Stralsund: Anja has been scrubbing floors and washing dishes for €2 an hour over the past six years. She is bewildered when she sees newspapers hailing Germany's ‘job miracle'.

"My company exploited me," says the 50-year-old, sitting in the kitchen of her small flat in the eastern German town of Stralsund. "If I could find something else, I'd be long gone."

Stralsund is an attractive seaside town but Anja, who preferred not to use her full name for fear of being fired, cannot afford the quaint cafes. Wage restraint and labour market reforms have pushed the jobless rate down to a 20-year low, and the German model is often cited as an example for European nations seeking to cut unemployment and become more competitive.

But critics say the reforms that helped create jobs also broadened and entrenched the low-paid and temporary work sector, boosting wage inequality.

Labour office data show the low wage sector grew three times as fast as other employment in the five years to 2010, explaining why the ‘job miracle' has not prompted Germans to spend much more than they have in the past.

Pay in Germany, which has no nationwide minimum wage, can go well below €1 an hour, especially in the former communist east German states.

Less prone to poverty

"I've had some people earning as little as 55 cents per hour," said Peter Huefken, the head of Stralsund's job agency, the first of its kind to sue employers for paying too little. He is encouraging other agencies to follow suit.

Data from the European Statistics Office suggests people in work in Germany are slightly less prone to poverty than their peers in the Eurozone, but the risk has risen: 7.2 per cent of workers were earning so little they were likely to experience poverty in 2010, versus 4.8 per cent in 2005.

It is still lower than the Eurozone average of 8.2 per cent. But the number of so-called ‘working poor' has grown faster in Germany than in the currency bloc as a whole.

In response, as other Eur-opean countries rush to deregulate, Germany is re-regulating.

Angela Merkel's conservative government is trying to water down the effects of some labour reforms brought in by her Social Democrat (SPD) predecessor Gerhard Schroeder, a year-and-a-half before the next federal election, when she is expected to seek a third term.

The contrast between Germany's record levels of employment and the dire jobs situation elsewhere in Europe is stark. Last year, the number of people in employment in Germany rose above the 41 million mark for the first time. The jobless rate has been falling steadily since 2005 and now stands at 6.7 per cent, compared to 23 per cent in Spain and 18 per cent in Greece.