ABSTRACT
In a standard definition, the so-called German model is described as an 'institutionalized high wage economy combining high competitiveness in world markets with strong social cohesion and, in particular, low levels of inequality along a variety of dimensions'. In a similar way, Freeman describes this model as 'Rhenish Capitalism'. There are several characteristics that belong to the German model. Hence, at that time, the German economy was in a critical phase, and it appeared to be not only a laggard in structural change but also the paradigm of Eurosclerosis. The key elements of Agenda 2010 aimed to reform labour market institutions. The so-called Hartz reforms were implemented in different steps between 2003 and 2005. The fundamental concept for improving the functioning of the labour market and reducing the number of the unemployed can be characterised as 'supporting and demanding'. The main element for the German model being substantially weakened through the reforms is solidarity.
