When Markus Wingens created the position of “energy manager” for the metal heat treatment company he runs in southwestern Germany, his idea was to increase energy efficiency and attract customers interested in sustainability.
But the job has become as much a task of filling out paperwork and learning the seemingly ever-changing laws as it has been making sure the company, Technotherm Heat Treatment Group, meets energy requirements.
Last year, four new laws and 14 amendments to existing ones came into force regulating energy consumption, each introducing new data reporting requirements and submission forms – in many cases to prove the same standards a company is already certified to , which it has been achieving since 2012, Mr. Wingens said.
“We have the Renewable Energy Act, we have the Energy Efficiency Act, we have the Energy Finance Act, and each one comes with an administrative burden,” he said. “This is crazy.”
Freedom from red tape has been a rallying cry for farmers from Poland to Portugal in recent protests against European Union laws and policies. Indeed, the burden of bureaucracy is a common complaint of corporate executives around the world.
But nowhere is the problem more pressing than in Germany, Europe’s biggest economy, which faces anemic growth of no more than 0.2 percent this year. In a report last month, the International Monetary Fund called “too much bureaucracy” one of the main obstacles to Germany’s economic recovery.
For example, it takes 120 days to get a business license in Germany – more than double the average in other Western economies. Germany also lags behind the rest of the European Union in digitizing government services, still requiring written forms for certain tax refunds and building permits.
“Now we have such a heavy workload that we need more and more people to get a handle on the bureaucracy,” said Klaus Paal, president of the Stuttgart Chamber of Commerce and Industry, who runs a packaging company.
“But these are skilled people who would actually be much better in production than writing reports or filling in statistics,” he added.
German companies spend 64 million hours each year filling out forms to feed the country’s 375 official databases, according to industry estimates. When the Stuttgart Chamber of Commerce asked its 175,000 members to name their biggest challenges, bureaucracy topped the list.
Even German Chancellor Olaf Scholz publicly admitted that the demands had become too great. “We’ve reached a situation where in many places no one can enforce all the laws we’ve created,” Mr. Scholz said last month.
His government has proposed legislation to cut red tape, which it claims will save companies and citizens around €3 billion each year. Among other things, it would cut the time companies have to keep official documents by two years and remove the requirement that Germans staying in hotels in the country fill out registration forms.
The bureaucratic drain on time and resources is particularly felt by small and medium-sized firms – those with fewer than 500 employees and annual revenues of less than 50 million euros (about $54 million) – which are the backbone of the German economy.
These firms often do not have in-house legal departments dedicated to filing audits, recording statistics and deciphering which information is requested by which authorities – European, federal, state and local authorities.
For Andreas Schweikard, general manager at Gebauer, a chain of seven luxury supermarkets in the southwestern state of Baden-Württemberg, bureaucracy generates mundane tasks and increases food waste.
For example, deli workers took cold cuts that were nearing their expiration date and used them in sandwiches for a quick sale until an ordinance went into effect that required detailed lists of all ingredients in all products sold. Now, instead of making new sandwiches — and lists — every day based on what’s about to expire, they offer more limited sandwiches and throw out more meat.
At the seafood stand, fishmongers must now ensure that each variety of fish is labeled in both German and Latin. They must also measure the temperature of each fish or fillet, as well as the general temperature in the cold storage cabinets, twice a day.
“At least there’s an app where things can be logged, but it would make more sense if refrigerator thermometers were calibrated to read temperature directly,” Mr Schweikard said.
Even the digitization of government services is mired in bureaucracy, said Michael Wirkner, who founded an advertising agency in Göppingen almost two decades ago.
To create an online registration system for 20 school districts, his company needed the approval of five regional data protection officers. Each had a different interpretation of European Union data security regulations; one told Mr Wirkner he could use a Google tool, while another insisted it was not allowed.
“So we end up spending time discussing things with hundreds of different people,” Mr. Wirkner said.
After Mr. Paal of the Stuttgart chamber realized how the onslaught of forms was bogging down business, his team invited members to submit examples of their bureaucratic woes. The chamber asked for detailed information on what companies must report, from workers’ driver’s licenses to how they use energy and where they deliver it.
They have created a database of answers, along with 60,000 pages of laws governing Baden-Württemberg. Using artificial intelligence, the chamber created topic clusters to help companies avoid filling in duplicate information.
“With this tool, we can now search through all the laws and say, ‘Name me all the reporting requirements,’ and it comes up with a spreadsheet that lists all the laws that require a company to report to an authority,” said Andreas Kiontke, a lawyer, who works with the chamber of commerce.
The tool could also suggest ways to ease red tape, which German politicians hope will take to heart.
“I think in other countries companies aren’t as concerned about some issues because they just know that nobody cares that much,” Mr Kiontke said. He noted that German regulators have imposed the European Union’s sweeping data privacy law on rules governing even professional etiquette. “In Germany we have regulations about handing out business cards at business meetings and whether that’s still allowed,” he said.
“It’s unbelievable,” he added. “We’ve kind of lost the compass of what still makes sense.”
