Bureaucracy, the "sore" of the German economy - It costs small and medium-sized businesses over 61 billion euros per year
Small and medium-sized enterprises in Germany spend 61 billion euros a year on bureaucracy alone, according to the German development bank KfW.
The published research states that employees in around 3.8 million such companies in Germany spend an average of seven percent of their working time on bureaucratic procedures. This is calculated to be an average of around 32 working hours per month per company, a total of 1.5 billion working hours per year, Beta reports.
The representative survey, which KfW has been conducting regularly since 2002, included 10,000 small and medium-sized enterprises from all economic sectors. According to data from the Federal Statistical Office, the average total cost of an hour of work in Germany in 2023 was 41.30 euros.
According to this value, last year companies allocated 61 billion euros for state bureaucratic obligations, which corresponds to about 3.9 percent of all annual personnel expenses of small and medium-sized companies.
This does not include obligations that cannot be expressed as working hours, such as long-term planning or permit procedures, problems with access to administrative authorities or controversial interpretations of certain rules.
Specifically, the survey listed the tasks of documenting and compiling information, filling out forms, and the time required for companies to comply with legal provisions and regulations as bureaucratic problems. As the biggest challenges, respondents cited tax obligations, procedures for maintaining and compiling documentation, and accounting obligations.
"In particular, the psychological cost of communicating with bureaucracy plays a major role for many entrepreneurs. From the perspective of small and medium-sized enterprises, the bureaucracy factor is undoubtedly the biggest risk to competitiveness and to Germany as a manufacturing country," the experts emphasize.
The research showed that the self-employed have the highest bureaucratic costs. On average, they use 8.7 percent of their working time to carry out excessive bureaucratic procedures.
Analysts emphasize that bureaucracy is one of the foundations of the economic system. According to them, standardized and formalized procedures are a prerequisite for acting in accordance with the rules, for the rule of law and fair competition in the market. However, there is a growing risk that the costs will exceed the benefits. That is why reducing bureaucracy is currently the most important topic of economic policy from the perspective of small and medium-sized enterprises, experts say.
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