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After German unification in 1990, more than 3 million jobs disappeared in eastern Germany and the obsolescence of eastern German capital stock became apparent. Further escalation of mass unemployment was successfully held in check; however, it soon became clear that labor market policies appropriate for western Germany were not, in and of themselves, enough to solve the employment problems in eastern Germany. Although it was clear that the main priorities in resolving eastern Germany's labor market problems after unification were to restructure the infirm economy, replace dilapidated infrastructure, and overcome the shock of unification, the details of the reconstruction and "catching-up" processes required by the eastern German economy were harder to define. The first step in the "catch-up" process was to institute East-West transfer payments. Other measures that have proved successful include the following: job creation measures designed to reach specific target groups; lump sum wage cost subsidies; provision of training to meet industry's needs; and establishment of labor promotion and structural development enterprises in eastern Germany. Training and qualifications have been deemed especially important because they are considered major incentives for development of more sophisticated jobs. (Twenty tables/figures and 73 references are included.) (MN)