Agenda 2010
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The Agenda 2010 is a series of reforms planned and executed by the German government which they say will modernise the German social system and labour market. The declared aim of Agenda 2010 is to improve economic growth and thus reduce unemployment.
On March 14, 2003 Chancellor Gerhard Schröder gave a speech before the German Bundestag outlining the proposed plans for reform. He pointed out three main areas which the agenda would focus on: the economy, the system of social security, and Germany's position on the world market.
The steps to be taken include tax cuts (such as a 25% reduction in the basic rate of income tax) as well as big cuts in the cost absorption for medical treatment and drastic cuts in pension benefits and in unemployment benefits alike. In that, the programme closely resembles similar measures taken earlier in the USA (Reaganomics) and the UK (Thatcherism). Those measures are also being proposed in accordance with the market liberal approach of the EU's Lisbon Strategy. The name Agenda 2010 itself is a reference to the Lisbon Strategy's 2010 deadline.
The series of changes in the labour market known as Hartz I - IV started in 2003, with the last step, Hartz IV, having come into effect on January 1st, 2005. The changes have altered the face of unemployment benefits and job centres in Germany, and the very nature of the German system of social security.
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[edit] Reaction to the changes
Politicians, industrial leaders, trade unions, media and population alike justifiably consider the Agenda 2010, especially the Hartz IV law, as the largest cut into the German system of social security since World War II.
While industrial leaders and both the conservative and market-liberal parliamentary parties such as the CDU and the FDP greeted Agenda 2010 as it implemented their long-time demands, there was some upheaval in Schröder's own social democratic party. After Schröder threatened to resign (with no obvious successor as Chancellor) if the changes were blocked since they were so vital to his government, he received an inner-party 80% vote of approval as well as a 90% approval from his coalition partner, the Greens. (Schröder had won the 2002 federal election with, among other things, the promise not to cut into the social security system.) In a reaction to the policies declared and the measures taken, about 100,000 members of Schröder's SPD left the party but the more prominent left-wing politicians stayed on. Although the changes eventually got through, after devastating opinion polls Gerhard Schröder resigned as party chairman - not as Chancellor - in February 2004 to give way to the more popular Franz Müntefering.
This development left the PDS (with only 2 out of the 603 members of the federal parliament) as the only outspoken opponent to the Agenda 2010 policies but their course is somewhat inconsistent. In the regional Länder of Mecklenburg-Vorpommern and Berlin, where there are SPD-PDS-coalitions, PDS ministers are actively implementing the Agenda laws.
The German Trade Union Federation (DGB), the most influential group outside parliament and historically interwoven with the SPD, massively stepped up their discourse against Agenda 2010, especially prior to the Hartz IV law in July 2004, but the rumble subsided quickly after a summit meeting with Schröder in August 2004. The trade unions suffered from a lot of attrition in that process as their members defected in droves either because the unions' attitude was perceived as too lenient or as too strongly opposed. There were no strikes against Agenda 2010 as the German constitution (Grundgesetz) prohibits politically motivated strikes, but some demonstrations at least were organised and supported by the unions. The biggest demonstrations, held in Cologne, Berlin and Stuttgart on April 3rd, 2004 brought together some 500,000 people.
The German mass media (TV and radio stations, newspapers and magazines alike) in the majority welcomed the changes as "overdue"; there were very few critical comments. Since the media and journalists themselves suffer a lot from unemployment and low wages, and since many newspapers only just avoided bankruptcy after the new economy and media crash following the stock crash in 2000, it is possible that their independence has been undercut by threats from their industrial advertising partners. There has generally been a consistent trend toward more neoliberal positions in German media in the past few years, starting in the 1990s.
In December 2003, the Bundesrat, dominated by the opposition CDU party, blocked some of the reforms on political grounds until several compromises were reached, many of which put a particularly painful twist - for those affected, for example the unemployed or the ill - on the measures taken.
Dissatisfaction with Agenda 2010, and in particular with Hartz IV, lead to thousands of people protesting in the streets of Berlin, Leipzig and other big cities particularly in eastern, but also western Germany over the summer of 2004 (see Monday demonstrations, 2004).
Dissent with the Agenda 2010 has also promoted the foundation of a new political party, the Labor and Social Justice Party (WASG) by long-term SPD members and union activists. The WASG is squarely against the measures taken in the Agenda 2010 process and ran in the 2005 North Rhine-Westphalia state election, where it gained 2.2% of the votes, against what it considers "the neoliberal consensus" displayed by the governing centre-left political parties and the more conservative opposition alike.
[edit] Consequences
So far, the Agenda 2010 has lived up to Schröder's expectations: while average real wages were cut in 2004 in the second straight year and continue to fall, industrial profits of listed companies have been soaring to new record levels. Unfortunately, those companies are not only failing to hire new workers from the ranks of the unemployed, but they are also continuing to shed workers in order to boost profits further, and invest them in low-wage countries. While overall economic growth remained feeble at 1.6% in 2004, Germany's unemployment figure reached a new record high of over 5.2 million in February 2005. Economic growth is dramatically hampered by an ever-weakening domestic demand. Some political scientists liken Schröder's politics with the deflationary politics pursued by Chancellor Brüning in the early 1930s which led to record unemployment in the Weimar republic, and ultimately the rise of Hitler.
It had been planned to cut the ancillary labour costs financing the social security system in order to stimulate hiring; these could not be cut, and instead, the workers now additionally have to pay some parts of their social security contibutions out of their own pockets. The number of people who cannot afford proper health insurance, until now almost negligible, is sure to rise. (It is estimated that about 300,000 Germans have no health insurance at all because they can't pay the premiums.)
Economic inequality in Germany has risen to unprecedented levels in the past years, with 13.5% of Germans or 11 million (2004 figure) officially living below the poverty line. (1 in 7 children and 1 in 5 young people are said to live in poverty.) Due to the Agenda 2010, especially the Hartz IV law, the number of poor Germans and the number of homeless people is expected to rise further, and it is feared that inequality will grow strongly. Renate Schmidt from the German government re-defined in February 2005 that "poverty is not only depending on money". (Updated 2006: The percentage of poor Germans has risen to 17.3% and the number of poor children to 2.5 millions or 1 in 6 children, up from 1.25 millions and a direct consequence of the Hartz IV laws.)
In the Länder elections in 2004, electoral turnout fell to unprecendeted lows (sometimes just above 50%), and some elections produced results like those in Saxony, where the neo-fascist NPD attracted 9.2% of the vote, gaining local parliamentary seats. Some have interpreted this to be a sign of protest, especially in regards to Agenda 2010 politics.[1] In the 2004 elections to the EU parliament, the SPD reached an all-time postwar national election low of only 21% of the votes. Generally, mistrust against politics, and politicians, has been growing strongly in Germany.
The SPD lost by a wide margin in the 2005 regional election in its "heartland" of North-Rhine Westphalia; the regional government was replaced by a CDU-FDP coalition. The SPD losses were widely attributed to the voters' discontent with the Agenda 2010 reforms as workers and unemployed people defected from the SPD in droves. As a consequence, Chancellor Schröder admitted defeat and called for an early general election in the autumn of 2005 (one year ahead of schedule).
