LIKE MANY CITIES in former East Germany, Leipzig shrank after the fall of the Berlin Wall in 1989, hitting a low of 437,000 residents in 1998. But then clubs and artists started moving into abandoned warehouses and factories. Now the population has risen to 590,000 and the city has come to be known as “the new Berlin” and “Hypezig”. That moniker “started as a criticism, but now it’s a brand”, explains Katja Herlemann, a theatre producer, sitting in the chic bar “Pilot” in the city centre. Her sardonically titled new theatre project, “Ceçi n’est pas un hype!”, explores the booming city and its diverse people.

In a former car-repair shop down the road in Grünau, a working-class district of the city, there is no sign of hype. Volunteers are unloading crates and arranging oranges, leeks and cheese donated by supermarkets. About 1.5m Germans rely on food banks like this one, where the needy can get a full week’s shop for €2 ($2.50, £1.80) per person (€1 for children). “It’s hard being poor in a rich country,” says Werner Wehmer, the director. “You see on TV how you’re supposed to live, you see the people in cafés you can’t afford to go into, you go to a Christmas market and can’t afford things.”

Want amid plenty

Similar scenes can be observed all over Germany. Globalisation and the liberalising “Hartz” labour-market overhaul of the early 2000s were big factors in Germany’s economic success, but they have also made the country more unequal. The share of households below the official poverty line of 60% of average earnings (€917 a month after tax for a single person) was 15.7% last year, compared with 14.7% in 2005, even though unemployment is at a record low. A large government study published last year showed that about 40% of German workers had seen almost no increases in net real wages since the mid-1990s.

Ulrike Pfeiffer, a language teacher, explains that she has to teach for 34 hours a week to make ends meet. Teachers on permanent contracts do just 26, but more and more adult education colleges like those where Ms Pfeiffer works use freelancers instead. “No health insurance, no holiday, no security,” she says, “and old-age poverty is programmed in.” The lack of a pension is also a worry for Peter Sonntag, who works irregular shifts at a warehouse on the edge of Leipzig owned by Amazon, an online retail giant. After several years’ service he is now paid €12 an hour, which does not leave much to save for his retirement. That is true across Germany, where earnings and pensions are more closely linked than in many other countries and the poorest 40% have virtually no assets (because most Germans rent rather than buy housing). In the decade to 2015 poverty among over-64s rose from 11% to 15%. The sight of old people rooting through bins for bottles, which carry a deposit, is a feature of German cities.

Working conditions are changing, too. German workplaces have traditionally been highly unionised, with consensus-based management practices. But the fast-growing service industries have imported a more Anglo-Saxon style, exemplified by Amazon, which arrived in Leipzig in 2006. “Managers monitor if you go on your break one minute too early and they check if you go to the toilet too often; I’ve never known that in a job before,” complains Mr Sonntag. He is a member of Verdi, a trade union, but Amazon refuses to enter wage negotiations and has hinted it might move the warehouse across the border into Poland.

The growth of low-paid work, combined with rising rents, is reshaping German cities. In Leipzig a typical monthly rent for a flat used to be around €4.50 a square metre, recalls Ms Pfeiffer, but now €7.50 is not uncommon: “People are being pushed out to the city limits.” That, says Ines Kuche of Verdi, creates so-called “Hartz IV” districts: areas with a concentration of social problems that rely on welfare, sometimes exacerbated by racial tension as immigrants move in. The politics reflect these divides. In the smart city-centre area round the bar “Pilot”, the Christian Democrats came first in last September’s election, closely followed by the Greens; out in Grünau, a kilometre from the centre, it was the far-right AfD, followed by the socialist Left party.

Away from the big cities, rising rents and traffic jams seem distant, but life can be tough in different ways. Bitterfeld, about 20 minutes’ journey from Leipzig, was an East German chemicals town with 76,000 people. After reunification, work dried up and many of the younger residents moved out. In the suburb of Wolfen Nord, boards are nailed over the windows of old factories, and communist-era tower blocks stand empty. Many of the 41,000 remaining inhabitants are poor and angry, and many are planning to leave.

Such economic exclusion can also be found in western post-industrial regions like the Ruhr valley. In the two decades to 2015 the share of low-paid workers in former West Germany rose from 11.9% to 19.7%. But in former East Germany it remained almost unchanged at 36.3%. At the time of reunification West Germany’s chancellor, Helmut Kohl, had promised “blooming landscapes” in the east. Their failure to materialise, apart from big-city successes like Leipzig and Berlin, helps explain why the AfD did so well in the east in the September election. The Social Democrats (SPD), traditionally the champions of the less well off, took just 23% of the working-class vote nationally, down from 48% in 1998—even though as a partner in the grand coalition they had just shepherded through a minimum wage designed to help precisely such people.

In other ways, too, public policy could do much more to help make German society fairer. The country’s education system, which separates academic and vocational streams, entrenches inequality. And although Germany has the most unequal distribution of wealth in the euro zone, the tax system relies heavily on regressive indirect taxes such as VAT.

The new government plans to use some of the country’s giant budget surplus to level some of these inequalities. Some €4bn will go on new social housing and encouraging housebuilding generally. Short-term employment contracts will be restricted and new pension provisions will be made for low earners. Peter Altmaier, the new business minister, has said that priority will be given to strengthening the social market economy and to economic development in the former east. The new government seems to want to “re-Germanise” an economy that has become increasingly Anglo-Saxon.