After reunification, the East lost a generation of young people fleeing soaring unemployment to seek jobs and a future in the West after 94 percent of state-owned companies in the region were sold or shuttered. Since then, living standards have gradually been catching up with the West, but differences remain.
A full-time employee in the states of the former East Germany, where economic output lags the West by 70 percent, earns 15 percent less on average for the same job as a Western counterpart, according to government figures. None of Germany’s publicly traded companies have their headquarters in the East, and the region trails in investment in research, development, machines and factories.
The population drain stopped in 2013 and has recently begun to show signs of reversing. But the region lost 1.3 million people in the first decades after reunification, a shortfall that will take years to recover from — if ever. Young families remain scarce, meaning there are fewer people paying taxes or having children.
Compounding the problem is a widespread hostility to foreigners in the former East, making it less attractive to asylum-seekers, but also other immigrants looking for work who may have skills that are in demand.
Only 8.2 percent of the people living in the former East are minorities, or have an immigrant background, government figures show. In recent years, there has been a spate of racist attacks, like an assault on a synagogue and kebab shop in Halle last year, and anti-immigrant riots in Chemnitz in 2018.
“Demographic development is the Achilles’ heel of East Germany,” said Klaus-Heiner Röhl, an economist with the German Economic Institute.
To attract more people to the region, the federal government has created thousands of public-service jobs, and is offering incentives to lure entrepreneurs and start-ups like Heyfair, Mr. Hellmundt’s company.