Germany's Hartz labor-market reforms

Facing stubbornly high unemployment and sluggish growth, Chancellor Gerhard Schröder's government enacted four packages of labor-market reforms between 2003 and 2005, known as Hartz I through IV after the head of the commission that designed them, former Volkswagen executive Peter Hartz. The reforms tightened eligibility and reduced the duration of unemployment benefits, created new categories of low-wage 'mini-jobs,' and merged unemployment and welfare payments into a single system. The changes were deeply unpopular at the time and split Schröder's own party, contributing to his election loss in 2005, but they are widely credited by economists with making German labor markets more flexible and helping the country weather the 2008 financial crisis with comparatively low unemployment.