Study: 325,000 Jobs Solely for Bureaucracy Management

In the past three years, German companies have hired around 325,000 additional employees to cope with increased bureaucracy. This is according to a current survey by the Institute for Employment Research (IAB), which questioned a total of 9,209 companies in the first quarter of 2025.

The perceived burden of bureaucracy has increased massively: on a scale of 1 (very low) to 10 (very high), companies rate their current expenses with an average of 6.8—an increase of more than a full-scale point within three years. The development at the upper end is particularly striking: while only 4 percent of companies reported the maximum score of 10 points in 2022, this figure rose to 14 percent in 2025.

The surveyed companies cite the General Data Protection Regulation (GDPR) as the biggest burden. This aligns with a current Bitkom survey, according to which 97 percent of German companies report high or very high effort in implementing data protection regulations. EU IT security regulations follow in second place, followed by the Supply Chain Due Diligence Act. However, the latter was partially softened by the federal government in September 2025.

The additional burden affects companies of all sizes. According to the IAB study, increasing bureaucracy often leads to rising personnel costs, productivity losses, and impediments to investment and innovation. The Regulatory Control Council recorded one of the highest increases in so-called compliance costs—i.e., the costs incurred by implementing legal requirements—for 2023. Since then, these costs have remained at a high level, according to IAB.

146 billion euros in lost economic output per year

The IAB figures on personnel recruitment are one side; the overall economic consequences are far greater: According to calculations by the ifo Institute at the end of 2024, bureaucracy costs in the form of lost economic output amount to an average of 146 billion euros per year. The German Engineering Federation (VDMA) identifies increasing bureaucratic burdens as a central reason for the persistent weakness in growth.

On January 1, 2025, the Bureaucracy Relief Act IV came into force, which, among other things, abolishes reporting obligations in the hotel industry and shortens retention periods for receipts. Digital Minister Karsten Wildberger (CDU), who has headed the newly created Federal Ministry for Digitalization and State Modernization since May 2025, has also announced a modernization agenda aimed at reducing bureaucracy costs by 25 percent. A “one in, two out” rule is being discussed, which would ensure that for every new burdensome law, two equivalent burdens are removed.

The IAB study also shows that more productive companies often increase their staff beyond what is economically advisable under the pressure of bureaucracy, while less productive companies struggle with rising costs, which in extreme cases can endanger their business model. Further details on the study have been published by the Institute for Employment Research.

(fo)