Germany’s Governance Crisis: Why State Reform Can’t Wait

Facing mounting challenges, Germany’s outdated, process-bound administration must be reformed to meet citizens’ needs and safeguard democracy.

The German state has a problem. It delivers too little. The results of state activity far too often fail to meet the legitimate expectations of citizens. If the major challenges of our time, such as the transition to climate neutrality or managing rapid technological change, are to be successfully addressed, we need a more capable state. It must be said clearly: without prompt reform, the major goals are at risk—with all the consequences this would have for society and democratic stability in Germany.

What exactly does state reform mean? The key here is comprehensive administrative modernisation. The good news upfront: the existing problems are not caused by the people working in state institutions. Contrary to popular belief, most are highly competent. The bad news: they work in rigid and hierarchical structures that still largely follow principles from the 19th century. These structures are what cause the inadequate results and demotivate employees, instead of encouraging them to actively shape change.

Why are administrations so crucial? They are at the heart of statehood, fulfilling two essential roles. Administrations, especially at the local level, are the direct interface between citizens and the state. This is where direct contact occurs, and where it becomes evident when people’s experiences with authorities increasingly diverge from their everyday reality. Digital processes that have long been standard in private life and businesses? They are still far too underdeveloped in the state’s offerings.

A look at the implementation status of the Online Access Act (OZG) illustrates the problem. Since the end of 2022, all authorities at the federal, state, and local levels are actually required to offer their services digitally. The initiative began in 2017. The result: even in the autumn of 2024, we are still far from comprehensive implementation, especially in the states and municipalities. Why is that?

As the Federal Audit Office rightly criticised, the responsible Federal Ministry of the Interior took more than two years to determine which administrative services should be digitised, when, and to what extent. Only after that could the responsible ministries at the federal and state levels prioritise, which took about another year and a half. By then, much of the originally planned project duration had already passed before things really got underway. This illustrates how cumbersome cross-departmental and cross-level coordination can be. Such conditions understandably lead to frustration on all sides and undermine trust in the state’s ability to perform.

Administrations are not just an interface; they are also the executive organs of their respective governments. The widespread notion that newly elected governments can move into ministries and begin implementing their coalition agreements from day one is far from reality. Without efficient and capable administrations, political priorities and programmes simply cannot be realised. And if political promises to the electorate are inadequately fulfilled, this, in turn, leads to frustration and further loss of trust in the state. The growing gap between what is necessary, what is promised, and what is delivered ultimately results in an erosion of democratic substance.

Why do administrations not function as they should? How can this profound crisis of statehood be understood? A look into the sociology of the last century provides useful clues. At the beginning of the 20th century, Max Weber analysed bureaucracy as a form of governance, as opposed to monarchy and charismatic leadership. The core of his typology was the primacy of rationality and transparent rules in administrative bureaucracy. A century later, the state system is still largely process-oriented. Too often, the means of action take precedence over the necessary goals.

This process-orientation can be observed in many areas. Facilitated by the multi-level structure of Germany’s federal system and ministerial silos, employees in administrative institutions are far too often occupied with processes without clear outcomes. The multitude of actors involved in every issue, as demonstrated by the OZG example, inevitably leads to lengthy procedures and a culture of caution. The more veto players there are, the harder it is to change the status quo. The result is a sluggish and change-resistant system.

One could argue that the state system does produce results, specifically in the form of extensive regulations in an increasing number of areas of life. That is true, but it is part of the problem. Regulations are, in many ways, nothing more than the definition of rule-based processes for others and are therefore inherent to the process-oriented administrations. This at least explains why so much regulation is produced. The logic of the administration’s own framework of action is transferred to the outside world.

Individual regulations can be well justified in isolation, reflecting the rationality of the administrative system. Hence, any attempt at comprehensive deregulation is difficult and usually results in only cosmetic changes. Whether reducing the retention period for company records from ten to seven years is the ultimate solution is certainly debatable – to say the least. The problem is that the sheer number of regulations leads to overregulation. Hardly anyone has an overall view of the regulatory jungle, making compliance a massive challenge.

Overregulation hampers not only the private sector but, paradoxically, also the state itself. For instance, if planning procedures or building codes are so extensive that it takes years before construction projects can even begin, public housing companies also suffer. As a result, achieving political goals, such as social housing targets, becomes increasingly difficult or can only be realised with significant delays.

This malaise is also evident in the number of housing completions in general. In Germany today, significantly fewer apartments are built annually than in the 1970s. This is not due to interest rates, as even during the prolonged period of low interest rates, the number of housing completions remained below average. The federal government has significantly missed its goal of 400,000 new apartments per year. Overregulation and other bureaucratic hurdles at various administrative levels are a substantial part of the reason.

Absurd situations are also not uncommon. In Tübingen, a planned €250 million expansion of the university hospital, which is central to the medical care of three million people, was prohibited by the nature conservation authority. The reason: a rare bird, the nightjar, had nested on the hospital roof. Before construction could begin, a replacement habitat would be needed, which has proved difficult because the bird prefers extensive areas with little tree cover. There was even talk of partially clearing ten hectares of forest. The nightjar has not been seen for about a year. Perhaps the bird itself has solved the administrative problem in this case.

The problems of an overregulated, process-oriented system are less significant when it comes to managing the status quo. But that is precisely not what is needed in our time. On the contrary, we have been navigating from one crisis to the next for what feels like forever, and must simultaneously tackle the major challenges of our time. The Herculean tasks ahead cannot be managed with a process-oriented state. The entire administrative system urgently needs to be reformed and aligned with the quality of results rather than processes. Helmut Kohl once said: “What matters is what comes out at the end.” He was right.

What does administrative modernisation mean in this context, and what are the key approaches? How can the focus be shifted from processes to results? New approaches must be developed, especially in three areas: structures, personnel, and technology. First, the hierarchical structures and thematic silos must be gradually opened. This is a long-term undertaking that will not succeed overnight. However, there are concepts that can at least make a quick start.

The approach of consolidating the most important political priorities into “missions” is essentially an attempt to overcome structural obstacles and focus on achieving core objectives. This is precisely the idea behind the new British Prime Minister Sir Keir Starmer’s “Mission Delivery Boards.” The name says it all: it is about the state working with external actors to deliver quantifiable results. Therefore, all decisions are aligned with the concrete missions, and the boards are given the authority to push necessary measures through fragmented and rigid structures in Whitehall.

Even if Mission Delivery Boards mainly fight against existing structures rather than reforming them, they can still provide the right impulses. Ultimately, sustainably reformed structures are not possible without a cultural change within the administrations themselves. This can be promoted by experimenting with new structures and changing recruitment policies. In Germany, there is far too little personnel exchange between the public sector, private sector, and academia. The rigid administrative career path should no longer be the unshakeable cornerstone of administrative personnel policy.

There is ample evidence that organisations benefit from the diversity of staff profiles and personal experiences. In German administrations, however, people often spend their entire careers in largely predetermined paths, which also set the wrong personal incentives more often than not. To become more results-oriented, administrations must become more innovative and entrepreneurial. This needs to be reflected in personnel policies.

If the organisational culture changes, structures can also be sustainably reformed. This includes the much more effective use of digital tools, especially Artificial Intelligence (AI). There are two stages of development: in the first stage, AI-supported assistance systems will need to support the existing process-oriented work of the administrations. This is necessary to secure the state’s general ability to act in light of impending retirements. According to a PwC study, the public sector faces a shortage of at least one million skilled workers by 2030.

In the second stage, AI must then act as a catalyst for structural system reorientation in combination with a more open personnel policy. One of AI’s most important capabilities is evaluating large amounts of data and making them useful for strategic decisions. This will enable a new level of evidence-based policymaking and data-driven administration in the medium term. Both are necessary steps to move from process orientation to result orientation.

Another important step in results-oriented administrative modernisation is opening structures to participatory methods. Such procedures strengthen trust in the state and lead to practical solutions. Here, too, technology can play a significant role, as demonstrated by the digital platform “vTaiwan,” which has been innovatively implementing participatory methods in Taiwan since 2014. Such approaches increase the transparency and legitimacy of state decisions and reduce the distance to citizens. German sociologist Steffen Mau even argues that participatory methods can initiate social learning processes that strengthen the democratic culture as a whole.

Reforms in the areas of administrative structure, personnel policy, and the use of technology must therefore be interconnected and implemented iteratively in order to truly reform the ossified structures in the medium to long term.

In April 2021, US President Joe Biden convincingly argued in a speech before the US Congress that the proof of a functioning democracy that delivers results for its citizens needs to be re-established in the US. This proof is also necessary in Germany. The widespread impression that problems are piling up and that major challenges are not being addressed is toxic to the democratic substance of the country. The temptations of populists become all the more effective the fewer concrete solutions the state delivers.

To meet the challenges of our time, we need a strong and effective state. Therefore, administrations in particular must urgently be modernised. However, this can only succeed if the right impulses are set, triggering a change that ultimately comes from within the administrations themselves. As mentioned at the outset, the employees of the administrations are not the problem. On the contrary: they are the greatest hope for getting the problems under control.

The recent state elections in Saxony and Brandenburg have shown that the traditional people’s parties in East Germany, despite incumbency advantages and sharp polarization, can only narrowly keep the AfD at bay. A popular prime minister from the Left Party has already failed to do so in Thuringia. Time is running out. The state must deliver better results and create new conditions to achieve them.

This article was first published in German in Frankfurter Allgemeine Sonntagszeitung