Corporate burnout due to bureaucracy

The oft-promised reduction in bureaucracy isn't happening. At a ZDH panel, the skilled trades sector is demanding that the government keep its promise.

This article is part of the special feature on bureaucratic madness in the skilled trades.

The density of laws, regulations, mandates, and prohibitions in Germany is constantly increasing. Small businesses, in particular, feel increasingly overwhelmed by the resulting bureaucracy. The German Confederation of Skilled Crafts (ZDH) hosted a legal policy forum in Berlin to discuss ways to reduce bureaucracy with academics, representatives of the federal government, and members of parliament.

Bureaucracy has been a major concern for the skilled trades for years. However, there has been little noticeable relief from the federal, state, and local governments. In response, the German Confederation of Skilled Crafts (ZDH) presented a catalog of 16 concrete measures and proposals last October that could lead to targeted relief for small and medium-sized enterprises (SMEs).

Should politicians continue to fail to find a way to tame the bureaucratic monster they have nurtured, ZDH President Hans Peter Wollseifer fears negative developments that would severely impact the skilled trades. "Many businesses are finding it increasingly difficult to cope with the growing bureaucratic demands. This overload leads to frustration and ultimately to a climate hostile to innovation," says Wollseifer. "Young people are choosing self-employment less and less. Young master craftsmen are worried that, given the increasing bureaucracy, they will no longer have time for their customers and their craft."

Wollseifer harshly criticized the federal government : "The political will to make progress in reducing bureaucracy has significantly diminished. To this day, there isn't even a draft bill for the planned Bureaucracy Reduction Act III."

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Government asks for patience

Hendrik Hoppenstedt, the Minister of State and Coordinator for Bureaucracy Reduction sent by the Federal Chancellery , offered little hope to conference attendees that businesses would soon see relief from bureaucratic burdens. Hoppenstedt stated, "I understand the impatience of the skilled trades, but I nevertheless ask for patience regarding the Third Bureaucracy Reduction Act . After all, the new federal government has only been in office for a year." Hoppenstedt explained that legislation requires lead time to ensure it is ultimately understandable, manageable, and effective. He added that civil servants must adhere to a total of 50 internal legislative guidelines when drafting the proposals.

The State Minister admitted, however, that there are shortcomings in the development of draft legislation: "Laws are still too often created at the desks of federal ministries and not enough in dialogue with businesses." In the future, affected industries and associations should be involved at an early stage of the legislative process . Referring to the skilled trades, Hoppenstedt said: "We depend on a healthy and strong skilled trades sector. Therefore, it is important to us that the skilled trades see the federal government as a reliable partner."

Seven years of standstill 

Klaus-Heiner Röhl from the German Economic Institute (IW) in Cologne demonstrated that the reduction of bureaucracy, so often touted by politicians , has long since ceased to be a reality. He attested that the federal government has been stagnating in reducing bureaucratic costs for seven years now. In contrast, compliance costs have increased considerably. The main culprit, he said, is the extensive documentation requirements related to the minimum wage.

Scientist Röhl recommended that the German government look to best-practice examples from other countries when it comes to legislation . For instance, Estonia has been an international leader in e-government for years. In Great Britain, the focus is already on strong participation of those affected, which ultimately leads to laws that are citizen- and business-friendly. Denmark, too, is characterized by innovative legislative processes that place great emphasis on citizen participation.

Increase of 28,5 billion euros possible

According to calculations by the German Economic Institute (IW), a 10 percent reduction in bureaucratic burdens alone could increase Germany's gross domestic product (GDP) by 0,84 percent. Compared to the previous year's GDP (3,39 trillion euros), this would amount to a saving of 28,5 billion euros. Klaus-Heiner Röhl concludes that bureaucracy is hindering economic growth , investment, and business start-ups in Germany.

With regard to the upcoming Bureaucracy Relief Act III, he recommended that the Federal Government simplify the documentation requirements for the minimum wage, raise the turnover and profit thresholds for the obligation to keep accounts , shorten retention periods for documents and ensure timely audits.

Holger Schwannecke, Secretary General of the ZDH, appealed to the Federal Government to adopt the measures proposed by the skilled trades to reduce bureaucracy in order to achieve real relief for small and medium-sized enterprises: "We need legislation that keeps the situation of our businesses in mind , and we need legal language that the addressees can understand."