Germany's Ruhr Valley is on brink of financial collapse
With tax revenues down and social spending up, more and more cities and towns in the Ruhrgebiet are struggling to make ends meet. One city
With tax revenues down and social spending up, more and more cities and towns in the Ruhrgebiet are struggling to make ends meet. One city that is particularly deep in the red is Oberhausen. The Centro mall is the one place the city of Oberhausen is famous for nowadays. The shopping and entertainment center, with its 250 stores and restaurants, sits next to a marina with a promenade and right by Germany's largest Sea Life Aquarium. The complex was built in the mid-1990s on a site where 32,000 people had previously worked in the steel industry, which was once a cornerstone of Europe's manufacturing base. "Thanks to the Centro, we've created almost as many jobs again, but they're all in the service sector, where people don't earn as much," Oberhausen City Treasurer Apostolos Tsalastras said. City Treasurer Apostolos Tsalastras says time is running out for his city Image: DW/Sabine Kinkartz Demise of the Ruhr region The average income in the city is now among the lowest in Germany: "The gross domestic product we generate here is also one of the lowest nationwide," the treasurer admits. The Ruhr Valley, in the western state of North Rhine-Westphalia, was shaped by the 19th-century coal-powered industrial revolution, which became vital for Germany's armament production in the two World Wars. After the wars factories were first dismantled and then rebuilt to fuel what was called Germany's economic miracle in the 1950s. A serious crisis began in the 1970s, when inflation and overcapacity saw raw steel production plummet, leading to plant closures and structural unemployment in the region. There are some remnants of the steel industry in Oberhausen, including a company that builds turbines for ships and power plants. But all of that is small-scale compared to the what it used to be, Tsalastras tells DW.
The structural economic problems since the decline of the coal and steel industries have been taking their toll for a long time. "We have no reserves, no capital investments we can liquidate, no assets we can sell, and so on," Tsalastras said. "We've been saving for 40 years; we've already sold everything: We have nothing left." Oberhausen ranks among the cities with the highest debt in Germany. "We are in a truly dire situation," Mayor Thorsten Berg, of the center-left Social Democrats (SPD), told DW. "The major burdens we face are payments to youth welfare and long-term care," Berg said. "The municipalities are expected to pay, but we don't get the money to do so. That's the flaw in the reasoning." Coalfields in transition To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video Weak economy, lower revenue In Germany, decisions made at the federal and state levels force municipalities to, for example, pay the housing costs for welfare recipients or provide social assistance for people with disabilities. In Oberhausen, 50% of expenditures are earmarked for social services. The costs of long-term care are rising because older people increasingly cannot afford to pay for nursing home care and the city has to step in. Expenditures for youth welfare have also risen sharply as children and adolescents are increasingly having to be removed from their families because either they or the parents are struggling — often with mental health issues. Oberhausen's treasurer notes that the COVID-19 pandemic has left its mark, but the impact of social media is particularly concerning. Municipalities feel helpless Municipalities' largest sources of revenue are the trade tax and the property tax on land and real estate. Added to this is a 15% share of income tax. However, the economic crisis, which has gripped Germany for seven years now, has hit tax revenues.
The BriefWire