German Government Unveils Major Bureaucracy Reduction Plan Amid Business Concerns

The German government held a pivotal session of the 'Entlastungskabinett' to announce a comprehensive plan aimed at drastically reducing bureaucratic burdens on businesses. Helena Melnikov, CEO of the German Chambers of Industry and Commerce (DIHK), cautiously welcomed the initiative, emphasizing that for these reforms to succeed, the government must follow through with concrete actions, moving beyond past unfulfilled promises.

Central to the plan is a proposed legal shift that would require the government, rather than businesses, to justify the necessity of regulations. Melnikov advocates for this change to be enshrined in a new law, possibly termed a reporting relief or burden of proof law, incorporating business perspectives and input from the National Regulatory Control Council. She pointed to promising examples at the federal state level, such as North Rhine-Westphalia's plan to eliminate all unjustified reporting obligations for companies by year-end, with parallel initiatives underway in Saxony and Baden-Württemberg.

While regulatory complexity has mounted overall—particularly due to overlapping European and national environmental rules increasing bureaucratic pressure—the government also aims to accelerate approval processes vital for business growth. A DIHK survey revealed that 45% of companies cite bureaucracy as their biggest challenge, with studies from ifo and IHK Munich estimating that Germany loses 146 billion euros annually in economic output due to these constraints. Melnikov stressed the importance of ensuring that bureaucracy reduction efforts meaningfully impact the broader economy and urged advocacy for omnibus laws in Brussels to stem the rise of new regulations.

In a related but distinct reform impacting businesses, the coalition committee of the Union and SPD recently decided to mandate the presentation of sick leave certificates (Arbeitsunfähigkeitsbescheinigung, AUB) from the first day of illness, effectively ending telephone-based sick notes. Chancellor Merz highlighted that the average sick days stood at 19.5 in 2025 among DAK-insured employees, calling the rate too high. Though companies already can require AUB from day one under existing laws, this reform would solidify it as a legal obligation and introduce stricter penalties for fraudulent certificates.

However, concerns arise about the increased burden this could place on medical providers, with estimates predicting up to 30 million additional doctor visits. The reform remains a political decision pending legislation by the end of 2026, with companies urged to review current policies and prepare for adjustments. This indicates the government's commitment to addressing absenteeism alongside reducing bureaucratic obstacles, though the overall effectiveness of these measures remains to be seen.

These government initiatives together represent an ambitious attempt to streamline business operations and improve economic efficiency, tackling longstanding issues of regulatory burden and workforce absenteeism simultaneously.