Germany’s growing jungle of rules, forms, and compliance obligations is now creating an unexpected boom — in bureaucracy itself. According to a new study by the Institute for Employment Research (IAB), German companies have hired around 325,000 additional employees in the past three years solely to deal with rising administrative burdens.
The number of firms describing bureaucracy as a “very high” strain has more than tripled — from 4 % in 2022 to 14 % in 2025, the IAB found. For many, the cost of compliance has become a permanent business expense.
Paperwork as a job motor
Roughly one in ten companies reported hiring extra staff since 2022 to handle the growing maze of laws, documentation duties, and reporting obligations. The phenomenon is particularly visible among larger enterprises:
30 % of large companies (250+ employees) and 30 % of mid-sized firms (50–249 employees) have added administrative personnel.
Among smaller companies, the share drops to 16 % for businesses with 10–49 employees and 7 % for microenterprises with fewer than 10 staff.
The energy sector has been hit hardest — 20 % of firms there have increased their workforce to cope with compliance. Public administration follows closely with 19 %, the study shows.
Bureaucracy drives up costs and slows innovation
According to IAB researcher André Diegmann, nearly 80 % of companies now face higher operating costs due to bureaucracy. The consequences are severe:
- 55 % report productivity losses
- 19 % see competitive disadvantages
- 16 % say bureaucracy has become a barrier to innovation
The EU’s General Data Protection Regulation (GDPR) remains the most cited source of administrative stress — mentioned by two-thirds of all companies. Other major burdens include:
- EU cybersecurity regulations (32 %)
- Germany’s Supply Chain Due Diligence Act (14 %)
Calls for a “sunset clause” on new laws
Experts at the IAB are urging politicians to rethink how regulations are designed. Researcher Alexander Kubis suggested introducing expiration dates for new laws.
“A reasonable approach would be to apply new legislation on a temporary basis and evaluate its effectiveness before making it permanent,” Kubis said.
“With such a sunset clause, policymakers could decide whether a law remains justified or needs adjustment based on real-world results.”
Red tape: job engine or growth killer?
While bureaucracy may be creating jobs, experts warn that it’s also draining resources from innovation and competitiveness. Many firms now employ entire teams for compliance, documentation, and reporting — positions that generate little added value.
As Germany grapples with sluggish growth and a skills shortage, the country’s “paperwork boom” may offer temporary employment — but at the cost of long-term economic efficiency.
