The government promised to reduce bureaucracy for businesses, but the new law on adherence to collective bargaining agreements is having the opposite effect. Under the guise of fair wages, the government is forcing companies to comply with yet another documentation requirement that is practically impossible to manage. Small and medium-sized enterprises (SMEs), already the backbone of the German economy, are facing a further administrative burden that completely undermines any promised reduction in bureaucracy.
The Fair Wages Act Creates New Hurdles
The Fair Wages Act obliges companies to prove they pay wages in accordance with collective bargaining agreements when awarded public contracts. While the intention may sound socially responsible, its implementation leads to increased bureaucracy rather than reduction. Companies must provide meticulous documentation of wages, contracts, and project allocations – a documentation requirement that is particularly overwhelming for small and medium-sized enterprises (SMEs).
Instead of genuine deregulation, businesses are experiencing a tightening of regulations.
The obligation to adhere to collective bargaining agreements is thus becoming a symbol of state overregulation. While ministries talk about simplification, mountains of paperwork are piling up, and the goal of “reducing bureaucracy” is turning into an empty slogan.
Small and medium-sized enterprises (SMEs) as victims of control policies
Small and medium-sized enterprises are particularly suffering under the new regulations. Many small businesses do not have their own human resources or legal departments to meet the complex requirements of the Collective Bargaining Agreements Act. They have to invest additional time and money to submit the required documentation on time.
The result: reduced competitiveness and increased bureaucratic costs. Those who do not meet the requirements lose access to public tenders. This makes the obligation to provide proof a real competitive disadvantage.
State control instead of trust
The Collective Bargaining Agreements Act is intended to prevent wage dumping, but it is developing into an instrument of distrust towards businesses. Instead of strengthening trust in corporate responsibility, the state is relying on control, lists, and forms.
This does not lead to a reduction in bureaucracy, but rather to a new form of obligation to adhere to collective bargaining agreements, which undermines any initiative to reduce bureaucracy. The result: more administrative burden, less efficiency, and increasing frustration in the business community.
Conclusion: More bureaucracy under a new name
The Fair Wages Act exemplifies how the government undermines its own promises. Instead of reducing bureaucracy, it creates yet another layer of rules, forms, and bureaucratic costs.
The middle class is once again the loser in political symbolism. What begins as the protection of fair wages ends as a prime example of government overregulation – proving that in Germany, relief often remains just a word. (KOB)