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Indicators

Mission and methodology

Compliance costs

The relevant measure of bureaucracy and the basis of measurements is the compliance costs. It comprises the time spent and the costs incurred by citizens, businesses and authorities when complying with a legal provision. This may refer to information obligations, concrete instructions for action or the compliance with requirements or limit values.

Measuring the compliance costs

By measuring the compliance costs, existing regulations of federal law are analysed. Based on the results, proposals for a reduction of burdens are developed. As a neutral service provider for the Federal Government and the National Regulatory Control Council, the Federal Statistical Office measures the compliance costs and, where required, estimates changes in burdens from regulatory projects. Based on the Act on the Establishment of the National Regulatory Control Council (section 8), the Federal Statistical Office collects the costs where they are incurred, that is, from the relevant citizens, businesses and offices or authorities. The surveys are conducted by telephone or personally and response is voluntary. The data collected on the regulations and on the burden they involve are made available to the public and the stock of data is systematically rolled forward. This means that all interested parties can watch the developments of bureaucracy reduction and get involved in the process. The results of the measurements are included in legislation and, consequently, are one of the bases of decision-making for better regulation. As regards existing regulations, they show approaches for improvement and allow a systematic reduction of bureaucracy.

Bureaucracy costs

Bureaucracy costs are a component of the compliance costs. They refer to the costs incurred when complying with information obligations. Information obligations are applications, reports, statistics or records, that is, the typical red tape. The methodological basis applied is the Standard Cost Model. The factors that are relevant for this internationally standardised method are the time required for complying with the obligation and the additional costs incurred by those concerned. For businesses, the measured time burden is monetarised through the usual hourly wage rates. The burden per case is multiplied by the total number of cases occurring every year in Germany, which provides the annual total burden created by the regulation. To measure the overall compliance costs, the Standard Cost Model was extended.

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