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Germany's biggest problem is Zukunftsangst (fear of the future). Uncertainty has led to declining membership in political parties, an increase in stress-related illness and consumers who cocoon at home rather than go out for a little retail therapy. It has more and more people "going to Balconia"--passing up a traditional holiday for staying home to water the geraniums. And as companies move production farther east, to the new E.U. member states and Asia, to avoid strict employment laws and high labor costs, German industry is gradually being hollowed out. In 1993, for example, Siemens employed 238,000 people in Germany and 153,000 in other countries; 10 years later, these figures were reversed, to 167,000 in Germany and 247,000 elsewhere. Some of Chancellor Gerhard Schroder's economic reforms are kicking in an astounding 6.3 million people (out of a population of 83 million) have signed up to work part time in "mini-jobs," earning up to $486 a month tax free but he hasn't solved the big problems.
Eastern Germany continues to be one of them. Since unification in 1990, the people of the former East Germany have certainly had their confidence tested. The German government's $1.46 trillion helped build railways, highways, schools and communications networks. But the money did relatively little to create permanent jobs; unemployment is above 18%, more than double the jobless rate in western Germany. Two-thirds of the funds are used to pay unemployment and retirement benefits to people who never contributed to the system. "Everything was concentrated on social policy," says Joachim Ragnitz, an economist with the Institute for Economic Research in Halle. "There was not a policy to attract foreign investors." Ragnitz warns it could take 20 to 30 years for living standards in eastern Germany to reach the level of those in western Germany.