Bureaucracy costs German SMEs around 61 billion euros per year and ties up seven per cent of their working time – without generating any direct value. These are the findings of a new position paper published by the EBS Europa Institut at the EBS Universität für Wirtschaft und Recht, presented today at the Representation of the State of Hessen to the European Union in Brussels. The study illustrates how complex regulatory requirements arise from both corporate and administrative perspectives, and which factors cause bureaucratic burdens to overshadow their initial purpose.

Instead of calling for a blanket reduction of rules, the paper analyses the conditions under which regulation actually proves effective – namely when reporting obligations are transparent, digital processes can be implemented in a practical manner, and legal requirements correspond to the actual organisational effort. Bureaucracy costs emerge where these prerequisites are not met, resulting in delays, the binding of resources, and a decline in overall locational attractiveness.

A central policy impulse is delivered by Günther H. Oettinger, former EU Commissioner and Head of the EBS Europa Institut. In Brussels, he delivers the keynote address “Smart Regulation – Business between Regulation and Self-Responsibility”, outlining the framework conditions required for regulation to enable, rather than hinder, innovation. Oettinger situates the findings of the position paper within the current European legislative landscape and underlines the importance of efficient, digitally compatible regulation as a competitive factor for European businesses.

The insights presented in the position paper demonstrate that bureaucracy should not be understood merely as the result of individual rules, but as the outcome of structural mechanisms within modern regulatory systems – mechanisms that can, in fact, be strategically managed.

Bureaucracy as a strategic governance task

The Expert Advocacy Platform – a consortium of companies from various industries supported academically by the EBS Europa Institut – has identified ten key areas of observation. These range from the interaction between legal frameworks and technology to the measurability of compliance costs and issues surrounding digital infrastructure. The key insight: bureaucracy costs are neither coincidental nor inevitable; they are the result of specific structural elements of contemporary regulatory systems. Their management is therefore a strategic design challenge, not merely an administrative one.

“The way bureaucracy is organised has become one of the decisive competitive factors,” emphasises Prof Dr Diane Robers, Academic Director of the EBS Europa Institut. “The core issue is not the existence of regulation, but its design – and whether it reflects the operational realities of companies. Once bureaucratic costs are acknowledged as a measurable entity, control becomes possible.”

Comparative perspective

The study draws on national and international research findings, best practice examples, and indicators such as the Ease of Doing Business ranking, digital administration models, and various approaches to impact assessment. These comparisons show that differences in administrative architecture, data usage and regulatory goal definition play a crucial role in the divergence of bureaucracy costs across jurisdictions.

Hessen drives momentum at EU level

The presentation of the paper takes place within the framework of the event series “Sounding Board konkret” – an initiative launched by the State of Hessen, which is actively promoting the reduction of bureaucracy at European level. In 2024, Hessen became the first federal state to establish the “Sounding Board for Business” in Brussels, enabling perspectives from industry, associations and academia to be fed directly into EU regulatory processes.