Red Tape Drains Billions of Productive Hours from Small Businesses
In a recent survey by KfW, a state-owned promotional bank, around 10,000 companies were examined to measure the burden of bureaucracy on Small and Medium-sized Enterprises (SMEs) in Germany. The study, conducted by author Michael Schwartz, evaluates the impact of bureaucratic obligations on these businesses.
According to the KfW study, on average, companies need 32 hours per month to meet legal requirements. For larger SMEs with more than 50 employees, including Albrings + Müller AG with its 70 employees, the workload is almost ten times higher at 310 hours per month. This translates to a significant portion of the working time, with seven percent of it being spent on fulfilling bureaucratic obligations on average.
Alrings + Müller AG, a Stuttgart-based real estate company, is doubly affected by bureaucracy, both on the customer side and internally. For instance, registering in the transparency register takes three to four hours of working time for the company. The effort required within the company to comply with laws, regulations, and procedural rules includes data protection, labor law and occupational safety, environmental and climate protection, or compliance with technical minimum standards.
The co-managing director and founder of Albrings + Müller AG, Christian Albrings, considers legal requirements, such as sustainability reporting, to be sensible, especially in the construction and real estate sector. However, he is not satisfied with the current state of digitalization, making sustainability reporting an additional burden.
Christian Albrings suggests fostering acceptance for people to embrace certain risks and stand by them as a solution to counter increasing bureaucracy. He believes this approach could help streamline processes and reduce the time spent on bureaucratic obligations.
For construction projects, Albrings estimates additional costs of one to five percent due to regulations. These costs, when multiplied by the total hours spent on bureaucratic obligations, amount to a substantial financial burden for SMEs.
Bureaucracy is considered a crucial basis for fair competition by the author of the KfW study, as it ensures legal certainty and rule-based action. However, the high workload and costs associated with bureaucratic obligations could potentially hinder the growth and competitiveness of SMEs in Germany.
For more information, please contact Jürgen Schmidt at 0711 66601-147 or j.schmidt@our website.
- The sustainability reporting requirements, considered sensible by Christian Albrings, especially in the construction and real estate sector, add to the already high workload in complying with various laws, regulations, and procedures within Albrings + Müller AG, a Stuttgart-based real estate company.
- The finance sector, including fintech companies, may find significant implications in the KfW study, as around 7% of a small business's working time is spent on bureaucratic obligations, translating to a substantial financial burden due to additional costs for regulations.
- In the realm of politics and policy-and-legislation, the staggering figure of large SMEs, like Albrings + Müller AG, spending almost ten times the average hours on bureaucratic obligations might prompt discussions about loosening regulations to encourage entrepreneurship and small-business growth.
- The general news industry could potentially cover the growing concerns raised by Christian Albrings, suggesting fostering acceptance for people to embrace certain risks and stand by them as a solution to counter increasing bureaucracy, streamline processes, and reduce the time spent on bureaucratic obligations.
- For the German industry, the findings of the recent KfW study highlight the impact of bureaucratic obligations on small and medium-sized enterprises, raising questions about the balance between ensuring competitiveness and maintaining fairness through bureaucracy.
