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How your wages in Germany could depend heavily on where you live

The amount you can earn in a job could depend heavily on whether you live in eastern or western Germany, a new study has shown. But geography is not the only factor.

A woman holds bills and coins in her hand.
A woman holds bills and coins in her hand. Photo: picture alliance/dpa | Daniel Karmann

Although it’s more than 30 years since Germany was divided in two, the former East-West border is still visible in many economic statistics. 

A newly published study by the Hans Böckler Foundation’s Institute of Economic and Social Research (WSI), shows that, on average, 18.7 percent of all full-time employees across the whole of Germany are low-income earners. 

But in the five former East German states of Brandenburg, Mecklenburg-Western Pomerania, Thuringia, Saxony-Anhalt and Saxony this average is at 29 percent. 

Low-income earners are defined in the study as full-time employees who have to make ends meet with a gross pay of less than €2,284 per month. This is the value at which the Federal Employment Agency currently sets the nationwide upper limit of the lower pay range and is less than two-thirds of the average monthly gross pay of full-time employees (subject to social insurance contributions) in Germany.

Full-time workers in eastern Germany are the lowest paid

The study, which is based on pay data from the German Federal Employment Agency for 2020, shows that there are major differences by region and a stark contrast between incomes in eastern and western Germany.  

While 6.4 and 8.3 percent of full-time employees in western cities such as Wolfsburg and Erlangen, respectively, worked in the lower pay range in 2020, eastern cities such as Görlitz and in the Saale-Orla district reached figures of more than 40 percent. The highest rate was in the Erzgebirgskreis in Saxony, where 43.2 percent of full-time workers earned a low wage.

READ ALSO: How big is the divide between eastern and western German states?

According to the WSI’s findings, rates of more than 30 percent continue to be relatively common in eastern Germany, especially in rural districts. By contrast, in the western states, even predominantly rural regions remain below this mark, albeit only relatively close behind in some districts of Schleswig-Holstein and Rhineland-Palatinate. In general, full-time work in the lower pay range is more widespread in rural regions, where there are mainly small businesses and little industry.

But the WSI’s study isn’t the only indication of lower earnings in eastern Germany. 

A study by career platform Stepstone from 2021 also showed that the states with the highest average incomes in Germany are all in the west, while the states with the lowest average incomes are all in eastern Germany. 

A response by the federal government to a question from the Left Party in the Bundestag from March 2021, also showed that wages in eastern Germany still lag far behind incomes in the west in some sectors. The biggest difference was in the manufacture of clothing, where, in 2019, full-time employees in the western states earned 73 percent more than in the east. 

The reply also revealed a large gap in earnings in the manufacture of cars, engines, bodywork, trailers and car parts. In this sector, the gross income was 45.1 percent more in the West.

Other factors influencing low pay

It isn’t just living in eastern Germany that will affect your wages. The report by the WSI also shows that factors such as gender, industry sector and qualification level also have a significant influence on income levels. 

Nationwide, 25.4 percent of women have to get by with a low monthly income despite full-time work, while the same is true for only 15.4 percent of men. 

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Full-time workers under the age of 25 earned a low salary in 39 percent of cases, while 40.8 percent of those without vocational qualifications were also poorly paid. 

According to the study, 17.8 percent of people with vocational qualifications were among the low-paid compared with just 4.9 percent of people with university degrees.

READ ALSO: Wages, rent and pensions: What will the new German government mean for your wallet?

Low pay despite working full-time was particularly pronounced in the hospitality industry (68.9 percent), temporary employment (67.9 percent) and agriculture and forestry (52.7 percent). An above-average number of people also earned less than two-thirds of the average gross salary in the arts and entertainment and private household sectors (33.2 percent), logistics (28.3 percent) and retail (24.9 percent).

Is it all bad news?

The WSI’s report does also indicate that some progress has been made.  In 2011, 21.1 percent of all full-time employees were still low-wage earners and this figure fell to 18.7 percent by 2020. “In recent years, we have succeeded in pushing back the lower pay range,” said Helge Emmler, one of the authors of the study, describing the trend. This is particularly true in eastern Germany, he said.

In order to further push back the lower pay range, the increase of the minimum wage to 12 euros per hour is “certainly a step in the right direction,” Emmler explained. In addition, however, stronger collective bargaining coverage is also necessary. In eastern Germany in particular, this is still much weaker than in the west.

READ ALSO: EXPLAINED: How the minimum wage will increase in Germany in 2022

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WORKING IN GERMANY

‘Lack of diversity is a problem’: What it’s like to work at a Berlin tech startup

Many foreigners dream of finding a job in Germany's growing startup scene. But aside from promises of free pizza, what's the culture like, is the pay good - and do you need to speak German? We spoke to two foreigners working at tech startups in Berlin to find out.

'Lack of diversity is a problem': What it's like to work at a Berlin tech startup

With over €5.1 billion in venture capital fund investments raised last year, the startup industry in Germany’s capital is booming. Startups are the fastest-growing job sector in Berlin, and more than 78,000 people are now employed in the sector.

The sector attracts highly qualified, ambitious people from all over the globe. But what is it really like to work for a Berlin startup?

We spoke to two insiders to find out. Gabriela, 36, is originally from Poland and has been a Business-to-Business Manager in a tech startup in Berlin since October last year. Giuseppe, also 36, is originally from Italy and has been working as a Human Resources Manager in various tech startups for the last seven years. 

Most important question first – do you actually get free pizza and office table tennis?

Giuseppe: These kinds of benefits have become a bit of a cliche that doesn’t really reflect the reality anymore. Yoga, soft drinks, and fruit baskets are nothing special. The real benefits are now to do with remote working and flexible working schedules. 

Gabriela: We haven’t really had many of these kinds of ‘incentives’ because we’ve been mainly working from home since I started. Only in the last month or so we’ve been going to the office at least once a week, and we do get free pizza and drinks once a month when the CEO’s give us their monthly update on how the business is going.

READ ALSO: The German regions attracting startups

Would you say that your work environment is diverse?

Gabriela: My team is a complete mix of people from different European countries. But the number of BAME (Black, Asian and minority ethnic) people on board is not very high and there is definitely a problem with the lack of female leadership, which the company is trying to address. The CEOs are all white Germans.

Giuseppe: (Lack of) diversity is still a big problem. Most of the CEOs and the highest earners are white – usually German – guys. Women and BAME people tend to occupy lower-paid jobs. It’s a systemic issue – and there is competition among a lot of startups that are trying to show who is more diverse. 

How much German is spoken in your company?

Gabriela: Hardly any. We speak all the time in English with each other and all of our meetings are in English.

Giuseppe: It’s the same with us. I’m hearing German less and less. 

READ ALSO: How easy is it to get an English-speaking job in Germany?

Is there anything then that indicates that the company you’re working for is German?

Gabriela: I think the presence of a strong labour law reminds you that you’re in Germany. In our company, there’s an employees representation group and certain clear rules. You know that you won’t be suddenly dismissed once you’ve passed your probation time.

Giuseppe: Yes, the labour law is what I would point to. It’s not easy to get rid of employees in Germany – there is a more robust framework that affects the environment and culture. 

What is the salary like?

Gabriela: I think it’s competitive. My company does salary benchmarking every summer to see what the standard is across the industry and adjusts its pay accordingly.

Giuseppe: Salaries have gone up a lot in the last few years and you could even say they are booming now. A ‘normal’ engineer can expect to earn at least €85,000 per year, and if you are in a serious leadership position, you can expect to earn up to €180,000.

READ ALSO: Do internationals face discrimination in the workplace

A woman working from home throws money in the air. Photo: picture alliance/dpa/dpa-tmn | Christin Klose

Would you say that it’s a high-pressure environment to work in?

Gabriela: For me, there isn’t the kind of pressure that if you don’t perform you won’t get the money you should be getting. Instead, my company is trying to get you to think that your own success is intertwined with the success of the company. There are good incentives to work hard and we have also a certain amount of shares in the company, so if it does well we benefit too.

Giuseppe: I personally feel pressure, but I love what I do, so for me it’s fine. But I have seen a lot of cases of people burning out – especially young people. I think because there are a lot of young managers, who get into leadership roles without having the tools or strength to resist the pressure.

How do you find the work-life balance? 

Giuseppe: I feel like I’m working all the time, but again, that’s because I love my job and I want to, it’s not necessarily the expectation, it’s not like in the US. In Berlin tech startups, there is a tendency to slow down around 6pm.

Gabriela: For me, the work-life balance compared to previous jobs is very good. Telecommuting is great, there are flexible starting times and last-minute holiday requests are usually approved. I think it’s very good for people with children and more complex schedules. 

How many days holiday do you get?

Gabriela: We get 28 days holiday per year.

Giuseppe: We get between 23 and 30 days holiday per year, depending on how long you’ve been working in the company.

What are the career progression opportunities like?

Gabriela: Very dynamic. For myself, I don’t see a clear career path at the moment, but I see a lot of movement happening and people moving to different roles. There is a feeling of being in a constant state of change. 

Giuseppe: If you join a startup at the right time, you can very easily become a manager very quickly.

READ ALSO: EXPLAINED: How to boost your career chances in Germany

What was different about working for a Berlin start-up than you expected?

Gabriela: I thought that working from home would be easier, because I hadn’t done that much before, but I find it much harder to be engaged than I expected. I think a lot of startups (in Berlin) are struggling now to find the right balance between the competing interests of their employees – some of whom want to be fully remote and others who want to come more regularly to the office.

Giuseppe: Before I started working for tech startups I had this romantic image that they were all led by geniuses with big ideas who started in their garages. But in reality, I’ve found this emotional, big-dreaming side to be lacking. There are a lot of people who work for startups who just see it like any other job.

A work team exchanging ideas with notes on a whiteboard.

A work team exchanging ideas with notes on a whiteboard. Photo: picture alliance/dpa/dpa-tmn | Christin Klose

What are the best things about working for a Berlin tech start-up?

Giuseppe: You can make an impact with what you do, to build a product and say it’s mine. There is also creativity and freshness in the team dynamics. I was deeply unhappy in the years I spent working for big corporations because I didn’t know what the goal was. In startups, the objectives are clear.

Gabriela: You can grow with the company, and there are a lot of positions opening all the time, and it’s very common for startups to promote internal talent.

READ ALSO: EXPLAINED: The German regions attracting startups

What are the worst things about working for a Berlin tech start-up?

Gabriela: Sometimes it can be hard to keep up with the pace of change. It sometimes feels like we are constantly onboarding new people or people are changing roles and there is a slightly chaotic feel to things. The buzzword “agility” is used and abused, and sometimes means staff is expected to go along with anything and everything.

Giuseppe: In the tech start-up world here there seem to be a lot of people who get into the top jobs because they speak a lot, not necessarily because they are the most competent. There is a lot of networking and self-promotion required to push yourself forward. It’s also not a good environment for people who don’t like change, because things change a lot. 

Do you think Berlin is a good place for foreigners to work?

Gabriela: Yes, definitely. You have a lot of choice when it comes to places to work – so it’s unlikely you’ll have to stick at a job which
you don’t like. It’s also a big help for foreigners that most startups in Berlin don’t require German language skills.

Giuseppe: Definitely. For me, the mix of cultures and ideas in the workplace is really inspiring and motivating. And, of course, the city of Berlin itself is full of cultural events and has a great night life – so it’s a great place to live for when you want to detach from work too.

Do you have any advice for anyone thinking about joining a tech start-up in Berlin?

Giuseppe: Try to develop an entrepreneurial mindset instead of an employee mindset as soon as possible. Always look for opportunities, don’t take things personally, don’t think about what happened yesterday, and focus on the now. 

Gabriela: Be open-minded and be prepared for change. 

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