followed reunification mean that the Berlin city government is still paying unemployment benefits to 10% of the population and welfare payments to another 8%.
More recently, Berlin erred by extensively subsidizing the construction of office buildings and apartments. Politicians predicted the city would become a hub for German business when the government moved from Bonn in 1999, but the boom never materialized. The result: more than 1 million sq m of office space now sits empty and many of the 210,000 new subsidized apartments are unrented. Yet new buildings are still going up.
One of the hardest hit areas is the public school system. Over 2,000 teachers retire each year — and they're not being replaced. Frogard Timappel, a history teacher and an official of Berlin's teachers' union, says the cuts "are much too much." Next September, parents will be expected to contribute €100 for each child toward the purchase of school books. In some schools, students are being asked to clean the classrooms themselves. Teachers have been told they have to work two hours a week more than the 26 hours of instruction they performed earlier.
The problems extend to higher education. Heike Gundermann, spokeswoman for Humboldt University, Berlin's oldest, says the cutbacks may mean the elimination of 500 professorial or scientific positions. It's also possible, Gundermann says, that the normal intake of 5,000 students per semester may have to be scaled back. Says Christhard Gössling, director of Berlin's famed Hanns Eisler Academy of Music: "Although the cutbacks are not huge, they are for us a matter of life and death." He says the cuts would eliminate 50% of the places at the school.
Last fall, the city declared an "extreme budgetary hardship," the first step toward winning extraordinary financial help from the federal government. But the German government is in terrible financial shape too — and the two sides have failed to reach an agreement on aid. In the meantime, Berlin's mood grows darker. "When we talk about poverty in Germany, we usually think of the Third World," says East Berlin's Siggelkow. "But we have an enormous problem right here." And, sadly for Berliners, there's no easy way out.
- CHARLES P. WALLACE | Berlin
- Berlin's woes are enough to make some folks miss the Wall