The Creative Industry in Berlin

Over the past decade, Berlin has gained a reputation as a city filled with artists, musicians, and other types of creative people. After six months (has it been that long already??) living here, I can tell you that the stories are true. In certain neighborhoods there is a pervasive sense of perpetual creativity. There are lots of small galleries, lots of pop-up parties; lots of strange, funky looking buildings, parks and people.

This isn’t just anecdotal evidence sold to enthusiastic tourists and newcomers like me. I’ve been doing research about the impact of creativity on Berlin, and it seems to me that creativity is a defining feature of the city. What’s more, it promises to play an even more important role in shaping Berlin’s future.

The German Flag. This one flies above the Bundestag.

The German Flag. This one flies above the Bundestag.

Why is this so? The reasons have a lot to do with what Berlin lost when the Berlin Wall was opened in 1989 and the city was reunited. Berlin lost jobs – lots and lots of jobs. Out of a total population of three and a half million people, approximately 150,000 manufacturing jobs disappeared between 1991 and 2001. This was due to the fact that the industry had been artificially supported by government subsidies in both the Eastern and Western sections. After reunification, these subsidies were eliminated. 150,000 jobs in a city of 3.5 million had an enormous impact, and is a main reason why Berlin’s unemployment rate still hovers around 12%, more than double Germany’s overall average of 5.4%.

The employment implosion hit working communities very hard. In particular, the Kreuzberg section of the city became something of a slum. It got so bad that the city designated a number of special police enforcement zones, giving officers enhanced powers. In Kreuzberg and other neighborhoods like Prinzlauer Berg, crime went up, rents fell, and nobody seemed to know what to do.

But then, just as in certain neighborhoods in New York City during the 1980s, artists, designers, hippies, and other low-rent-seekers started moving in to these neighborhoods. Along with their talent, these people brought a hip, cool, attractive aura. As word spread that neighborhoods were friendly to artists, other young professionals started moving in. Rents began increasing, more people began moving into “up and coming” neighborhoods…you get the picture. It’s gentrification, plain and simple.

What’s unique about Berlin is that a lot of the gentrification has been done by people working in so-called creative industries like advertising, design, music, film, and software. According to the latest figures, 22,000 creative enterprises employ around 160,000 people, which accounts for approximately 20% of Berlin’s annual GDP.

This creative explosion is good news for the city, but the number is a little misleading. Most of those 160,000 are part timers and freelancers. Part time work is good, but it hasn’t made up for the initial loss of manufacturing jobs, particularly because those manufacturing workers are not easily employable in the creative sector.

Leaders in Berlin are staking a lot of effort – and money – on growing Berlin’s creative sector. The government gives special tax benefits to creative businesses and promotes Berlin’s reputation as a creative center. I have some reservations about whether the creative sector can replace manufacturing as the economic driver of Berlin’s economy, but I will share those details in a later post when I’ve done more research. The only thing that can be said with finality right now is that Berlin’s future is tightly linked with the creative industry. For now, the best thing to do might just be to enjoy the creative energy that the industry brings to the city.