Germany's Path To Reform

A graying population, low birth rate and record unemployment are weighing down on Germany's health, pension, nursing care and unemployment benefits, which are all threatened with collapse. Along with these rising bills, non-wage labor costs are also soaring, minimizing opportunities for creating new jobs. Add to that Germany’s status as the slowest growing economy in the entire euro zone and you’ve got a recipe for disaster.

With his "Agenda 2010" plan of tax cuts, structural reforms and cuts to the social system, German Chancellor Gerhard Schröder wants to spur the economy and encourage job creation and consumer spending. The reforms are also intended to bring Germany in line with the deficit spending caps established in the Maastricht Treaty regulating the stability of the euro. The bulk of the legislation is on the agenda this autumn in parliament, and the world is watching to see if Schröder's plan will give the German economy the kick start it needs.