Further Developing the “One In, One Out” Rule

With the introduction of the so-called “bureaucracy brake” in 2015, the federal government took important steps to limit regulatory burdens. It operates according to the “one in, one out” principle: For every new bureaucratic requirement, an equivalent one must be eliminated within the same ministry—usually within one year. However, this tool can, at best, maintain the status quo—a noticeable reduction in bureaucracy can only be achieved with a plan that focuses on net reduction targets.

Furthermore, there are currently key exceptions that significantly limit the potential for savings: For example, the 1:1 implementation of EU law is not covered by the bureaucracy brake, even though European regulations constitute a substantial part of the legal framework that companies must apply. The one-time compliance costs—such as those for setting up new IT systems—are also not taken into account. Anyone serious about reducing bureaucracy must eliminate loopholes that allow for “window dressing” and take a much more ambitious approach than in the past.

Consistently Reduce Bureaucracy—Enact Better Laws

It is crucial not only to reduce existing bureaucracy but also, at the same time, to enact better, less bureaucratic laws. This requires smart legislation that takes practical implementation into account from the very beginning. Mandatory, interagency practical reviews—ideally supplemented by digital reviews—have proven to be an effective tool and should be implemented at all levels of government. Thinking through implementation from the outset is the most effective way to prevent bureaucracy.

Despite four Bureaucracy Relief Acts (BEG) that have already been passed, reporting, information, and documentation requirements are increasingly complicating day-to-day business operations—often accompanied by the threat of penalties. Further bureaucracy-reduction laws should—similar to the annual tax laws—apply regardless of industry or company size; this creates leeway that structurally strengthens Germany as a business location and frees up human and financial resources within companies for their core business.

The focus is also on public administration: An efficient, low-bureaucracy, and digitally-enabled public administration is a key lever for reducing the burden on the economy. Unified digital points of contact, end-to-end electronic communication, and standardized data transmission hold enormous potential—and there is significant ground to make up in this area compared to other European countries.