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 topic Bureaucratic madness in the craft industry

The German government has published its annual report on the reduction of bureaucracy, giving itself a positive assessment. Crafts businesses, but also 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 bureaucracy reduction. He says: "2018 was a successful year for bureaucracy reduction. We launched many individual projects and, overall, reduced the burden on citizens and businesses. Total ongoing compliance costs for businesses fell by €405 million. The largest reduction resulted from the Upstream Emissions Reduction Ordinance, which provides annual savings of €347 million."Many legal requirements are for craft businesses completely disproportionateHe demands: "Laws must finally be adapted to the personnel structure and performance 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

According to the "one in, one out" principle, federal ministries have been required since 2015 to offset newly introduced ongoing burdens on the economy by providing relief elsewhere.The bureaucratic brake "One in, one out" is currently far from reality, criticizes the President of the German Association of Chambers of Industry and Commerce Eric Schweitzer the annual report.

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

The industry sees things similarly. "The often cosmetic interventions of politicians cannot mask the bureaucratic burden in companies," said the deputy general manager of the industry association BDI, Holger Lösch, the German Press Agency. The federal government is celebrating successes—but these aren't resonating with the business community. 

The companies would still rely on the agreed Bureaucracy Reduction Act Lösch also criticized the lack of time to wait. "Instead, companies are being hindered by an increasing number of agents, 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.