National Regulatory Control Council

Methodology

Another task of the NKR is the further development of methodology. The Standard Cost Model has served to appraise the "pure costs of bureaucracy" – statutory information obligations such as accountability requirements and statistical obligations. This model was developed in the Netherlands in the 1990s and made it possible for the first time to quantify bureaucratic burdens objectively. Since then, the Standard Cost Model has gained acceptance as an international standard.

In order to calculate the pure costs of bureaucracy, for instance for a certificate of employment, the initial question is what an employer typically has to do to issue that certificate. It is identified what time is needed for the individual steps, for example to collect data and fill in a form. The average costs per case are then determined by multiplying the wage costs of the staff who are normally tasked to do this. Thus, the number of certificates of employment required to be issued in Germany each year can be ascertained. Multiplied by the costs incurred in the individual cases, the total cost of issuing such certificates can be calculated.

Content-related obligations and amendments incurred about by a new law or regulation are not part of the "costs of bureaucracy". Examples include the procurement of protective clothing, the retrofitting of filter systems and the obligation to fit vehicles with winter tyres.

Since 2011, all compliance costs ensuing from new regulations, including therefore the costs ensuing from content-related obligations and amendments, have had to be identified for citizens, businesses and public authorities. Before the Federal Cabinet adopts a regulation, the NKR critically scrutinises these compliance costs.

When determining the compliance costs, the requirements that are newly introduced, amended or abolished by a new piece of legislation are identified in a first step. For each obligation, it is then considered how much impact this change will have on the costs involved in that individual case, and how many times per year that obligation must be complied with. One-off compliance costs and annual compliance costs are considered and presented separately. The compliance costs of that individual case are then extrapolated on the basis of the annual number of cases to be expected. The Federal Government, the NKR and the Federal Statistical Office have developed guidance that, by way of practical examples, explains and defines how to ascertain compliance costs. The NKR is working to develop methods further to identify bureaucracy and compliance costs.

In 2014, the Organisation for Economic Cooperation and Development (OECD) also published guidance focusing on the analysis of substantive compliance costs. Thus, it provided practical and specific guidance suitable for use by officials responsible for estimating regulatory compliance costs.