German issues in a nutshell: 'Agenda 2010'
Germany's sweeping social reform package Agenda 2010 helped slash unemployment rates but meant drastic changes for the unemployed. Over a decade since it was introduced, the reforms continue to divide the country.
Former German Chancellor Gerhard Schröder introduced the reform package in 2003
One point of contention during Germany's upcoming federal election concerns what to do with a set of reforms called Agenda 2010 that was introduced by Chancellor Angela Merkel's predecessor, Gerhard Schröder.
Agenda 2010 was a legislative package of labor market and welfare reforms intended to reduce unemployment and jumpstart Germany's economy.
Billed as the largest single social reform ever seen in post-war Germany, the changes were introduced in 2003 by then-Chancellor Schröder whose Social Democrats (SPD) were in a coalition with the Green party. At the time, Germany's economy was sluggish and unemployment was at 11.6 percent.
The name "Agenda 2010" comes from the deadline proposed by the EU's economic development plan called the Lisbon Strategy.
The reform measures were warmly welcomed by businesses and conservative politicians but loathed by the left and Germany's labor unions. After beating Schröder in elections in 2005, Merkel, in her first address to parliament as chancellor, thanked her predecessor "for bravely and resolutely opening a door with Agenda 2010, so that our social systems could be adapted to a new era."
Although Germany's unemployment rate today is down to 6.3 percent, the Agenda 2010 reforms remain controversial and a talking point for September's elections.
What did the reforms do?
The main changes implemented under Agenda 2010 include:
- Drastic cuts to welfare budget
- Tax breaks to workers and corporations
- Weakening the then-stricter labor laws to allow easier hiring and firing of employees
- Changing the rules to allow for more part-time and temporary work
- Creating social benefit program called "Hartz IV" that merged unemployment and welfare benefits
- Reducing the amount of time a person could receive unemployment benefits
The reforms also called for raising the federal retirement age to 67. The age is still currently set at 65 but is planned to reach 67 by the year 2029.
Why are they controversial?
Depending on the political point of view in question, the Agenda 2010 reforms were either long-overdue and a resounding success, or they were disastrous for workers, fueling unemployment woes and frustrating the workforce.
The number of low-paid and part-time jobs in Germany has grown significantly since the reforms were put in place. The number of limited-term contracts also expanded, impacting workers on all levels, leading to frustration about not being able to plan for the future.
Still, the reforms were strong in cutting down unemployment rates and many conservative politicians note that the Agenda 2010 reforms likely helped buoy the German economy through the 2008 financial crisis.