The Federal Office for Building and Regional Planning

Top News 04 October 2021 Equal living conditions: only with the support of small towns

Bonn, 04/10/2021

BBSR publishes report on the situation of small towns in Germany

At the end of 2019, 24.4 million people lived in small towns - almost as many as in the 80 largest German cities (26.6 million). The geographical location of small towns, central or peripheral, explains differences in local living conditions. Regardless of their location, small towns contribute significantly to equal living conditions – as places to live, but also as economic centres in the regions where many hidden global market leaders have their headquarters. The municipalities have to catch up, especially in providing fast Internet connections, as revealed by the report "Small Towns in Germany" published today by the Federal Institute for Research on Building, Urban Affairs and Spatial Development (BBSR).

High population growth in small centrally located towns

Most small towns situated in the areas surrounding large cities have recorded increases in population over the last ten years. Between 2009 and 2019, the small town of Kelsterbach in the surrounding region of Frankfurt am Main achieved the strongest growth measured by its population (29 per cent). It is followed by Schönefeld in the area around Berlin and Aschheim in the surrounding region of Munich (both 27 per cent), whereas the population in municipalities outside the metropolitan areas continued to decline. Small towns in structurally strong rural regions in southern Germany, which gained population despite their peripheral location, are an exception. In eastern Germany, population growth is concentrated in the large cities, apart from the area around Berlin. Overall, the population in small towns increased by 1.2 percent or 291,000 inhabitants between 2009 and 2019.

Population in peripherally located small towns older than average

Differences between central and peripheral municipalities are also evident in the age and social structure of the population: in centrally located small towns, the population is younger on average (44.6 years) than in peripheral ones (45.9 years) and in very peripheral ones (47.9 years). Small towns in the surrounding area of municipalities also have an above-average share of households with higher incomes. In most small towns, however, the income classes are evenly distributed. Especially in eastern Germany, there are numerous small towns with an above-average number of low-income households.

Small towns economically important - many hidden global market leaders situated in small towns

Small towns are not only places to live, but also very important for the region as business locations and job markets. Centrally located municipalities more frequently accommodate highly innovative companies and places of work for employees in knowledge-intensive sectors. As a result, the number of employees in knowledge-intensive occupations has risen there in recent years.

The significance of small towns as business locations is also evident in the 'Hidden Champions' - i.e. predominantly medium-sized companies that are very successful in global markets. Of these 1,691 companies, 518 have their headquarters in small towns, 174 of them in peripheral locations. The companies are mainly located in Baden-Württemberg, North Rhine-Westphalia, Hesse and Bavaria. In peripheral locations they are mainly found in Baden-Württemberg and Bavaria. In East Germany, on the other hand, there are very few of these companies.

Digital transformation - broadband expansion as a prerequisite

The study reveals deficits in the provision of fast Internet connections - an important locational factor: Of small-town households, 76 percent were provided with a bandwidth of 100 Mbit/s in 2020, compared to 96 percent in the major cities. In peripherally located small towns, the figure was almost 8 percentage points lower (71.5 per cent) than in centrally located ones (79.2 per cent). Only 35% of small-town households had a bandwidth of 1,000 Mbit/s in 2020 (large cities: 82%).

Staff shortages limit design options

Staff shortages in city administrations limit design possibilities. Small towns are no exception. This applies not only to planning processes, but also to their implementation. The COVID 19 pandemic has also caused financial losses in small towns – with high pandemic-related expenditures at the same time. It is not yet clear how the pandemic will affect municipal finances in the medium to long term, posing an uncertainty that can lead to important investment projects being postponed or even cancelled.

Information and exchange strengthen small towns in their choice of action strategies

The report indicates opportunities for action for small towns primarily in inter-municipal cooperation, city-wide development concepts and new forms of cooperation between urban society, local economy, politics and administration. In order for small towns to benefit from the increased use of digital solutions, broadband coverage must be expanded there as a top priority. The research paper also provides information on the federal government's urban development policy and the BBSR's research to support small towns. Concepts from large cities cannot be transferred automatically to small towns. The current pilot phase of the "Small Town Academy" (2019 to 2022) shows the need for permanent, institutionalised support for small town development.

Interested parties can order the report free of charge from the BBSR: gabriele.bohm@bbr.bund.de

Background: According to the study, a "small town" is defined as a municipality with 5,000 to less than 20,000 inhabitants or with at least a basic central function with part of the functions of a medium-sized centre. This is assigned by the planning authorities of the Länder.

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