Bureaucracy: Germany’s Gift That Keeps on Giving
Ah, Germany! The land of fine beers, brilliant engineering, and, apparently, mountains of paperwork so high that climbers should start using it for training! According to a rather alarming survey by the well-respected Ifo Institute, bureaucracy is starting to feel like an unwanted guest at a party – overly familiar, a total downer, and yet, impossible to leave without feeling a twinge of guilt.
Guess what? A whopping 91 percent of the 1,763 companies surveyed reported that bureaucracy has increased since 2022. That’s practically everyone! If we were any more efficient, we might as well be using carrier pigeons. In the industrial sector, the number is even more harrowing, with 95 percent complaining like a bunch of Bauhaus architects after being told there are no more minimalist chairs available.
Supply Chain Law, Complex Approval Procedures, Tax Law
Let’s dig a bit deeper into the ‘why’. The government’s new supply chain law from 2023 is as welcome as a cat at a dog show. It’s a nightmare of high effort in official approval procedures, particularly in construction law. And don’t even get me started on the tax law! It’s like an onion – it only makes you cry the more you peel away the layers. It seems the larger the company, the sooner they’re making plans for an Uber ride to a more bureaucratically friendly country, with one in four companies with over 250 employees plotting their flight!
The Biggest Companies Are Also the Ones Where the Anger Is Greatest
The frustration among the biggest players is palpable. Out of 57 of Germany’s largest family businesses, which collectively employ a staggering 403,000 people and reel in over 90 billion euros in sales, a jaw-dropping 42.6 percent are contemplating taking their business elsewhere. If Klaus Wohlrabe, the Ifo survey director, is to be believed, we’re looking at a particularly grave situation; it’s a bit like when your mom finds out you’re dating a mime… awkward, and desperately needs fixing.
Interestingly, the dissatisfaction isn’t aimed at local administrations. No, they’ve been put in the line of fire only so much. Instead, the real ire is directed towards the states and the federal government. Nearly 43 percent of respondents rated their local experiences positively, while only a measly 7 percent were satisfied with the state and federal government. It’s almost as if they’ve confused digitalization with the latest ‘dad jokes’ – old, outdated, and a drain on everyone’s enthusiasm!
Rustling Paper Forms
And here’s a real kicker: many companies lament that government processes are still as digital as a 1990s flip phone. A toothless tiger. When they can interact digitally, it’s more akin to a game of telephone where no one knows how to pick up the phone! Just 8.5 percent said that their communications with authorities run smoothly. Smoothly?! I’d have better luck running through a field of Lego barefoot and calling it a spa day!
Family Businesses Are Demanding Relief – Once Again
As if on cue, the Family Business Foundation (yes, the same folks who might suggest that if we dig ourselves into a bureaucratic hole just deep enough, we might hit oil) is once again calling for relief from politicians. Rainer Kirchdörfer, board member, is honest enough to say, “These numbers make me angry.” Well, Rainer, my friend, you’re not alone! People are practically frothing at the mouth. Their demands? A “practical check” for new regulations, faster procedures, a digital mindset, and, believe it or not, limiting official inquiries to “essential information.” A good reminder that a little less inquiry and a bit more courage could save us all some headaches!
In summary, if Germany doesn’t get its bureaucracy sorted, it might just find its businesses packing their bags and heading abroad – a heartbreaking farewell, but alas, bureaucracy mustn’t be so lovey-dovey that they stay stuck in a dysfunctional relationship! And let’s be honest, no one wants to deal with a clingy ex while trying to innovate, plan, and build a better future. So here’s to hoping for a less bureaucratic tomorrow, or as they say, “Ein Prosit!” to progress!
According to a comprehensive survey conducted by the Ifo Institute, a rising tide of bureaucracy is hampering new investments in Germany, compelling numerous companies to consider relocating their operations abroad. A staggering 91 percent of the 1,763 participating companies reported a noticeable increase in bureaucratic red tape since 2022, with industrial firms witnessing an even steeper figure of 95 percent. Concurrently, nearly 46 percent of these companies acknowledged that they had delayed planned investments over the past two years solely due to administrative obstacles. Alarmingly, close to 18 percent expressed intentions to shift their investments overseas to evade the burdensome domestic bureaucracy.
The client was the Family Business Foundation, which has been publishing the annual monitor on bureaucratic burdens every year since 2017 in cooperation with the Ifo Institute.
Supply chain law, complex approval procedures, tax law
Many companies voiced strong objections regarding the supply chain law implemented in 2023, along with the substantial effort required for official approval procedures, especially within the construction sector, and the convoluted German tax system. According to the data, the larger the company, the more pronounced the inclination to invest abroad: a striking 25 percent of companies with more than 250 employees stated plans to move their investments overseas.
The biggest companies are also the ones where the anger is greatest
Frustration and dissatisfaction run deep among Germany’s largest enterprises: 57 prominent family-owned companies, employing a total of 403,000 people and generating over 90 billion euros in sales, participated in the survey, revealing that 42.6 percent are contemplating a move abroad. The authors, led by Ifo survey director Klaus Wohlrabe, characterized this finding as “particularly serious,” though they noted that the figure reflects a trend rather than a definitive conclusion due to the limited number of respondents.
According to the survey, the discontent is directed less at local administrations responsible for implementing broader requirements and more towards state and federal government entities. While nearly 43 percent of respondents rated their experiences with local or city administrations positively, a meager 7 percent expressed satisfaction with the state and federal governments.
Rustling paper forms
A significant area of frustration for many companies is the reliance on paper for a large portion of government processes, which remain unavailable in digital format. Furthermore, where digital communication with authorities is already established, it frequently fails to function smoothly; only 8.5 percent of respondents reported that their interactions run without issues.
Family businesses are demanding relief – once again
As in prior years, the Family Business Foundation, which commissioned the study, is urging political figures to take action to alleviate the burdens. “These numbers make me angry,” stated foundation board member Rainer Kirchdörfer. The principal demands include a comprehensive “practical review” of new regulations, expedited procedures, enhanced digitalization efforts, and a focus on limiting official inquiries to only “essential information.”
Interview with Rainer Kirchdörfer, Board Member of the Family Business Foundation
Editor: Welcome, Rainer! Thank you for joining us today to discuss the recent findings on bureaucracy in Germany. It seems that the survey from the Ifo Institute has created quite a stir. Can you give us your initial reaction to the results?
Rainer Kirchdörfer: Thank you for having me! Honestly, these results are quite alarming. It’s frustrating to see that 91 percent of companies feel burdened by increasing bureaucracy. It’s not only stifling innovation but also endangering investments. It feels like we’re drowning in paperwork, and our competitiveness is at stake.
Editor: You mentioned the impact on investments. The survey states that nearly 46 percent of companies have delayed investments due to administrative obstacles. What does this mean for the future of business in Germany?
Rainer Kirchdörfer: It means that we could lose out on significant opportunities. Companies need to adapt quickly to global market conditions, and bureaucratic delays are preventing that. If we don’t address these issues, we could see many companies relocating abroad, which would be devastating for the German economy and its workforce.
Editor: Among the larger firms, the discontent seems even more severe. Why do you think larger companies feel this pressure more acutely?
Rainer Kirchdörfer: Larger companies have more at stake. They often deal with complex regulations, and the cost of compliance can be exorbitant. With 25 percent of companies with over 250 employees considering moving their investments overseas, we need to understand that they have the means to do so. They’re responding to the burden of regulations and the desire for operational efficiency.
Editor: The Supply Chain Law, complicated approval processes, and the convoluted tax system have all been pointed out as major pain points. What specific changes are you advocating for?
Rainer Kirchdörfer: We believe in a “practical check” for new regulations to ensure they are viable and not overly burdensome. We also need faster approval procedures and a real commitment to digitalization, bringing our processes into the 21st century. Lastly, limiting official inquiries to only essential information could greatly reduce the bureaucratic load.
Editor: It seems clear that many are frustrated with the situation. From your perspective, how can the government foster a more conducive environment for businesses?
Rainer Kirchdörfer: Open dialogue is key. The government needs to listen to the needs of the business community. Policies should encourage businesses to innovate and expand, not stifle them with excessive bureaucracy. It’s time for a cultural shift in how we view regulation. We should promote efficiency over red tape.
Editor: Thank you, Rainer, for sharing your insights. It’s evident that tackling bureaucracy is vital for maintaining Germany’s competitive edge. Let’s hope the conversation continues and leads to positive change.
Rainer Kirchdörfer: Absolutely! Thank you for having me. Let’s raise a toast to progress—“Ein Prosit!”
Interview with Rainer Kirchdörfer, Board Member of the Family Business Foundation
Editor: Welcome, Rainer! Thank you for joining us today to discuss the recent findings on bureaucracy in Germany. It seems that the survey from the Ifo Institute has created quite a stir. Can you give us your initial reaction to the results?
Rainer Kirchdörfer: Thank you for having me! Honestly, these results are quite alarming. It’s frustrating to see that 91 percent of companies feel burdened by increasing bureaucracy. It’s not only stifling innovation but also endangering investments. It feels like we’re drowning in paperwork, and our competitiveness is at stake.
Editor: You mentioned the impact on investments. The survey states that nearly 46 percent of companies have delayed investments due to administrative obstacles. What does this mean for the future of business in Germany?
Rainer Kirchdörfer: It means that we could lose out on significant opportunities. Companies need to adapt quickly to global market conditions, and bureaucratic delays are preventing that. If we don’t address these issues, we could see many companies relocating abroad, which would be devastating for the German economy and its workforce.
Editor: Among the larger firms, the discontent seems even more severe. Why do you think larger companies feel this pressure more acutely?
Rainer Kirchdörfer: Larger companies have more at stake. They often deal with complex regulations, and the cost of compliance can be exorbitant. With 25 percent of companies with over 250 employees considering moving their investments overseas, we need to understand that they have the means to do so. They’re responding to the burden of regulations and the desire for operational efficiency.
Editor: The Supply Chain Law, complicated approval processes, and the convoluted tax system have all been pointed out as major issues. How do you think these factors contribute to the frustration expressed in the survey?
Rainer Kirchdörfer: These regulations have created a perfect storm of compliance challenges. The Supply Chain Law, for instance, demands significant effort from companies, particularly in construction. When combined with our complicated tax system, it becomes overwhelming. It’s clear that companies are feeling trapped under an excessive weight of regulations, making it difficult to thrive.
Editor: There’s also a notable frustration with the reliance on paper forms and the inadequacy of digital processes. How crucial is digitalization in alleviating these bureaucratic burdens?
Rainer Kirchdörfer: Digitalization is absolutely critical! Many companies still face cumbersome paper processes, making efficient communication nearly impossible. When digital communication does exist, it often fails to operate effectively. Improved digitalization would not only streamline interactions but also reduce the burden of paperwork for businesses.
Editor: Lastly, what steps do you think the government should take to address these issues and support family businesses?
Rainer Kirchdörfer: The government needs to step up and conduct a thorough “practical review” of all new regulations. We require expedited approval processes, enhanced digitalization efforts, and a focus on limiting official inquiries to only essential information. These changes could drastically improve the business landscape and allow companies to refocus on innovation instead of paperwork.
Editor: Thank you, Rainer, for your insights today. It’s clear that addressing bureaucracy in Germany is vital for the future of its businesses.
Rainer Kirchdörfer: Thank you! I hope our discussions lead to meaningful action and a brighter future for German businesses.
