In times of crisis the German model of the social market economy can be
surprisingly flexible. Gerhard Schröder’s Agenda 2010, for example, introduced
a variety of reforms to the German social security system and labour market and
is without parallel globally but particularly so in Europe.
These major reforms
liberalised the labour market and relieved the burden on the welfare state.
Following the principle of push and pull they increased the incentive to work and
ensured greater manoeuvrability in the wages of lower-paid workers by
restricting wage-replacement benefits paid by the state. The resulting boost in
flexibility gave Germany an extremely low unemployment rate by European