Too many rules hurting Germany?

By CNN's Suzanne Kelly

KaDeWe department store in Berlin feels the pinch of rigid shopping hours

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BERLIN, Germany (CNN) -- Nestled in the heart of Europe, Germany is a country rich in tradition and pride -- but no longer rich in economic growth.

With the world's third-largest economy now among Europe's worst performers, many analysts say Germany is missing one very important quality: flexibility.

The shopping hours at Berlin's famous KaDeWe department store provide a case in point. Just as it has for decades, the store is forced by law to close early on Saturdays --- and stay closed on Sundays.

"I think the government have to do a lot to liberalize the opening times for us," says KaDeWe's Dagmar Flade.

"We would like to have much more flexibility to open our department store, and we want to have the choice. And we are sure that our customers say to us when they want to come, when they want to buy, and then we will open.

"We have to close at 4 o' clock. And that's terrible because people want to buy longer than 4 o' clock. But we are not allowed to do that."

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It's much the same throughout the country. Businesses complain they are forced to turn paying customers away in order to keep the government -- and the unions -- happy.

"We have also problems with our social partner ... from the union, and we have to handle it," says KaDeWe's Flade. "And we need more help from our government at this point."

To many Germans, it seemed that Gerhard Schroeder was the answer after he won the chancellorship in 1998. He was a business-savvy politician who managed to gain the support of the unions while promising to find ways to get all segments of the economy working together.

He introduced the Alliance for Jobs, a program of cooperation among business, government and unions aimed at getting more Germans off the unemployment rolls.

But halfway through his term, he seemed to turn his back on business, focusing again on securing the union voter base instead of seeking agreement between the two.

"I think flexibility is a big issue here," says Jeffrey Gedwin, director of Berlin's Aspen Institute, a think-tank that studies the differences and similarities between the United States and Germany.

Gedwin says Germany's lack of flexibility can't be blamed solely on Schroeder and his policies.

"I think Germans in particular, when they think about economic questions, they think about security and they think about stability," he says.

"They don't exclude the others, but I think it's a question of emphasis and priority. So, in general -- and there are historical reasons for this -- it's a question of culture, temperament, mentality, analysis."

Germany defines itself as a socially responsible market economy -- one that thinks about its workers, not just the bottom line.

Many voters seem disenchanted, feeling that whoever wins on Sunday -- Schroeder or conservative challenger Edmund Stoiber -- won't be able to bring down high unemployment, push through significant labor reform and deal with the crumbling economic problems which were, ironically, created by one of the most joyous events this country has ever seen.

Analysts largely agree that the fall of the Berlin Wall, as celebrated as it was, was the beginning of Germany's economic problems.

"We underestimated, all of us, that the communists, the GDR, the Soviet satellite, had 40 years to destroy the economy, to destroy the environment, to destroy the whole attitude and moral philosophy about how a liberal democratic and market society works," says Aspen's Gedwin.

A European Commission report traces two-thirds of Germany's economic problems to reunification. The other third is traced back to the inflexibility of business, unions and government -- which doesn't help to tear down the structures that still divide the German economy.

Stoiber promises to change things, steering the country back on a pro-business track while not forgetting about German traditions. But it's a promise voters here have heard before.

Unless Germans themselves are willing to change some of their views and traditions, many here believe that neither candidate can do much to help them.

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