Germany’s anti-digital law is a stunted case study

If you want to know why Europe’s biggest economy is a digital laggard – in fact, if you want to know why progress is hard everywhere – feast on a trip into the fine print of a new German law governing employment contract.

The occasion for the anecdote is a directive from Brussels requiring the 27 members of the European Union to update their legislation on what employers must stipulate when hiring people. This concerns everything from salary to holidays and other conditions. The world of work has changed dramatically since the EU first spoke out on these issues in 1991 – just think of the gig economy, telecommuting or home offices. A good legislative adjustment therefore takes on its full meaning.

The EU instructions explicitly mention that “in view of the increasing use of digital communication tools, [this information] can be provided electronically. Duh, you might say. But it is good to specify that employers and employees must have the choice for their contracts: paper, PDF or both.

Except that Germany has none. It just passed a law that completely bans contracts and digital signatures. Whether you’re a coder finding jobs online, an Amazon delivery person, or a Dilbert character, you’ll now get the fine print of your terms on paper — the dead tree kind of thing. And there will be your new boss’s signature in freshly dried ink. If employers provide a digital contract instead, they will face a fine of up to 2,000 euros ($2,049) for each instant.

This sort of thing is, of course, exactly what you would have expected from the four administrations under former Chancellor Angela Merkel. In his 16 years in power, it has become a permanent joke that every dominant party in every German election promises digital transformation – and will forever, because it never comes.

But the new government led by Chancellor Olaf Scholz was meant to break that pattern. The coalition is made up of Scholz’s center-left Social Democrats, Green Environmentalists and pro-business Liberal Democrats. The latter, in particular, have made digital transformation their central message.

Again, as Otto von Bismarck observed, laws are like sausages, and best not to see them made. If you had looked closely at this legislation, you would have seen the German Confederation of Trade Unions in the background. The DGB, as this trade union lobby is known in German, wields particular influence over the Social Democrats, who lead the Ministry of Labor, which drafted the legislation.

When drafting the law, the DGB categorically excluded the authorization of any electronic medium for contracts. So I asked them: for heaven’s sake, why?

To protect “precarious” workers, a DGB spokesperson explained to me. Many of them only have a smartphone but no printer or broadband connection at home, and don’t necessarily check their emails or connect to the company intranet. Also, if the employee and employer later end up in court, a physical paper contract is better, he thinks. Besides, 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 foul progress everywhere, all the time. The DGB, and therefore German law, prohibits all digital employment contracts – millions and millions – because some people would be better served with paper versions.

How about just asking employers to ask recruits how they would like to receive their contract? Make paper an option, not a mandate. According to DGB logic, the government should also ban Apple Pay and all other digital wallets, as well as credit cards, and only allow notes and coins, because someone somewhere is more comfortable with this payment method.

Now multiply this approach hundreds, thousands, millions of times – and you get Germany. The European Commission regularly ranks EU member countries according to their digital development. Overall, Germany is currently in the middle, at 13. But that’s because Germany has recently improved the relevant physical infrastructure, from broadband lines to wireless networks, where it is now superior. on average.

In the mental infrastructure, it’s a different story. In the use of electronic invoices, for example, Germany is near the bottom. In the prevalence of e-government services, it ranks 24th, ahead only of Italy, Bulgaria and Romania. Another report, that of the ESCP Business School in Berlin, is even more scathing. He notes that Germany is one of the countries that has lost the most in digital competitiveness. Within the Group of 20, a forum of developed economies, it ranks third before last.

What Germans sometimes forget is that digital progress isn’t just about the cables, antennas and gadgets you have; it’s also about what you’re ready to do with it and whether you’re open to change.

Analysts are now estimating the cost of the new law in terms of extra bureaucracy, paper, energy consumption and carbon emissions. It’s big. Some wonder what delivery method the DGB will impose next time. Stagecoaches? Carrier pigeons? Both would require extensive livestock infrastructure. Perhaps the Scholz government should start preparing.


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