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While almost a third of bureaucratic requirements can be attributed to EU decisions, the excessive bureaucratic burden in Germany is mainly due to the federal government's legislative requirements (66%). Regulations at the state (4.5%) or municipal (1.3%) level, on the other hand, have little impact. This is the result of a study conducted by the IfM Bonn on behalf of the VDMA's IMPULS foundation. In total, the IfM researchers identified 3,900 requirements that companies in the mechanical and plant engineering sector have to take into account in the course of their normal business activities.
Bureaucratic obligations place a considerable burden on small companies in the industrial SME sector, and their costs can even exceed the average annual gross return on sales of 5.5 percent. A good two years ago, the Institut für Mittelstandsforschung (IfM) Bonn analysed the bureaucratic costs arising from regulations at federal level alone for the first time on behalf of the VDMA's IMPULS Foundation. This was carried out using in-depth analyses of three companies of different sizes that are typical of the machinery and equipment manufacturing industry. At the time, a burden of around 3 per cent of annual turnover was calculated for smaller companies – this roughly corresponds to the proportion of annual expenditure on research and development for small and medium-sized companies in the machinery and equipment manufacturing industry.
In a follow-up study, the burdens at state and municipal level as well as the bureaucratic costs caused by the EU were also included. For the smallest company (150 employees, annual turnover of 35 million euros), this resulted in a burden of 2.18 million euros – the equivalent of 6.3 per cent of turnover. This corresponds to the average salary of 34 full-time employees. For the two larger companies, the annual cost burden was lower at 1.3 per cent and 1.6 per cent of turnover respectively, but this sum also equates to a burden of 58 and 24 full-time employees.
"Around 85 per cent of companies in the machinery and equipment manufacturing industry in Germany are small companies with fewer than 250 employees. For them, a bureaucratic burden of over 6 per cent of turnover is unacceptable," says VDMA President Bertram Kawlath. "But the bureaucratic burden is immense for all companies. Companies often have to withdraw highly qualified employees up to management level from productive activities in order to fulfill the bureaucratic tasks from Berlin and Brussels. However, the problem is not just the direct costs; bureaucracy also paralyses processes and innovation. In view of the foreseeable shortage of skilled workers and the global technology race, this is fatal", emphasises Kawlath.
Even though almost a third of bureaucratic requirements are due to EU decisions, the excessive bureaucratic burden in Germany is mainly due to federal legislation (66 per cent). Regulations from the federal states (4.5 per cent) and local authorities (1.3 per cent), on the other hand, are hardly significant. A total of 3900 regulations were identified that companies in the machinery and equipment manufacturing industry have to take into account in their normal business activities.
Companies have to fulfill the most German requirements in the area of climate and environmental protection (27 percent), followed by regulations in the areas of finance, taxes and customs (21.5 percent). In contrast, the highest financial and human resource expenditure is caused by regulations in the areas of occupational health and safety and finance, taxes and customs. "The excessive bureaucratic burden in recent years has also been caused by the fact that EU directives have been further tightened by additional requirements in national law. A classic example of this is the General Data Protection Regulation, which in Germany comprises 99 articles and 173 explanatory recitals. More recent examples include the Supply Chain Sustainability Act and sustainability reporting", explains Prof. Dr Dr h.c. Friederike Welter, President of the IfM Bonn and Professor at the University of Siegen. Due to their business relationships, these stricter regulations affect smaller companies in particular, even if some of them have been explicitly exempted in the legislation.
The IfM Bonn therefore recommends the following measures to reduce bureaucracy, which are supported by the VDMA
• Cross-departmental practical checks and better participation for better legislation,
• the phasing out of legislation in the Federal Ministry of Labour and the Federal Ministry of Finance,
• "One In One Out" also for specifications from Brussels,
• further laws to reduce bureaucracy,
• "White lists" for laws such as the Supply Chain Due Diligence Act and the Whistleblower Protection Act.
The study "Bürokratiekosten von Unternehmen aus dem Maschinen- und Anlagenbau" (in German only) is available on the homepage of the IMPULS-Foundation (https://impuls-stiftung.de/studien) and the Institut für Mittelstandsforschung (IfM) Bonn (www.ifm-bonn.org)
https://impuls-stiftung.de/wp-content/uploads/2025/03/2025-02_IMPULS-Studie_Buer...
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