SMEs Spend Seven Per Cent of Working Time on Administrative Processes
German small and medium-sized enterprises (SMEs) spend an average of seven percent of their working time on administrative processes, amounting to approximately 32 hours per business per month.
Workers at Germany's approximately 3.8 million small and medium-sized enterprises (SMEs) dedicate, on average, seven percent of their working hours to administrative processes. This translates to 32 hours per month per business, totaling 1.5 billion working hours annually, according to findings from KfW Research's representative SME Panel.
The survey specifically asked businesses about the time spent complying with all legal requirements, including documentation and information obligations for tax and social security authorities, as well as adhering to regulations on data protection, labor rights, and environmental standards. The study did not account for immeasurable burdens such as lengthy approval procedures or poor accessibility of authorities, which are also significant concerns for businesses.
The total annual cost for SMEs to comply with these administrative requirements is estimated at EUR 61 billion, representing roughly 3.9 percent of their annual personnel costs. The administrative burden varies by business type and size; sole proprietors face the highest relative burden, spending 8.7 percent of their working time on these tasks. The construction industry also reports a substantial administrative load, consuming 8.1 percent of working time.
Tax-related matters constitute the largest portion of administrative work for SMEs, followed by record-keeping and accounting obligations. While KfW acknowledges that bureaucracy provides a foundation for legal certainty and fair competition, the research highlights that escalating administrative costs can outweigh benefits. Consequently, reducing bureaucracy is identified as a critical economic policy issue for SMEs in Germany.