Bureaucracy: Poor marks from the skilled trades

The federal government is patting itself on the back for reducing bureaucracy. However, businesses are barely aware of these "successes." Due to constantly new laws, they have less and less time for customers.

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

The German government has published its annual report on the progress of reducing bureaucracy. In it, it gives itself a positive assessment. However, craft businesses, as well as trade and industry, hardly notice the successes in reducing bureaucracy.

Holger Schwannecke, Secretary General of the Central Association of German Skilled Crafts (ZDH), would therefore not give the federal government such a good report. He says: "The fact is, the federal government's efforts are not having enough impact in practice."

The reasons are as diverse as they are well-known, says Schwannecke. "Complying with constantly new, overly detailed, and incomprehensible laws takes valuable time away from craft businesses, which is then lost for customers."

Don’t just talk, implement consistently and quickly

What does the Federal Government say? Minister of State Dr. Hendrik Hoppenstedt is the coordinator for reducing bureaucracy. He says: "2018 was a successful year for reducing bureaucracy. We launched many individual projects and, overall, provided relief for citizens and businesses. The total ongoing compliance burden for businesses decreased by €405 million. The greatest relief resulted from the Upstream Emission Reduction Ordinance, which brings annual savings of €347 million." He argues that many legal requirements are completely disproportionate for small and medium-sized enterprises (SMEs ). He demands: "Laws must finally be adapted to the personnel structure and efficiency of smaller businesses. It is incomprehensible why effective instruments such as the SME test remain unused by the Federal Government."

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It's also too simplistic to limit one's assessment of bureaucracy to national laws. "EU law significantly shapes the burden profile of craft businesses."

The practice's patience is exhausted

The federal government's annual report again announces important measures to reduce the burden and avoid new bureaucracy. "However, it is crucial that these measures are implemented consistently and quickly. The patience of practitioners has run out. A further delay to the Bureaucracy Reduction Act is no longer acceptable. The federal government risks squandering its credibility in reducing bureaucracy with the Federal Employment Act III."

The skilled trades sector actively supported the federal government. Schwannecke continued: "What we need now are bold measures for real relief."  

DIHK calls for practical testing of every new regulation

Following the "one in, one out" principle, federal ministries have been required since 2015 to offset newly introduced, ongoing burdens on businesses with relief measures elsewhere. Eric Schweitzer, President of the Association of German Chambers of Industry and Commerce (DIHK) , criticizes the annual report, stating that this "one in, one out" bureaucracy brake is currently far removed from reality.

If the bureaucratic relief only exists on paper, that's not enough. The DIHK calls for a practical test for every new regulation. At a minimum, the costs of all EU directives and regulations must be included, says Schweitzer.

"We also need solutions for the disproportionately high bureaucratic costs for small and medium-sized enterprises"Business has supported the introduction of the bureaucracy brake as an innovative procedure. However, the current annual report shows that the contradiction between theory and practice regarding the bureaucracy brake is becoming increasingly greater," Schweitzer summarizes.

Companies perceive the wave of bureaucracy to continue unabated. Reporting, documentation, and retention requirements, bureaucratic forms, approval procedures, and duplicate reporting make expanding, establishing, or continuing businesses difficult. Current examples include the General Data Protection Regulation, retention periods, and regulations for electronic storage.  

BDI: Cosmetic political interventions

Industry representatives share a similar view. "The often cosmetic measures taken by politicians cannot mask the bureaucratic burden on companies," Holger Lösch , deputy managing director of the Federation of German Industries (BDI) , told the German Press Agency. The federal government celebrates successes, but these are not reaching the business community.

Lösch also criticized the fact that companies were still waiting for the agreed-upon bureaucracy reduction law . "Instead, companies were being hampered by an increasing number of officers, new documentation requirements, and lengthy audits."

This impacts innovation and the development of new markets. Lösch called, among other things, for a reduction in retention periods for tax documents. He also stated that public administration must finally be comprehensively digitized.