For many expats in the famously poor but sexy German capital, the dominant feeling about the impact of the economic crisis here so far has been characteristically laid back: It’s not that bad.
Berlin was so impoverished to begin with, the theory goes, that the German recession – the country’s worst in six decades – has not really been felt.
Indeed, with budget airlines like Easy Jet and Air Berlin going at full blast this past summer and city workers determinedly toiling away to restore the Berlin Wall in time for its historic 20th anniversary in November, the metropolis of 3.4 million has seemed as bustling as ever.
“The whole crisis never hit here as badly as it did anywhere else,” said Jon Sanders, 29, manager of the über hip Danish lifestyle and fashion shop Wood Wood in Berlin’s trendy Mitte district. “My impression of retailers in Berlin-Mitte is that they haven't been severely hit by the crisis. Whereas in Copenhagen, you hear it and feel it and see it a lot: You really see a lot of empty shop spaces.”
According to Christian Dreger, an economist at the German Institute for Economic Research, Berlin’s economy has managed to escape the worst effects of the economic crisis largely because its major industry is government.
“Berlin’s economy is expected to decline in 2009 and perhaps even in 2010 but the situation this year is not as bad as in the rest of Germany,” said Dreger. “This is not due to the particular strength of the Berlin economy but instead reflects the fact that Berlin firms are less involved in international markets. So while we had huge declines in German exports, which contributed to the decline of Germany’s GDP growth rate, in Berlin this negative effect is smaller.”
Berlin’s unique economic structure in turn means that its expat population differs from other expats hubs in Germany, such as Hamburg, which attracts expats working in trade and industry or Frankfurt, which attracts those in trade and banking – all sectors that have been hard hit in Germany over the last year and a half.
Berlin skyline sunset panorama
Another major factor Berlin’s expats’ ability to scrape by is the city’s relatively cheap cost of living. In Mercer Consulting’s 2009 cost of living survey, Berlin was the lowest ranked European city in the top 50, coming in at 49th, far below other international destinations like Hong Kong (5th), New York (8th), Paris (13th) or London (16th).
Even so, the city still faces bleak economic news. Unemployment in the German capital is a whopping 14 percent, with some central districts reaching 20 percent, and is expected to rise. (In comparison, the average unemployment rate for the rest of the country is 8.85 percent). And although Berlin’s GDP grew 1.6 percent last year, a drop of 4 percent is expected for 2009. The city’s debt, meanwhile, currently stands at 60 billion euros (85 billion dollars) and is also expected jump in 2009.
Getting by
So is Berlin at risk of losing its status as a mecca for expats wanting to change careers, pursue that long-gestating art project or start the business they’ve always dreamed of? Not yet, it seems. Many Berlin expats are still managing to get by, in large part due to their aptitude for flexibility.
One example is British expat David Berry-Lichtenberg, 48, who co-founded the language school, David Berry Languages, 13 years ago. Berry said his business was not particularly affected by the crisis, in part because many of his clients, like lobby groups, are related to the government sector and in part because of his business’ malleable structure: Unlike larger language schools, which usually offer standard sets of courses, Berry has built his business around customized language classes and allows clients to pause their courses temporarily if they need to.
“Our specialty is that we are flexible – that’s what makes us different from the big international companies,” said Berry. “Being a relatively small business, we’re very aware of slight changes in the market and can react more quickly.”
This versatility has served his company well in the last year: Turnover has remained fairly stable and the school has lost only one customer in recent months – a small marketing firm of about half a dozen people.
That shopping feeling
On one Wednesday afternoon in Mitte’s Wood Wood, there was little sign of the recession: German, French and English could all be heard as the consummately dressed crowd wandered around the shop.
The eye-catching store, adorned with abstract mobiles and neon decals, has similarly managed to elude the crises’ worst effects. The company isn’t making less money than before the economic turmoil started, said Sanders, people are just buying different products.
“We just sell more items at a cheaper price – meaning we sell more accessories and less clothing,” said Sanders, 29, sipping a latté in the shy Berlin sun. “The average shopper still wants to have that shopping feeling but doesn't dare to go for, let's say, the weird dress that is expensive. Instead, they go for the basic pants or nail polish, which don’t cost as much and which they can use more often.”
Once Wood Wood clued into customers’ preferences for smaller purchases, they started adjusting their merchandise accordingly, stocking more accessories and less expensive clothing. Although, said Sanders, there is no danger of Wood Wood becoming devoutly utilitarian any time soon.
“We still want the fun stuff and the expensive stuff but maybe right now we’re taking a little less,” he said. “And it's not like we're targeting one very specific customer group that could be severely hit by a crisis. That's a plus for us, that we are spread in so many directions.”
No more stealing, at least
For Cambridge-native Paul Gurner, whose new and used English-language bookshop St. Georges is to Berlin what Shakespeare & Company is to Paris, making the best of unusual or trying circumstances is nothing new: His business was built that way.
Gurner was working in Berlin when his twin brother called him from England six years ago and asked if he wanted to invest in a friend’s burgeoning bookshop in Brighton. The brothers each put down a couple thousand pounds but the venture didn’t work out.
Paul Gurner, who owns St. George's English bookstore in Prenzlauer Berg, says that he's lowered his prices to accommodate the changing financial climate. Photo © Rebecca Miller/Expatica
“The investment went bad and we didn't get the money back,” said Gurner. “Instead, we got books.”
Faced with this interminable reading list, Gurner and his brother decided to open a bookshop of their own and set up shop in Berlin’s trendy, baby-filled Prenzlauer Berg in May 2003, an area he said was ripe for an English book store. Six years later, the store is doing well, despite recent circumstances.
"We've always seen growth, however small it was," said Gurner, his manner reminiscent of Hugh Grant’s affably bumbling bookshop owner in Notting Hill. "There was a big jump when we started stocking new books two to three years ago but it has slowed off. But we don't know if that's due to the economic crisis. We might have just met a ceiling anyways – we're a small bookstore."
Still, St. George’s has reduced the prices of their used books in order to adjust to customers’ thinner wallets. The prices of their new books are adjusted automatically week by week, according to the exchange rate – one area that has seen a change in recent years.
"A 10 pound book two years ago was 13 euros and now it's 11 euros, so that's a big drop," said Gurner, as he joked in German with a customer over her purchase of Proust’s In Search of Lost Time. “At least we haven’t seen more theft.”
A tightening of the noose
Some sectors of Berlin expats, however, have had a harder time adapting to the fallout of the crisis: Namely, the swaths of people in the city working as translators and journalists.
As budgets tighten, translation has become a lower priority for many clients, leaving many translators at the whimsy of irregular jobs, late payments and erratic communication.
“My bank account still looks like a war zone,” said Anthony Heric, a 41-year-old American who has been working in Berlin as a translator since 2002. “At the beginning of the year, I had three main clients that made up the bulk of my work. Now, one of them is completely gone and one of them has lowered their rates and has about 50 percent less work than they did last year.”
Overall, said Heric, his earnings are down by about 20 percent this year – which compared to some of his colleagues is fairly lucky.
“I have friends that are on the verge of bankruptcy because people are taking so long to pay the bills,” said Heric. “The bill that they used to pay in 4 weeks is now being paid in 3 months and for some people that is literally catastrophic.”
Other difficulties many translators are facing include clients only planning work on short notice. Translators used to scheduling their work months in advance are being forced to live week-to-week, which has made many nervous about their financial situation.
Yet, while many translators have felt this has been their worst year ever, Heric believes that the market is picking up. “I’m hopeful that the rest of the year will be relatively normal and hopefully by 2010, it will pick up speed a little bit more,” he said, adding with a chuckle: “I’m from Southern California and am not one to sit around wringing my hands. I’m still going to go to the movies and enjoy life as much as I can.”
To Walmart?
Like translators, the throng of journalists in Berlin has also been particularly subject to companies’ economic woes, even as expat freelance reporters try to stay in Germany to avoid the mega-crisis in their industry back home.
When 27-year-old American journalist Stephanie Siek came to Germany in 2008 on a Fulbright grant, she was initially optimistic about staying on afterward and freelancing to support herself. That soon changed.
“I liked being in Germany and I really liked the idea of staying here for longer than a year,” said Siek. “But as [the economic situation worldwide] kept getting worse, I realized that a lot of [potential] customers for a freelance story had either eliminated their freelance budget for foreign news entirely or it was so limited you could no longer make a living just on that.”
Half way through her yearlong scholarship, Siek said she began to panic because there were so few job openings for her skills in the US or in Germany.
“It’s sort of depressing to realistically look at the option of going back home, moving in with my parents and being a greeter at Walmart,” Siek said. “My greatest fear is that I’ll go from Fulbright scholar to Walmart cashier.”
Luckily for Siek, she landed some freelance work at German broadcaster Deutsche Welle in Bonn just before she was due to return home in August. She hopes to work her way into a contract position soon.
“I recently learned that Deutsche Welle still gives holiday bonuses,” she said. “In my six years as a professional journalist in the US, I never worked for a company that still had those – they had all phased them out because of budget cuts.”
Jessica Dorrance/Expatica
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With Germany in its worst recession in six decades, Berlin expats are finding ways to survive.
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