I read once that the extreme labor laws in Germany are part of the problem. How it's really hard to fire someone. Do you think that factors into the problem?
It´s deeply rooted in tradition. Germany is a conservative country. Not necessarily the majority of the people but at least "the system". Innovation is punished. We killed the Romans when they tried to bring us civilization, we burned heretics at the stake, we followed an emporer and an Austrian into senseless wars. There is no hire & fire tradition. It´s not a given that a 50 year old experienced specialist will find another job if he loses the current one. Or a 30 year old lower-qualified. "The system" makes it hard to fire people (after 6 months), which makes companies reluctant to hire. Federal job agencies are not good at brokering jobs. They´re learning but they are buried in useless paperwork.
Our politicians see all the fresh concepts in other European countries. Especially Scandinavia has been really creative. I think it was Denmark (I hope I´m not telling bullshit) who has completely removed all barriers for a hire&fire approach - with the result that their unemployment rate is melting like snow in the sun. The average turnaround time for an unemployed is something like 4 weeks while it can be closer to 6 months in Germany.
No politican suggesting a radical system change would get (re)elected though. For this reason a backdoor approach was chosen and instead the economy stimulated with small adjusted to taxes (lower for most companies), exceptions for very small companies (they can fire their people easier) and effectively negative wage growth for 10 years (!). As a result Germany is much, much, MUCH more competitive as an industry location than before. The wage delta has become smaller, the effective taxes for companies lower (but nor for workers), and the well known advantages of location remained.
As a result Germany will be one last time, unexpectantly due to China´s weakness, the "export world champion" in 2008. The high demand for German product, especially industry machines and cars, creates new jobs. Approximately a million in the last few years. This lowered the unemployment rate significantly.
Unfortunately export depends on the situation in other countries. You all know what´s going on in the world economy at the moment.
The abundance of rules for everything is not a really a problem in everyday life. Because we have a tradition of bending rules. Or finding a contradicting rule we like more.
In the last couple of years legislative gets too aggressive though.
Standardization is inevitable to a certain extend because Germany is a small country with high population density. The country is almost exactly half as big as Texas and has 83 million habitants.