Far-right surge could endanger East German businesses

As the far-right party Alternative für Deutschland (AfD) leads the polls in Eastern Germany, business and government representatives warn that a rise in xenophobia could endanger the region’s position in the global fight for talent.

While the German economy as a whole is struggling and is undergoing a “technical recession” in the first quarter of 2023, the Eastern part of the country has boomed over the last few years, Chancellor Olaf Scholz told a business conference on Sunday (11 June).

This is, in part, due to the population having more experience of economic transitions, as the former East shifted from communism to a market economy in the 1990s, Scholz said.

However, companies in the region would face severe labour shortages, which is why it needs to be more welcoming towards skilled migrants, he added.

“Today, employees and skilled workers, especially in future-oriented sectors, can choose where they go. And it’s often the supposedly soft factors that make the difference,” he said.

While the East could attract talent with beautiful landscapes, affordable housing and free education and childcare, this would also include the attitude towards migration, Scholz said.

Thus, “a shift in attitude is also needed throughout the country,” he said, “namely, the realisation that foreign skilled workers are not only needed but really welcome.”

Similar calls were made by Siegfried Russwurm, head of the German industry association BDI.

“Let me make it clear: Xenophobia and prejudice are the very last thing our country needs,” Russwurm told the conference.

“Germany is colourful, not brown,” Russwurm said, in reference to the colour associated with German national socialists, quoting his predecessor as head of the industry association.

“This is not only a good thing, but it is also right and important for us and our place in the world, for a country that is more dependent on international networking than almost any other country,” Russwurm added.

Far-right particularly strong in Eastern Germany

The last weeks and months have seen a surge in support for the far-right party Alternative für Deutschland (AfD, ID), which surpassed Olaf Scholz’s social democrats in a national poll published on Friday (9 June).

Support for AfD is particularly strong in the East, the regions of the former German Democratic Republic (GDR), where the party is leading polls ahead of the conservative opposition party CDU (EPP).

In a local election on Sunday (11 June), the AfD candidate for district administrator in the South Thuringia district of Sonneberg, Robert Sesselmann, narrowly missed an absolute majority, reaching 46.7% of votes in the first round.

In the state of Thuringia, the AfD led by regional chairman Björn Höcke is considered to be “proven extremist” by the regional domestic intelligence agency (Verfassungsschutz).

A run-off election with CDU candidate Jürgen Köpper, who reached 35.7% of votes, is planned for 25 June.

“Sonneberg is a district with strong companies that have their markets in the euro area,” Thuringia state premier Bodo Ramelow (Left) tweeted. “It has low unemployment and therefore also needs to recruit workers.”

“The business community should now speak up if a candidate for district administrator wants to get out of the euro,” he added.

Ramelow’s Left party as well as Scholz’s SPD and liberal FDP have called upon their voters to vote for the CDU candidate in the second round. Ramelow also blamed the low voter turnout for the result, with only 49.1% of those entitled to vote heading to the polls.

In autumn next year, Eastern Germany sees three regional elections in the states of Brandenburg, Saxony and Thuringia, in all of which AfD could become the strongest party, but with all other parties ruling out a coalition with the far-right.

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Economy minister warns of cuts

As the German government wants to reduce public spending to return to the constitutional “debt brake”, Economy Minister Robert Habeck (Greens) warned of reduced investments into regional business development in Eastern Germany.

While he agrees that the country would be in “a phase that cannot be used to justify further suspending the debt brake next year”, it would however be wrong to cut funding for regional development “in this phase where populist forces are abusing the structurally weak regions for their own purposes”, he told the conference on Monday.

More than 30 years after German reunification, GDP per capita and average wages are still considerably lower in Eastern Germany than in the West.

“With the economic boom in the East that I described, somehow, that has to change,” Scholz said.

“And many of you know that,” he said adding that “72% of East German companies cite higher wages as the remedy for the shortage of skilled workers.”

Nevertheless, “we will not be able to fill the gap that is opening up, especially in the East, with domestic workers alone,” he said.

Germany in recession as inflation, higher interest bite

Germany fell into a recession around the turn of the year, official figures published Thursday (25 May) showed, as inflation and higher interest rates curbed demand in Europe’s largest economy.

[Edited by Théo Bourgery-Gonse/Nathalie Weatherald]