Following monetary union with west Germany in June 1990, the median real monthly consumption wage of east German workers aged 18-54 rose by 83 in six years. The median real product wage rose by 112. On the other hand, the employment rate fell from 89 to 73 for this age group. The overall employment level, in uenced by early retirements, fell by about a third between 1989 and 1992, when it stabilized. Although east Germany's employment fall is not striking by European transition economy standards, it is an outlier in terms of wage growth, the least dissimilar country being Poland, where real product wages rose about 25 in the years following transition. 1 The east German wage rises, coming on top of the wage rise implicit in the decision to unify the currency at a one for one exchange rate, were pushed through by the powerful union structure