This article is adapted from the business magazine Capital and is available here for ten days. Afterwards it will only be available to read at www.capital.de. Like stern, Capital belongs to RTL Deutschland.
Cutting bureaucracy is a bureaucratic matter. It’s about paragraphs, deadlines, reporting requirements. And so practically not a day goes by without politicians complaining about the burden of excessive bureaucracy. But taking concrete action against the administrative chaos is not much fun. The effort is great because the work is small-scale and not always without conflicts of interest: after all, every bureaucratic hurdle had a justification.
The traffic light coalition is now starting an attempt at detoxification with its Bureaucracy Relief Act (BEG). The governments had also introduced such a law in each of the three previous legislative periods. Now almost 60 laws and regulations are addressed on 156 pages so that small changes have the greatest possible impact: If the law came into force in this way, according to the draft, the economy would be relieved by a good 944.2 million euros per year, the administration by 73, 7 million euros and the citizens by 3.7 million euros.
Before the draft was approved by the Federal Cabinet, Federal Justice Minister Marco Buschmann himself admitted that it was not a work of the century. That would probably be necessary, because the FDP man sees Germany as the world champion of bureaucracy. Bureaucracy is like belly fat: it has been eaten up over the years and can’t be easily gotten rid of overnight, says Buschmann. Therefore, this relief law is just a beginning.
But there is a gap between promises to reduce bureaucracy and concrete results. The costs of government regulations have continued to rise in recent years – despite all attempts to counteract this. Actually, the same principle applies as for a well-stocked wardrobe or bookshelf: new things should only be purchased when old things are getting rid of. Otherwise the stacks will overflow. “One in, one out” is the name of the rule that was drawn up by the grand coalition in 2015 to deal with the chaos of bureaucracy.
The suggestion came from the Regulatory Control Council, an independent advisory body responsible for this. But the rule fails in practice. Not every new legal measure that poses a burden is compensated for elsewhere. In 2021/22, new charges with costs of 530 million euros were offset by reliefs of only 125 million euros.
Now several million sums are being put on the table again. They are the benchmark for how much time and money has to be spent in order to comply with and implement specifications – or not. These five changes should bring the greatest relief:
The bottom line is that the package seems balanced between relief for the economy, citizens and administration. However, the Minister of Justice has removed a new regulation that he wanted to get through the Bundestag more quickly. In February, Parliament increased the thresholds for the categories of small, medium-sized and large companies in the trade law. According to the ministry, this will mean simplified accounting rules for 52,000 companies as early as 2023 – and another annual relief of around 650 million euros. The assignment decides whether an abbreviated balance sheet or a detailed one is required for the annual financial statements.
The calls for more far-reaching reforms to reduce bureaucracy continue despite the government’s plans. The chairman of the NKR, Lutz Goebel, spoke of a “strong start”. In order to systematically counteract the growing increase in compliance costs, further ambitious initiatives would have to follow. The NKR is also concerned with sharpening the existing bureaucracy brake “One in, one out”. The rule is diluted by exceptions resulting from the adoption of EU law and by one-off legal burdens. In addition, countless demands and concrete suggestions from practice for relief potential remained unused.
In fact, in 2023 the Ministry of Justice asked organizations and associations – from Greenpeace to the Central Association of German Crafts and the Federal Association of German Industries (BDI) – to make suggestions for reducing bureaucracy. There are many things that cannot be found in the draft law. “According to the federal government’s monitoring report, more than half of the approximately 450 suggestions either should not be taken up yet or are still being examined,” complains the NKR.
The BDI also reacted critically. “The federal government is missing out on the bureaucratic liberation.” The current package falls far short of expectations. More practical checks are needed in the ministries. After the approval in the cabinet, there is still discussion in parliament. The MPs there will almost certainly try to carry out one or two small interventions.
The President of the Federal Association of Wholesale, Foreign Trade and Services (BGA) also appealed to parliamentarians to improve the draft. What is now on the table is “well-intentioned, but poorly crafted,” criticized Dirk Jandura. After all, reducing bureaucratic burdens and reporting requirements is the cheapest way to promote economic growth. The scope of this draft law does not do justice to the current economic situation.
