Against regulatory frenzy at all levels - an appeal from the industrial SME sector

Bureaucracy reduction, a terribly exhausting buzzword for a decades-old political project with a sobering track record. The need for real progress is all the greater. After all, bureaucratic hurdles at all levels are jeopardizing the innovative strength and productivity of companies throughout Europe.

In her candidacy speech to the plenary session of the European Parliament on July 18 in Strasbourg, the re-elected Commission President Ursula von der Leyen made this a key issue. It is good that the EU Commission wants to deal with this in detail. After all, much of our national legislation now also has its origins in European directives and regulations. Green Deal initiatives, such as the Industrial Emissions Directive (IED), the Sustainability Reporting Directive (CSRD) and the EU Supply Chain Act (CS3D), are causing European SMEs in particular to suffocate in paperwork, but without providing the necessary support for implementation. In particular, reporting obligations with up to 1,000 individual aspects are pushing companies to their limits. 

The new EU Commission is now set to change this: The topics of competitiveness and reducing bureaucracy are new political priorities. This includes many initiatives that also sound good for SMEs: a Vice-President of the EU Commission for implementation, simplification - in short: cutting red tape. Annual progress reports from all Commissioners on this topic are planned, as well as competition and SME checks. There is also to be a new definition category for small mid-cap companies - an issue that WVMetalle is particularly committed to because the current SME protection is all too often undermined through the back door. It remains to be seen whether the EU institutions will bring about tangible relief.  

But it is not only the European level that has some catching up to do in this respect. Federal and state policy as well as regional policy and administration must also ease the burden on industrial SMEs. Many companies in Germany see bureaucracy as one of the biggest obstacles to their development. 

It is therefore important that politicians put a stop to the increasing regulatory frenzy and instead reduce regulations. There will only be a real reduction in bureaucracy by reducing regulation. There are plenty of proposals for this: one of the most important in relation to the EU is the consistent 1:1 implementation of regulations at national level. The ambitious German practice of “let's just go one better” must come to an end. It would be no less important to refrain from imposing new reporting obligations and to reduce existing directives and regulations. 

Bureaucratic madness is also breaking out at state and municipal level. Take building projects, for example: In Berlin, the average wait for a building permit is 30 months. A builder in Bavaria needs 73 different forms and has to contact 14 authorities to build a detached house. Not to mention industrial projects... 

But bureaucracy is also increasingly taking place in the economy itself. There is no doubt that it makes sense for customers to agree certain standards with their own suppliers. These are described in the relevant standards. With the so-called “High Level Structure”, the authors of these standards have attempted to create an alignment between the systems, e.g. for quality, the environment or occupational safety.

On the other hand, additional standard requirements, for example for medical technology, aircraft construction and the automotive industry, are difficult. Different standards for each raw material may seem sensible at first, but in practice the differences between the individual commodities are marginal. However, the difference is all the greater in terms of the effort required on the part of suppliers, who then have to maintain, audit and train different systems. In addition, there are extensive audits with assessments, action plans and, in the worst case, sanctions. Auditors often act in the same spirit as large companies and project the desire for similar structures onto small businesses. As if that were not enough, there are now also demands for data security and sustainability. The familiar pattern of “standard plus own additional requirements” continues.

Is this still proportionate, let alone expedient? It is no longer possible for suppliers to make sense of all these regulations. This is because the economic performance of German industry is falling in international comparison. And we have not been patent world champions for a long time. More and more companies are moving away or closing down completely. Is it possible to turn the tide again? Yes, but what we need is less restrictive regulation, more freedom and more time for our engineers.