Schröder's Economic Reforms: The End of Reformstau?

Abstract

During his first term, Chancellor Gerhard Schröder accomplished Germany's most dramatic tax and pension reforms in decades, overcoming both a disastrous first year in office and the tendency of the German system of government to produce Reformstau (reform gridlock). Schröder's success in passing these reforms resulted from his gaining greater control of the Social Democratic Party (SPD) and his government, his skill in negotiating with Bundesrat politicians, and the Christian Democratic Union's (CDU's) weakness. Nonetheless, the electorate's key economic concern has been reducing unemployment and the strategies that enabled Schröder's earlier reforms are unlikely to work on labour market policy.