BERLIN Germany, a country known for its cradle-to-grave state support, vast bureaucracy and clock- watching 9-to-5 workers, is slowly changing. But critics say the reforms are too few, too slow in Europe's biggest economy.

On Friday the Lower House of Parliament approved a major revamp of the state pension system, reducing the burden on the bloated state and giving the young a growing responsibility to save for their own retirement.

The changes follow last year's tax reforms and budget cuts aimed at boosting German international economic competitiveness.

The Social Democrat-led government of Chancellor Gerhard Schroeder has championed the changes. Labor Minister Walter Riester hailed the pension reform as "the greatest social reform that has been undertaken in the postwar period."

Other analysts call the pension and other reforms positive steps which still leave Germany much work in trimming down before it is really a lean and mean economic competitor.

"The most important problem that German business faces in terms of competitiveness is the high cost of German workers," said Karl Kaltenthaler, a U.S. political economy professor at Rhodes College. "Not only are German workers very highly paid, but they receive tremendous benefits aside from their pay.

"Development of economies in Southern Europe and Southeast Asia means that Germany faces new competition in markets it used to dominate," he said.

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Economists and analysts say a staggering array of rules and regulations also stifle German competitiveness.

The rules prompt many stores to devote considerable time and energy to skirting the rules to offer better prices.

A car dealer might register a car for a day and then sell it as a "used" car at lower cost. A store might stage a one-day repair to justify a "renovation" sale.

With the Internet making it easy to compare prices across borders, the rule puts many German retailers at a disadvantage, and in December the government backed a move to scrap the law. It is now up to Parliament to approve the legislation.

Among the most restrictive laws in Europe, they also tightly limit the hours stores can remain open.

A prime reason for the restrictive hours is opposition to change from unions, and many analysts blame strong labor laws and unions overall for creating an inflexible job market.

"Germany is too slow to get what the market needs," Erich Lejeune, chairman of German computer chip broker CE Consumer Electronic, told Reuters in a recent interview.

"I like the spirit of American business people, you know, hire and fire when somebody is no good," he said. "You can't come again to a meeting and say: 'Listen, you know, I still didn't achieve that.' You know, he's fired."

Those who do lose a job in Germany can count on strong unemployment subsidies, and even opposition conservatives are slow to suggest any changes there.

Laurenz Meyer, secretary general of the Christian Democrats, recently made headlines by making the radical suggestion of advocating a cut off of handouts to young people on the dole more than 10 years. The United States has a limit of two years.

(Reuter)