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Whether it’s the disparity between cities and rural areas or the differences between economically dynamic regions and those impacted by infrastructural changes, Germany remains socially and spatially unequal. The structures of individual regions vary significantly, influencing migration patterns, income levels, and basic living conditions and opportunities. The third Socioeconomic Disparities Report visually illustrates this inequality and explores how regional disparities have evolved and become entrenched in recent years.
Ecological catastrophes, geopolitical conflicts and economic crises – Germany’s regions demonstrate unequal resilience in confronting both current crisis and future transformational challenges.
In its first part, the report builds on the 2019 (English) and 2015 (only in German) Disparities Reports, while in the second part, for the first time, it assesses the sustainability of the regions. The report provides both a comprehensive review of the socioeconomic disparities in Germany and an evaluation of the regional sustainability in facing the transition to a climate-neutral economy. Ten policy recommendations have been derived from this.
Contact:
Jonathan Overmeyer, 030 26935-7129, Jonathan.Overmeyer(at)fes.de Vera Gohla, 030 26935-8331, Vera.Gohla(at)fes.deDepartment of Political Counselling and Impulses
Press enquiries: Johannes Damian, 030 26935-7038,Presse(at)fes.de
Unequal Germany - Socioeconomic Disparities Report 2023 (PDF)
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The socioeconomic inequality in Germany can be categorised into five clusters, or regional types. This classification is based on a method that visualises similarities in regional structures: A cluster analysis that systematically groups the country’s 400 districts and urban municipalities using socioeconomic indicators such as employment and poverty rates, municipal debts and infrastructure.
The disparities map reveals: Large cities are becoming increasingly overburdened and face a growing risk of social polarisation. Meanwhile, there is a noticeable trend of people migrating from cities to more socioeconomically stable suburban areas.
Notably, it shows that the traditional divide between urban and rural areas no longer holds true in all cases. In some structurally weak regions, median incomes have risen and relocation rates have dropped, reflecting positive catch-up effects with the rest of the country.
The map also highlights that the supposedly homogenous East is divided into two parts. Dynamic large cities and their suburban contrast against structurally weaker, more rural regions.
Furthermore, it shows that western industrial urban areas are particularly affected heavily by structural changes and require additional support.
The distribution of wealth and poverty can be displayed by median incomes by residence – that is, the income that lies exactly in the middle of the distribution, thus avoiding distortion by extremely high or low figures.
However, wealth and poverty are also determined by additional indicators. The rates of old-age and child poverty are also indicators that express inequality between cities and districts. Furthermore, the cost of rental housing as a percentage of income also influences how much money people have available for their daily lives.
The 2023 Disparities Report systematically evaluated the distribution of wealth and poverty in Germany based on elderly and childhood poverty, median incomes, and the cost of rental housing as a percentage of income. The order and colour scheme of the regional types on the map are aligned with the levels of regional median incomes by residence.
We can see that regional distributions of wealth and poverty in Germany do not break down exclusively along lines of income opportunities. Where wages are the highest, the costs of living and explicitly housing costs are also the highest. At the same time, independent of median income levels, the risk of poverty tends to concentrate primarily in large urban areas.
Regional differences in asset levels are at least as relevant to regional sustainability as income-based measures.
The unequal distribution of wealth – for example through inheritance – poses a significant risk of reinforcing and deepening inequality. Wealth not only generates future income but can also compensate for income shortfalls in uncertain times.
More than half of the population in Germany lives in regions with positive future potential, yet sustainability is also unevenly distributed across the country and largely follows existing disparities.
This new map illustrates the distribution of resilience and sustainability through four clusters (regional types). The analysis primarily focuses on the regional economy, the labour market, education and opportunities, and public infrastructure.
Notably, it’s not just large cities that are "spatial innovation stars"; former crisis areas in the Ruhr valley or Eastern Germany are also included. Resilient rural areas in the south of the country similarly have positive future prospects.
In the future, support will be needed not only in regions with some obstacles to adaptation but particularly in areas with significant structural challenges, where demographic trends increase the risk of shortages in skilled labour. Municipal debts and limited innovation strength in these regions also hinder further investment.
The East remains divided: Cities like Berlin, as well as Dresden, Leipzig, and Jena, have a positive impact on their suburban areas, yet rural areas facing future challenges continue to stand in contrast to these effects.
Achieving climate-neutral economic activity requires transforming the carbon-intensive industrial sectors, a challenge that also affects Germany’s regions to varying extents.
The map highlights the thirty districts and urban municipalities that face particularly significant challenges and risks due to their economic structure, as these areas are home to a high concentration of energy-intensive industries and automotive manufacturing. The colour coding of these regions clearly illustrates that, according to their resilience clusters, they possess very different starting conditions for tackling the transformational challenges. Therefore, when planning and designing support for these regions, it is crucial to take this dual inequality into account to ensure targeted and effective action.
Strong regions are needed for a successful transformation to a non-fossil fuel economy and a sustainable approach to current crises. New Instruments must be identified, and existing ones utilised consistently, to support regions in a targeted and customised manner, enabling them to address future challenges effectively. With this in mind, here are 10 policy recommendations.
The current federal government (Social Democrats (SPD); Free Democrats (FDP); Alliance 90/The Greens) agreed in their 2021 coalition agreement on a number of measures and initiatives to enable ‘Good living conditions, both urban and rural’.
What is important now is to implement them consequently over the last year of the legislation.
Local authorities play a key role in public investment in Germany and, therefore, in shaping the transformation.
It is essential to address the issue of municipal indebtedness to enhance the capacity of local authorities, especially in former industrial cities. The objectives outlined in the coalition agreement must be implemented in this context as well.
The basic condition for promoting parity of living conditions is good infrastructure. This applies to business-oriented (office space, transportation systems, energy supplies, and so on), as well as general social services (education, childcare, public transportation and so on).
More far-reaching investments are needed, especially in structurally weak, significantly economically-challenged regions.
Poverty in Germany is not evenly distributed; it is particularly concentrated in large cities as well as in former industrial cities and structurally weak regions.
In addition to the introduction of child welfare payments, further measures are necessary to prevent poverty proactively and to stabilize structurally weak regions.
There are various funding programmes from different stakeholders, such as the EU, the federal government, and the Länder. In times of limited resources, the need for consolidating structural policy instruments is urgent.
It is essential to streamline the multitude of funding sources and deploy them in a manner that is significantly more spatially effective and responsive to regional needs. This initiative, already outlined in the coalition agreement, must be implemented consistently during the second half of this legislative term.
The distribution key for federal financial assistance and research funding, known as the "Königstein key," is based on the tax revenue and population size of the Länder.
It is essential to enhance transparency regarding the spatial effectiveness of these funds and to implement concrete measures for a more efficient use of these resources to promote spatial equality. In the future, such funding should be replaced with needs-oriented distribution criteria.
The changes and insecurity unleashed by the climate and energy revolutions will be matched by the opportunities for economic growth and value creation. They might be one key to reducing regional parity differences.
It is essential that, in planning the expansion of onshore wind power and the development of hydrogen infrastructure, special consideration is given to areas in rural, sparsely populated, and structurally weak regions to create locational advantages in these areas. This approach also applies to the establishment of new value creation chains, such as chip production and the circular economy.
The future potential of skilled workers is crucial for the development opportunities of regions. Demographic change is likely to become the primary constraint point for structurally weak areas, alongside other indicators.
In addition to the primarily capital-oriented funding currently available, it is essential to utilise further instruments to enhance the availability of skilled workers in these regions. This could include the establishment of additional universities of applied sciences in close collaboration with local businesses or programmes aimed at retaining skilled workers who have left their hometowns.
To achieve short-term progress, attractive incentives must also be created to encourage the immigration of both national and international skilled workers, particularly in the structurally weak areas of Eastern Germany and a few western German districts.
Trust in climate-just transformation can be bolstered through increased transparency and visibility.
It is necessary to create flagship transformation projects, for instance, the planned establishment of Intel in Magdeburg.
Moreover, it is vital to overcome "complexity traps" and enhance transparency. Various formats can be employed to showcase the challenges of transformation effectively, presenting examples of successful change in the respective regions—these could include city-wide exhibitions, garden shows, or international construction exhibitions, such as the IBA Emscherpark in the Ruhr area.
Additionally, it is essential to develop new forms of participation and regional models to involve local stakeholders, strengthen regional self-determination and competences, and thereby aiding ‘regional empowerment’.
In times of great uncertainty, people want to depend on a state capable of effective action. This is especially true in regions facing serious challenges.
It is necessary to make the institutions capable of acting. This involves equipping them with sufficient personnel, a functioning infrastructure and adequate public services, fast and unbureaucratic processes, and more opportunities for participation. These are all high expectations requiring adequate funding.
