Well, the German labor market is certainly benefitting from the good economic situation there right now and because of demographic factors. Some areas in Germany have already full-employment (Bavaria and Baden-Württemberg) and some counties have unemployment rates of 1%, for example in the Ingolstadt area. By 2015, many companies will report shortages in getting enough skilled workers. This is because of demographic changes. The people who were born in the 1950s are starting to retire and their numbers are much higher than the ones entering the labor market right now. There are about 6.5 Mio. people in the age group of 55-60 right now who will retire in the next years, but in the age group of 15-20 only 4 Mio. people will start entering the labor market. That is a gap of 2.5 Mio. workers. Therefore Germany's unemployment rate will probably drop to record lows in the next years, but a certain base of them will always remain (1.5 Mio. to 2.5 Mio.), because you cannot train a salesman to be a analytical chemist and so on.
The other side of the Hartz IV story is that unemployment agencies started to push unemployed people into low-paying jobs below 400€ a month, so called 1€-jobs or mini-jobs. These jobs have almost doubled since the start of the reforms and make up 7 Mio. now, or better said every 5th German worker works for less than 400€ a month, is a so called "working poor". What the official jobless numbers also don't tell you is the fact that there are still about 7.5 Mio. Germans on welfare support. They either receive unemployment money or welfare money.
http://www.spiegel.de/wirtschaft/soziales/0,1518,758944,00.html
