When it comes to economic strength, Saxony-Anhalt often comes out on top in a nationwide comparison, says Joachim Ragnitz, head of the Ifo Institute in Dresden. This was proven by evaluations of around 300 economic indicators in a comparison of the 16 federal states.
"The unemployment rate is quite high compared to other countries, we have very low wages there and we have low disposable income," said economic researcher Ragnitz to the ARD financial editorial team. In August, the unemployment rate in Saxony-Anhalt was 8.2 percent, above the national average of 6.5 percent.
Annual income below average
According to the Federal Statistical Office, the average gross annual earnings of full-time employees in Saxony-Anhalt was 51,937 euros in 2025, well below the national average of 65,441 euros.
If you include not only the full-time positions but also all employees subject to social security contributions, the average annual gross wage in Saxony-Anhalt in 2025 was 41,163 euros, slightly higher nationwide at 45,913 euros. This also includes the wages of low earners and part-time workers. Here, too, Saxony-Anhalt is among the bottom performers in a national comparison, but according to figures from the Federal Statistical Office it is still ahead of Mecklenburg-Western Pomerania and Schleswig-Holstein.
The oldest population of all federal states
In addition, there is “a very unfavorable population structure,” says Joachim Ragnitz. "In Saxony-Anhalt we have the oldest population of all federal states and at the same time a very negative population development for the future." According to Ragnitz, the potential workforce in the state will shrink by a good nine percent in the next ten years.
At the end of 2025, around 2.12 million people lived within the country's borders, which was 0.7 percent fewer than in the previous year. There is already a shortage of skilled workers. According to ifo researcher Ragnitz, it is not particularly attractive for companies to invest there. "Then there is also the fact that the settlement structure is not particularly favorable. With Halle and Magdeburg, there are only two large cities and also many regions that are very rural and very remote."
Villages where buses no longer stop
In the 1990s there was very high unemployment after the collapse of the GDR industry, explains Ragnitz. Many people migrated back then. The consequences can still be felt now. Villages where no bus stops anymore, the last bakery is closed and the nearest doctor is too far - all of this is reality in sparsely populated, rural areas.
"This is the case in many regions of Saxony-Anhalt: that neither public services of general interest function properly because the state cannot afford to run a school and because there are not enough children." Such shrinkage is also occurring in the private sector. "Where there are few people who don't go to the pub anymore, no pub will be able to survive. It will then disappear."
Structurally weak regions also in the west
However, these are not exclusively East German phenomena. There are also very structurally weak, rural areas in western Germany. The Ifo researcher therefore believes that the differentiation between West and East is no longer appropriate. Rather, one must differentiate between cities and rural regions.
"We see in our data that the regional differentiation between individual districts in the west is sometimes much greater than between east and west." Ragnitz speaks of a tripartite division of Germany.
According to the economist, there are the southern federal states, Bavaria, Baden-Württemberg and Hesse, which are doing relatively well. "Then we have the northern federal states plus Saarland, which tend to be rather weak. And we have the east, which has already partially reached these northern states and has even almost overtaken them."
Shaped by small and medium-sized companies
If you look at the economic structure in Saxony-Anhalt, it is characterized by many small and medium-sized companies. The chemical industry is a very important economic factor, especially in southern Saxony-Anhalt, says Oliver Holtemöller from the Leibniz Institute for Economic Research Halle (IWH). "However, the industry is very energy-intensive and suffers from increased costs." That too: not a specific problem for Saxony-Anhalt.
But in an otherwise structurally weak federal state, crises hit particularly hard, according to IWH researcher Holtemöller. "If I lose a job in a company, the likelihood that I will be able to find new employment in the immediate area is lower than in a region where there are several urban agglomerations."
There is a lack of a sufficient number of large corporations that can cushion economic downturns in their own country through international business. According to a survey by the Norddeutsche Landesbank (Nord/LB), the largest employer in Saxony-Anhalt is not a large industrial company, but rather Deutsche Bahn with more than 8,000 employees.
Low rents and lower labor costs
The fact that the state is so sparsely populated also means cost advantages for the location. The researchers from the German Economic Institute looked at the cost of living in Saxony-Anhalt and came to the conclusion that it is lower than in all other parts of Germany - primarily thanks to low housing costs. A representative shopping basket is around 7 percent cheaper in Saxony-Anhalt than in Germany. This means there is more money to live on in Saxony-Anhalt.
From the point of view of economic researchers, this is an argument for attracting skilled workers. In addition, the comparatively low labor costs are a good reason for companies to invest there. The DAX group Daimler Truck seems to have recognized the advantages: in the summer of 2025 it opened a logistics center in Halberstadt. Investment volume: 500 million euros. From the city in the Harz district, the truck group now supplies its customers worldwide with spare parts.
