Europe's Revolution: Living Complex 10: a monument to the failures of reunification

Its name is prosaic, but this housing estate was the pride of a town that flourished under Communist rule. Hoyerswerda, says Tony Paterson, is a very different place now

Twenty years ago, the prosaically named Living Complex 10 was the pride and joy of the East German mining town of Hoyerswerda. Now Wolfgang Kietschke is one of the last people still living there, huddled away in his small ground-floor flat with just a small dog for company.

The view from his kitchen offers a foretaste of the fate that awaits his home. Through the window, the 63-year-old can see an identical grey, six-storey concrete block, built in the summer of 1989, just a few months before the fall of the Berlin Wall.

All the windows of the block opposite have been smashed, the apartments gutted. A few nylon net curtains, left behind in haste, billow aimlessly in the wind, the only sign that until recently the block was inhabited. "There used to be life around here; there was a real community" Mr Kietschke explained. "But now the whole area is being put under the sledge-hammer. Our block is the next to go. We've been ordered to move out early next year, but we've no idea where we are going to be re-housed."

The school in Living Complex 10 closed down two years ago. The Exchange, the district's entertainment club, closed a year before. Block after block in the district stands empty, gutted, graffiti-smeared and awaiting the wrecker's ball.

Mr Kietschke and many of his elderly neighbours eke out an existence on pensions or social security. Mostly they only leave the building to visit the Penny-Markt discount supermarket a couple of streets away. They spend the rest of the day watching television. "They used to call this a model district," Mr Kietschke said with a sigh.

In what was then East Germany, Hoyerswerda was considered an exemplary socialist city. Much of it was purpose-built to accommodate the 72,000 people who worked excavating lignite – the soft, brown coal used to heat homes – from the vast open-cast mines that mark the surrounding countryside like gaping wounds. The city was considered so vital to East Germany's industrial needs that the ratio of Stasi spies to inhabitant was upped from the national norm of one informant per 20 residents to one per six. Hoyerswerda also laid claim to being East Germany's youngest city, with an average age of 27.

But the lignite-mining industry and the gas-processing plants linked to it collapsed in the wake of Germany's reunification in 1990. Today, Hoyerswerda has come to symbolise everything that has gone wrong in the process of bringing the two Germanys back together. It is dying on its feet.

Such a reputation is bad enough, but in 1991 the town's image was further blackened by race riots instigated by groups of neo-Nazi skinheads who attacked Vietnamese and Mozambican immigrant workers with petrol bombs. Some residents looked on and applauded, and the immigrants had to be re-located for their own safety

Since then, the population of Hoyerswerda, which lies 160 miles south-east of Berlin, has nearly halved. More than 150,000 jobs were lost after reunification and thousands of young people have left for the more prosperous west. Unemployment, at 23.5 per cent, is more than twice the national average, and the population is ageing rapidly.

To save on maintenance costs, local authorities have begun an extensive home demolition programme. About 6,500 of Hoyerswerda's Communist-era apartments have been razed over the past decade, and another 3,500 are set to follow.

Andrea Schmidt used to run a dance bar in Living Complex 10. Nowadays she is in charge of a huge flea market there. It is stuffed full of the detritus of a city under demolition: rows of discarded armchairs, sofas, television sets, tables and crate-loads of plastic flowers that used to adorn the balconies of the workers' flats in the complex. A handful of elderly shoppers combs the market for pots and pans on offer for €2 (£2) a piece.

Ms Schmidt remembers moving to Hoyerswerda as a child in the 1970s. "Back then it was considered pure luxury to move in here. All the flats had central heating and hot water. That was something unthinkable where we lived before," she said.

The plattenbau – the prefabricated concrete slabs that were mass-produced and enthusiastically used in the construction of new homes in Communist East Germany – actually originated in Hoyerswerda. Ms Schmidt served an apprenticeship as a builder and was taught how to twist the steel rods that reinforced the concrete slabs.

Does she regret reunification? "I like the idea of being able to travel where I want," she says, "but I haven't had a holiday since 1989. I have always had to work. Now that I run this flea market, I sometimes miss the old East Germany. At least then you knew that you were going to get some time off, even if you could only travel to places like Bulgaria."

Hoyerswerda's early 19th-century old town has been carefully renovated since the fall of the Berlin Wall and many of the house facades now gleam in bright, new colours. The city also boasts a number of fashionable boutiques.

But around 11am on a weekday, the old centre is eerily empty and it is possible to count the number of people on the streets on one hand.

Twenty years on, east Germany is proud of its boom towns like Leipzig, Dresden, and even east Berlin, which have been restored almost to their pre-Second World War glory. But there are also many towns and villages like Hoyerswerda, and well over 250,000 homes have been unceremoniously demolished in the former Communist east. Helmut Kohl, Germany's "Unification Chancellor" promised in 1990 that east Germany would soon be a "blossoming landscape". In reality, much of the region has suffered a human haemorrhage.

Nearly 2 million east Germans have emigrated to the west over the past 20 years. Yet the exodus is set to continue. Despite massive injections of taxpayers' money, some observers maintain that east Germany is fast becoming a Teutonic Mezzogiorno – the term for the low-income south of Italy.

Ironically, it is Hoyerwerda's former open-cast mines that may promise a brighter future.

At least a score of them are dotted around the surrounding wooded countryside; all are being turned into large, interconnected and potentially beautiful lakes by a process of gradual natural flooding. The local tourist board is hopeful that with patience, and a lot of rainfall, a thriving tourist industry will develop.