Roman Herzog, captured the zeitgeist
in 1997 when he spoke of "the loss of economic dynamism, the torpor of society, an
unbelievable mental depression". Reformers clamoured for elements of the German
model, like vocational training and centralised wage bargaining, to be scrapped.
Shaping up
Instead it was made more limber. Business outsourced some production to eastern
Europe; fear of that process extracted concessions from German workers, who offered
flexibility on wages and work hours
in exchange for greater job security. In the subsequent decade manufacturing's share of GDP rose even as it was falling elsewhere (see chart 3 on next page).
In the early 2000s, with growth still in low gear and unemployment in double digits, the then-chancellor, Gerhard
Schroder, a Social Democrat, started another round of gruelling physiotherapy.
