Bureaucracy costs German economy EUR67 billion in 2024, study finds

Bureaucracy in Germany cost the economy an estimated EUR67 billion in 2024, according to a new study by the Association of Research-Based Pharmaceutical Companies, or vfa.

The figure amounts to roughly 1.5% of the country's economic output.

Administrative burdens reduce productivity and divert resources from areas such as research and development or production, according to the vfa.

"It is therefore an advantage for a location if bureaucratic processes can be carried out with minimal effort - for example, through automation and digitalization," the vfa writes, warning that locations with heavy bureaucratic loads risk losing competitiveness.

The costs cited in the study are conservatively estimated and mostly reflect the working hours spent on bureaucracy.

In the pharmaceutical industry, one in five working hours is spent on documentation and reporting obligations, the vfa notes in a paper presented at Tuesday's Innovative Healthcare Industry Day in Berlin.

The focus is on compliance costs and the study does not compare any financial benefits companies may gain from bureaucracy.

The vfa stresses that bureaucracy is not an end in itself but serves to guarantee quality, safety and the rule of law - all essential foundations of a functioning market economy.

The goal, according to vfa chief economist Claus Michelsen, is not deregulation but modernisation.

"A lean, internationally compatible bureaucracy can turn Germany from a stumbling block into a locational advantage," Michelsen said, adding that simpler, faster and more digital processes are key to achieving this.

Around EUR51 billion of the total cost stems from general regulations, including labour law, tax requirements and commercial law obligations such as payroll accounting and corporate tax documentation, according to the vfa.

Industry-specific regulations account for roughly EUR16 billion, with financial services bearing the largest share due to strict consumer protection rules. Manufacturing follows with EUR2.5 billion in annual costs, amounting to around EUR1,400 per employee.