The Agenda 2010 is a series of reforms planned and executed by the German government, an SPD–B'90/Greens coalition at that time, which are aimed at reforming 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.
A series of changes in the labour market known as Hartz I - IV started in 2003 and the last step, Hartz IV, came into effect on January 1, 2005. These changes affected unemployment benefits and job centres in Germany, and the very nature of the German system of social security.
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 economically liberal parliamentary parties such as the CDU, the CSU, and the FDP strongly supported Agenda 2010 as it implemented their long-time demands, there was a strong upheaval in Schröder's own social democratic party. After Schröder threatened to resign (with no obvious successor as Chancellor) if the changes were blocked in his party since they were so vital to his government's policy, he received an inner-party 80% vote of approval as well as a 90% approval from his coalition partner, the Greens. However, 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 went 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 although their course was somewhat inconsistent. In the Länder of Mecklenburg-Vorpommern and Berlin, where there are SPD-PDS-coalitions (and later SPD-Die Linke coalitions), PDS/Die Linke ministers are actively implementing the Agenda 2010 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 prohibits politically motivated strikes, but some demonstrations at least were organized and supported by the unions. The biggest demonstrations, held in Cologne, Berlin and Stuttgart on April 3, 2004 brought together some 500,000 people.
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 Electoral Alternative for Labor and Social Justice (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.
The immediate aftermath of the Agenda 2010 reforms was rather negative as unemployment soared to over 5.2 million people in February 2005  and Schröder called German companies "lazy" for failing to hire more workers . Beginning in 2005, however, unemployment figures have been falling and, in May 2007, unemployment was at 3.8 million people, a 5½ year low . The apparent success of Agenda 2010 in reducing unemployment in Germany has been cited in the debate over extending long-term unemployment insurance benefits in the United States.
A debate about the socioeconomic results of the Agenda 2010 reforms was stirred by the release of a study conducted by the Friedrich Ebert Foundation in late 2006. The study classified 4 percent of people living in West Germany as well as 20 percent of people living in East Germany as living in "precarious" socio-economic conditions. Although the topic of social conditions in Germany was much debated as a result of this study, with many people (including those in Schröder's own party) laying blame on Schröder and his Hartz IV reforms for a new economic inequality in Germany, no policy changes have been enacted as a direct result of the study . As of 2008, the wage ratio had been cut to a fifty-year-low of only 64.5%.
Another sign that economic inequality has risen in Germany can be seen in the fact that the number of Germans living below the poverty line has increased from 11% in 2001 , to 13% in 2004 , and about 18% in 2007. According to 2007 government statistics, one out of every six children was poor, a post-1960-record, with more than a third of all children poor in big cities like Berlin, Hamburg and Bremen.
Voters seemed to respond to the Agenda 2010 and Hartz IV reforms negatively. In the 2004 elections to the EU parliament, the SPD reached an all-time postwar national election low of only 21% of the votes.
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, which was one year ahead of schedule
By 2011, unemployment had fallen from its 10% average of the mid-decade to around 7%, its lowest since the early 1990s.
- "AFP: German unemployment and retail sales steady". Google.com. 2011-08-31. Retrieved 2011-09-23.