Main Task

As the working-age population of East Germany was already almost fully employed, to increase productivity the "Scientific Organisation of Labour" policy was introduced in 1973. Three-shift system and elements of Taylorism were introduced to maximize the work intensity.^[2] Emphasis on welfare programs for East German women was one of the ways to further increased participation of women in the workforce. In 1970, 82% of working age women were employed, in 1980 this rose to 87%, and in 1989 to 91%.^[3]

Great amounts of capital and energy was spent on housing, particularly the building of new housing districts and the restoration of neglected pre-World War II housing stock, in order to provide all families with decent housing. East Germany saw the widespread construction of plattenbau, a local type of prefabricated homes which often came in the form of high-rise tower blocks. While the plattenbau districts lacked individuality or beauty, they provided the basic living needs at a very low cost, as the state was subsidizing much of the rent and utilities costs. Many of Honecker's policies reflected the ideals of his communist youth: cheap housing, utilities and basic foodstuffs meant more to him than cars and modern consumer goods that the East German population increasingly desired, especially when comparing its living standards with those of West Germany.^[1] The official statistics claimed that in 1970, for every 100 households there were 15 cars, 53 washing machines, 56 refrigerators and 69 televisions. In 1981, this had risen to 37 cars, 82 washing machines, 99 refrigerators and 90 televisions.

Between 1971 and 1982, the GDP of East Germany grew at average 5% annually, however the policy only increased the government debts and, by 1982, the state was nearly insolvent.^[3] Unable to rapidly increase its welfare and to increase its exports simultaneously, a growing budget deficit created problems as early as 1972. Despite SED propaganda, there were no increases in the socialistic productivity. By the mid-1970s, instead of instituting any new reforms, Honecker decided to fund his policies by increased borrowing of loans from the West, and especially from West Germany. In 1977, hoping to increase its export income, East Germany returned to the ideas of Ulbricht, and began to develop semiconductor and microprocessor industry which, despite large investments, failed to achieve the desired results and export income continued to decrease.^[3] It was unable to increase its exports to West as it lacked exportable products of sufficient quality, at the same time it relied on the cheap basic material supplies from the Soviet Union, which demanded payment in East German-produced goods, which were of higher quality than those produced in the Soviet Union.

By the mid-1980s, East Germany's economic growth had declined to less than 1% per year, and the government's economic goals were not reached. Debt skyrocketed as Honecker refused to adopt market-led economic reforms while continuing to subsidise the generous welfare state with money that the government did not have. By 1985, East Germany's debt to Western countries had grown to 25.1 billion Valutamarks, and the debt servicing rate (interest from borrowing) for the foreign currency debt reached 168%.