Since the German reunification, Berlin has come to be a city of innovation, communication and creativity with strong location conditions. An excellent science and research landscape, reasonably priced real estate, Germany’s largest and most cutting-edge communication network, and a good transport infrastructure make Berlin a dynamic and cosmopolitan business location.
Being the seat of the Federal Government, Berlin is also the hub of the public sector, which makes the location particularly attractive for company settlements.
Besides essential factors such as the local job market, taxation and infrastructure, the performance, efficiency and business friendliness of the public administration are largely significant for investment decisions, whether it comes to the quick and unbureaucratic handling of building projects or the competent processing of subsidy applications. Quick and unbureaucratic approval procedures, savings potentials through the use of e-government, and special service offers for businesses are increasingly important to companies in their location selection. By contrast, a cumbersome administration with bureaucratic hurdles and tedious procedures hampers the economic development of a region. Public administration, thus, has long become a location factor in the international competition.
International investors particularly value Germany’s reliable legal system and competitiveness. According to the fdi-markets database (Financial Times Ltd.), Germany is the fifth most attractive investment location internationally. Within Europe, Germany occupies second place before France and after the United Kingdom. Despite such good results, other international studies point out that the structural conditions in Germany are not yet optimal.
In the current World Bank study “Doing Business”, Germany comes in 22nd among 183 countries. Although, on average, Germany was able to improve its rank by a few places compared with previous years and the study authors also praise the German legal system, it is evident that, in an international comparison, bureaucratic procedures still have a negative impact on business friendliness in Germany.
But what is the situation in Berlin? According to a study of the structural conditions for investments in East Germany, mandated by the federal administrator of the newly formed states and published in 2010, insufficient efficiency of the administration is counted among the key weaknesses of the location, besides the factors of taxation and labour legislation. This was also confirmed in a 2007 study of the business location of Berlin by the Monheim Institute from the viewpoint of local companies: the majority of the 300 companies polled are dissatisfied with the performance of the public administration and call for a further reduction of bureaucracy.
The Berlin administration has acknowledged the problem: over the past 20 years, the state of Berlin has made big structural and organisational efforts towards efficiency, quality and service orientation. However, in the pursuit of an efficient and service-oriented administration, not only were the structures modified, such as through the local government reorganisation of 2001, but also new taxation and government instruments were introduced within the framework of comprehensive management reform. Since the mid-nineties, the Berlin administration has been undergoing a profound modernisation process.
The modernisation programme “ServiceStadt Berlin”, passed by the state government in 2007, is staying on that same course. Under the motto “More service, better quality”, more than 100 projects are to facilitate access to services for citizens, local businesses and investors as well as improve quality. Joint service centres and a central citizen service are such examples. Since 2009, for instance, Berlin has had a single citizen telephone line shared by all important offices and agencies. Under the same government number 115, Berliners can now reach their administration on weekdays between 8 a.m. and 6 p.m. by phone to receive instant information on public administrative services.
In order to improve the structural conditions for investments, the state of Berlin has introduced a joint electronic procedure for the Berlin construction supervision agencies in 2010. The electronic applications for, processing of, and issuing of building permits are to shorten the decision paths and handling times significantly. The joint point of contact is another example of the business friendliness of the Berlin administration. As a “one-stop agency”, that service and contact point supports companies in handling business- and company-related administrative procedures and offers information on the requirements to receive services.
Overall, it is becoming obvious that the transformation of the administration in Berlin – towards an optimised administration, geared to the needs of business – is in full swing.
That transformation has exacted a great deal from the staff of the Berlin administration. Extensive restructuring processes had to be dealt with and completely new tasks assumed. At the same time, however, the number of jobs declined due to staff savings: while the Berlin administration of 1991 still counted 207,000 employees, the 2010 number dropped by almost half to about 105,000.
However, a more efficient public administration has little to do with staff redundancy. Quite the opposite: the administration is strongly dependent on skilled labour if it is going to be a partner to business. Coincidentally, the administration must also prepare for a stronger fight for skilled labour with the private sector. Therefore, the public sector must communicate much more clearly which types of attractive jobs it has to offer. In the meantime, job priorities have changed. While job seekers primarily used to look for job security, nowadays they value an interesting and diversified job. Especially young people often attach utmost importance to social commitment and put themselves out for the community. In the public administration, they can achieve both: do something for the common good while building a career. That put aside, the pending retirement of the baby-boomer generation is
creating numerous gaps on management levels, which need to be filled quickly. Therefore, the public administration must communicate its strengths more clearly: a combination of exciting and varied tasks for the common good and a secure job with development potentialities and compatibility of family and career.
However, the challenges of the future also require a different training profile so that administrations are able to accomplish their tasks. Establishments such as the Hertie School of Governance and the Institute for Public Governance in Berlin have long recognised that and specialised in training and supporting administrative management personnel. The public administration is increasingly going to be faced with managerial and economic challenges. On the one hand, that is due to increased outsourcing of state and municipal tasks to private companies. On the other hand, public and private sectors are increasingly cooperating in accomplishing public tasks. Public administration and private business depend on each other; only as partners do they provide the foundation for a successful economic location.
The signs are good that Berlin is capable of overcoming the exacting challenges of systematically converting the administration into a location factor in the international competition. Berlin is already worth the investment today.
Qualified businessman and auditor Ulrich Maas was born in 1954 and has been chairman of the audit firm KPMG AG in charge of the Public Sector and Region East fields since 1996. He is a member of the board of trustees of Stifterverband für die Deutsche Wirtschaft e.V., an organisation of German business benefactors, as well as treasurer of the association of friends and patrons of the state opera Staatsoper Unter den Linden.