Reduce bureaucracy in payroll accounting

If employers are to take on social insurance tasks, this must and can only mean that the tasks can be fulfilled without extensive bureaucracy. However, this is precisely not the case today. The thicket of social security regulations is accompanied by considerable liability risks and causes enormous administrative costs for companies. Problems are caused in particular by the complicated calculation of social security contributions, the overflowing reporting and certification system and the differences between social security and tax law.

In a study - Bureaucracy costs and new ways to avoid bureaucracy by the vbw - it was found that if the time required to fulfill the requirements of sovereign regulations increases by 1%, GDP decreases by 0.03% on average. If the time required to fulfill the requirements of sovereign regulations were to fall by 10%, this could result in an increase in GDP of 0.3%, which means an increase of around €9.1 billion. (Source: vbw 2017)
Our proposals for simplifying contribution and registration law include the following points:
Reduce bureaucracy in the pay-as-you-go system or abolish it in the medium term
The pay-as-you-go procedures serve to offset the employer's expenses for continued payment of wages in the event of the employee's incapacity to work, the financial burdens arising from maternity protection for employers and continued payment of wages in the event of the employer's insolvency by the employee's health insurance fund. The pay-as-you-go system is financed by a corresponding employer contribution. The largest cost factor is the U1 procedure for small companies (employers with up to 30 employees). The individual employer must carry out the pay-as-you-go procedure with every health insurance fund with which one of its employees is insured. Accordingly, different reimbursement rates (currently over 100) and therefore also different contribution rates must be applied and taken into account by the employer, depending on the health insurance fund's statutes.
The most effective reduction in bureaucracy would be achieved by removing the obligation to participate in the pay-as-you-go system. Especially as the financing of maternity care during maternity protection periods is a task for society as a whole (Article 6 (4) of the Basic Law) and should logically be borne by the general public. However, even if the procedure is retained, a significant reduction in bureaucracy can be achieved by allowing employers to choose a health insurance fund with which they can implement the pay-as-you-go procedure. Companies would thus have a single point of contact for all settlement cases, uniform contribution and reimbursement rates and uniform reimbursement rules.
At least simplify the artists' social security contribution procedure
Germany is the only country in Europe to have a special social security system for artists. The obligation of companies to pay contributions under the Artists' Social Security Act (KSVG), which was created to finance this system, places a considerable bureaucratic burden on them - in addition to the cost of the artists' social security contribution itself. The bureaucratic burden is due in particular to the numerous ambiguities in the legal regulations and the extensive record-keeping, documentation and reporting obligations.
The bureaucratic costs of levying the KSA are disproportionate to the revenue, criticizes the Association of Hessian Business Associations (vhu) in a position paper. The KSK collected 260 million euros in levies in 2014. According to the vhu, companies incurred almost as much in costs for calculating and paying the levies. As evidence, the vhu refers to a 2008 study by the Cologne Institute for Economic Research (IW), which had already prompted the BDA to publish a position paper against the KSA in 2009. It came to the conclusion that for every euro of tax collected, 78 cents of bureaucratic costs were incurred (source: VGSD 2016).
The law to stabilize the artists' social security contribution rate has once again dramatically exacerbated the imbalance between the contribution and the associated bureaucracy. The law introduced extensive monitoring of the payment of the artists' social security contribution during the German Pension Insurance's audit of employers. This results in further costs for both the pension insurance institutions and the employers, without changing the amount of the levy to be paid. Such a blatant disparity between costs and benefits shows the urgency of bringing about immediate simplifications.

27. November 2023

Contribution and registration law

4. January 2023

Health insurance