Germany’s anti-digital law is a case study in terms of slowing down progress


If you want to know why Europe’s largest economy is a digital laggard – yes, if you want to know why progress is difficult everywhere – treat yourself to a trip into the fine print of a new German employment contract law.

Spoiler: The problem isn’t the hardware, it’s the software – the human kind.

The occasion for the anecdote is a directive from Brussels that requires all 27 member states of the European Union to update their legislation on what employers must prescribe when hiring people. This affects everything from payment to holidays and other conditions. The world of work has changed dramatically since the EU first issued a statement on these issues in 1991 – just think of the gig economy, teleworking or working from home. A good legal optimization makes sense.

The EU directives specifically mention that “given the increasing use of digital means of communication [this information] can be provided electronically.” Stupid, one might say. But it’s good to clarify that employers and employees should have a choice for their contracts: paper, PDF, or both.

Except that Germany has none of it. They just passed a law that completely bans digital contracts and signatures. Whether you’re a programmer finding jobs online, an Amazon delivery man, or a Dilbert character, you now get the fine print of your terms on paper — dead tree kind. And it will have your new boss’ signature in freshly dried ink. If employers instead provide a digital contract, they will be fined up to €2,000 ($2,049) for each case.

Of course, one would have expected something like this from the four governments under former Chancellor Angela Merkel. During her 16-year tenure, it became a constant joke that every mainstream party promises digital transformation at every German election — and forever will because it never comes.

But the new government under Chancellor Olaf Scholz should break this pattern. The coalition consists of Scholz’s centre-left Social Democrats, the environmentally conscious Greens and the pro-business Free Democrats. The latter in particular have made digital transformation their central message.

On the other hand, as Otto von Bismarck famously remarked, laws are like sausages and it’s best not to watch them being made. If you had looked closely at this law, you would have seen the German Federation of Trade Unions in the background. The DGB, as this union lobby is called in German, has a particular hold on the Social Democrats, who run the Labor Ministry that drafted the law.

When drafting the law, the DGB categorically ruled out the approval of electronic contract media. So I asked her, for heaven’s sake, why?

A DGB spokesman explained to me about the protection of “precarious” employees. Many of them only have a smartphone, but no printer or broadband connection at home, and do not necessarily check their e-mail or log on to the company intranet. Even if employees and employers end up in court later, he thinks a paper contract is better. Also, he reminded me, people never look at their (digital) telecom contracts either.

What a strange line of reasoning – and how typical of the attitudes that are on the rise everywhere. The DGB, and by extension German law, bans all digital employment contracts – millions upon millions – because some people would be better off with paper versions.

How about just getting employers to ask recruits how they would like to receive their contract? Make paper an option – not a mandate. Following the logic of the DGB, the government should also ban Apple Pay and all other digital wallets and credit cards, and only allow bills and coins because someone somewhere feels most comfortable with that payment method.

Now multiply this approach a hundred, a thousand, a million times – and you get Germany. The European Commission regularly ranks the EU member states according to their digital development. Overall, Germany is currently in midfield with 13th place. But this is because Germany has recently improved the corresponding physical infrastructure, from broadband lines to wireless networks, and is now above average.

With mental infrastructure, it’s a different story. When it comes to the use of e-bills, for example, Germany is far behind. When it comes to the spread of e-government services, it ranks 24th, ahead of Italy, Bulgaria and Romania. Another report by the ESCP Business School in Berlin is even more devastating. According to this, Germany is one of the countries that has fallen far behind in terms of digital competitiveness. Within the Group of 20, a forum of industrialized countries, it occupies the third last place.

What Germans sometimes miss is that digital progress is not just cables, antennas and gimmicks; It’s also about what you’re willing to do with them and whether you’re open to change.

Analysts are now estimating the cost of the new law in terms of additional bureaucracy, paper, energy use and carbon emissions. It is big. Some are wondering which delivery method the DGB will prescribe next time. stagecoaches? carrier pigeons? Both would require extensive infrastructure in animal husbandry. Perhaps the Scholz government should start preparing.

This column does not necessarily represent the opinion of the editors or of Bloomberg LP and its owners.

Andreas Kluth is a columnist for the Bloomberg Opinion and reports on European politics. The former editor-in-chief of Handelsblatt Global and author of The Economist is the author of “Hannibal and Me”.

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