Bureaucracy costs Methodological notes on the results

Bureaucracy refers to a system of government administration which is based on legal acts and regulations and is indispensable for the proper functioning of a modern society. It provides protection against private and official arbitrariness. Excessive bureaucracy, however, makes citizens, businesses and often the public administration itself angry; it causes delays and unnecessary costs at the same time. To determine the absolutely necessary bureaucratic burden and reduce excessive bureaucracy in a reasonable and transparent manner, it is important to know the causes and distribution of the burden. administrative burden measurements and life situation surveys are designed to analyse the relevant regulations and, based on the results, develop proposals for reducing the burden caused by bureaucracy.

Compliance costs

Compliance costs are the most comprehensive measure of bureaucracy and the basis of its measurement. They cover the time spent and the costs incurred by citizens, businesses and public authorities when they comply with a legal requirement. This may include information obligations, concrete instructions for action, the fulfilment of requirements or compliance with thresholds. administrative burdens in the narrower sense are a component of compliance costs; they focus on costs incurred by the business sector on account of information obligations. Information obligations cover applications, reports, labelling, statistics or certificates, that is, typical paperwork.

Determining the compliance costs

Compliance cost measurements are designed to analyse existing regulations of federal law. Based on the results, proposals are developed for reducing the burden. On behalf of the Federal Government and the National Regulatory Control Council, the Federal Statistical Office, as an impartial service provider, measures the relevant compliance costs and, if need arises, estimates the change in the burden expected to be caused by regulatory projects. In accordance with Section 8 of the Act on the Establishment of a National Regulatory Control Council, the Federal Statistical Office determines the costs there where they are caused, that is, among citizens, businesses and public authorities and offices. The voluntary interviews are typically conducted as telephone or face-to-face interviews. The data collected on the relevant regulations and the burden caused by them are documented in the publicly available OnDEA database, and they are updated in a systematic manner. This gives all interested parties the opportunity to follow the developments in the area of compliance costs and to engage in the process. The conclusions drawn from the results of measurement are incorporated into legislation and used as a basis for decisions aimed at better regulation. Furthermore they show approaches to improving existing regulations and allow a systematic reduction of bureaucracy.

Methodological basis

The methodological basis is provided by the Standard Cost Model (SCM). It was originally developed to show the burden caused by information obligations. Relevant variables of this internationally standardised approach are the time spent on fulfilling a given obligation and the related additional costs incurred by the parties concerned. The time spent by businesses is monetised using the usual hourly pay rates so that staff and material costs can be shown in euros. The costs per case and the total of cases in Germany per year yield the overall annual burden caused by the obligation. To measure the total compliance costs, the Standard Cost Model was extended; the approach is basically the same for each type of legal obligation. The extended model, for instance, takes into account one-off costs which arise when changing over to an amended legal basis becomes necessary.

Administrative burden index

The administrative burden index shows the development of administrative burdens, that is, the costs of documentation and reporting duties arising for businesses in Germany every year. In 2007, the Federal Statistical Office carried out a baseline measurement of administrative burdens in the business sector in the framework of the Work Programme for Bureaucracy Reduction and Better Regulation. This baseline measurement formed the basis for the goal to reduce the annual costs of information obligations by 25% within a period of five years. The status after completion as at 1 January 2012 has served as the index base; it corresponds to a value of 100. This means that the Federal Government will achieve its objective of not generating additional administrative burdens if the value of the administrative burden index does not exceed 100. Based on the regulatory projects reported to the Federal Statistical Office, the latter calculates the administrative burden index and publishes it on the internet at quarterly intervals.

Barometer of burdens

The burdens barometer was first calculated for 2006. It represents a subindex of the administrative burden index. To synchronise it with this index, the reference date of the barometer was also set at 1 January 2012. Therefore its value is also 100 index points at that specific point in time.

Life situation survey

In addition to determining the compliance costs, the Federal Statistical Office - commissioned by the Federal Government - has interviewed citizens and businesses since 2015 about how they perceive cooperation with public authorities and offices in certain life situations. This approach focuses on the perception of people.

Based on comprehensive preliminary surveys, the 21 most significant life situations of citizens, like the birth of a child, death of a family member/close friend or unemployment, were selected for further analysis. In the business sector, a total of ten central situations, such as a business start-up or appointment of employees, were identified after interviews with representatives of business associations and trade unions.

In the 2019 round of interviews, nearly 6,000 citizens were interviewed about roughly 7,700 situations and their satisfaction with the relevant authorities. And more than 3,300 interviews were conducted in the business sector. The respondents assessed the authorities on the basis of certain criteria, such as comprehensibility of the law, digital administration options or opening hours and waiting times. Both surveys were conducted on behalf of the Federal Statistical Office by infas – institute for applied social science.

The Federal Statistical Office is analysing the survey data. Using this information, the Federal Government will design further activities to achieve a significant simplification and improvement for those concerned.

More information on the life situations, that is, detailed results of the life situation survey and the ‘journeys through the corridors of public administration’ regarding various situations are available at amtlich-einfach.de.

Guide on measuring and representing the compliance costs caused by regulatory projects of the Federal Government

The relevant measure of bureaucracy and the basis of measurement is the compliance costs. It comprises the time spent and the costs incurred by citizens, businesses and authorities when complying with a legal provision.

Policy to increase transparency on adjustment costs for business and their effective and proportionate limitation

In its Work Programme on Better Regulation, the Federal Government agreed to limit adjustment costs as much as possible, for this reason, it has drawn up this Policy to increase transparency on adjustment costs for business and their effective and proportionate limitation.

Methodological manual of the Federal Government on introducing the Standard Cost Model

With the Cabinet decision of 25 April 2006, the Federal Government resolved that the Standard Cost Model (SCM) already employed in several other European countries should be introduced in Germany as well. This model is a methodological approach for systematically measuring a significant share of existing bureaucracy costs: the burdens borne by businesses, citizens and public administration which are attributable to mandatory statutory information and reporting obligations (applications, forms, statistics, records etc.) – in other words, burdens which are imposed by government.