At that time, the economic situation Germany found itself in prompted the Bundesbank, in a paper entitled Ways out of the crisis, to write,  2  BIS central bankers’ speeches  “Germany has fallen far behind European partner countries in terms of key data such as GDP growth, employment and the government deficit.” Far-reaching reforms were initiated in Germany to tackle this period of structural weakness.
Among them was the Agenda 2010 reform programme, which included the so-called “Hartz IV” legislation. Moreover, in view of the location-related problems that key industries faced and the high level of entrenched unemployment at that time, the wage bargaining partners steered a course of wage moderation over a prolonged period of time.