By the beginning of the 20th century, the city had developed an economy that was balanced, with a mixture of industry, services and creative businesses. After World War II, the German Democratic Republic redistributed the economic assets, transferring services to Berlin and creative business to West Germany, leaving Leipzig dependant on heavy industry as its main economic driver. By 1989, the city’s population had decreased by 100,000 inhabitants. With the German reunification, Leipzig’s industry received a sudden economic blow, losing 90% of industry jobs in 6 years. By the 2000’s, the city’s population had decreased, again, by 100,000 citizens to just below 440,000.
The fastest growing city in Germany
Today, Leipzig looks very different. With 600,000 citizens, Leipzig is Germany’s fastest growing city and the country’s second most competitive city after Berlin (HWWI/Berenberg City Ranking). In addition to that, it has the biggest improvement of economic performance, a trend that will most likely continue. The city’s evolution has been so impressive that it is referred to as the “City of Heroes”, the “New Berlin” and “Hypezig”.
How did this struggling city manage to turn around the loss of 20% of its population, the rise of unemployment and recover in such a short period of time?
The development of Leipzig during the 1990’s was, for the most part, left to its own devices. There was no proactive interference by local authorities and the private sector was managing its development, leading to an absence of strategic thinking. By the end of the decade, the economic situation stabilized and even improved, but not at the rate fitting for the “city of heroes”.
The tipping point
“The year 2000 was a tipping point”, said Florian Woitek, Desk Officer at the Saxon State Ministry for Economic Affairs, Labour and Transport. “We realized that we can't just let urban development happen by itself and that we needed a strategic approach. We came up with a development plan called "Leipzig 2020", which has now been expanded to 2030”. The plan, where cooperation and participation of stakeholders was essential, served as a guide for the Mayor to create synergies of sectorial investment, set priorities for budgeting processes, facilitate national and European funding, and increase transparency for the citizens.
It was clear that Leipzig needed to grow economically and demographically. It was important to foster the establishment and development of new businesses that can attract people into the city, while maintaining established companies. Leipzig focused on developing their infrastructure including new roads, train connections and the redevelopment of the airport to attract investments into the area. Mr Woitek said: “New infrastructure and a good link between the rural areas and the city facilitated larger companies coming into the city, which helped turn around the population shrinkage. We are proud to see that we are now back to 600,000 citizens”.
Big companies such as Porsche, DHL, Amazon and BMW created thousands of direct jobs, for both skilled and unskilled workers but the impact of these businesses trickled down to other sectors as well. Research, logistics, and communications businesses of all sizes saw a boost in their activities due to the establishment of these multinational companies. Furthermore, the development of open spaces allowed small and medium companies to flourish and to find their footing. Mr Woitek said: “We were able to find a good balance between big companies that can employ thousands of citizens, and small and medium enterprises that can stimulate growth at the local level”. The city also invested in their cultural and historic sites, especially in the city centre, which is key to attract tourism and younger populations.
Leipzig’s story of success has been shared widely among the stakeholders of the Initiative for coal regions in transition, a European Commission’s initiative that fosters dialogue and provides assistance to EU coal regions in their path toward decarbonisation and a just transition. The Commission doubled down on their commitment to a just transition in 2020, with programmes such as the Just Transition Platform or Just Transition Mechanism and establishing funds like the Just Transition Fund. The work is now expanding beyond the EU with programmes in the Western Balkans and Ukraine starting in early 2021.
The people of Leipzig are the real heroes
Support from European and National levels of government is crucial to the success of the regions. In Leipzig, for instance, the flow of funds from the federal level since the country’s reunification were undoubtedly crucial to its growth. The transfer of resources in the name of “a rising tide lifts all boats” might explain Leipzig’s growing trend, but it would be unfair to single that out as the main driver of success. After Leipzig’s role in the Monday Demonstrations in 1989 against the government of the German Democratic Republic, the city was dubbed “City of Heroes”. Thirty years later, the people of Leipzig proved, once again, that they are able to overcome the direst of situations. Mr Woitek said: “It’s not the government who creates jobs and growth, it’s the people. As a local authority, we were able to secure open spaces, parks and community areas for citizens, small companies or artists. We wanted to create an environment for our citizens to be empowered to improve Leipzig on their own, proving that this remains the ’City of Heroes’.”