Bureaucracy is a Heavy Burden on Young Companies in Germany

Start-ups spend an average of around nine hours per week on administrative tasks required by law – comprising data protection, labour law and occupational health and safety regulations, as well as environmental protection standards and other documentation, reporting and notification requirements. Companies in the construction industry report an above-average administrative burden compared to other sectors.

More than half of the companies surveyed stated that bureaucratic requirements meant they had less time to process orders, resulting in longer waiting times for customers. The second most common response was that an external person had to be hired to carry out administrative tasks. In addition, 45 per cent of the companies surveyed stated that they had to increase the prices of their products, and 44 per cent said they had less time for innovation and research and rated self-employment as increasingly unattractive due to the regulatory overload. Slightly more than a fifth of companies have refrained from hiring new staff, due to bureaucracy. Another fifth stated that they had hired staff specifically to handle administrative tasks.

More than 80 per cent of start-ups say attractive working conditions are crucial to retaining skilled workers. The majority of young companies see long-term personnel development as an important strategy, and more than half consider improving work-life balance and offering further education to be key to keeping their employees satisfied. Around 40 to 45 per cent cite higher wages, in-house vocational training and actively promoting the company as an employer as personnel strategies. However, cooperating with educational institutions, chambers of commerce and job centres is considered less important. “This suggests that start-ups tend to rely less on institutional support and rather engage in activities on their own to find skilled workers,” Gottschalk says.