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17.01.2015 | KPMG Law Insights

Better working conditions for young scientists – R&D spending remains too low

Dear Readers,

We are starting this first newsletter of the new year with a discussion of a ruling: The European Court of Justice has made a pleasingly clear statement on the extent to which state authorities can grant EU subsidies to companies and what role the so-called private investor test can play in this.

At the end of last year, there were also a number of developments with regard to higher education and public procurement law: The Federal Social Court (Bundessozialgerichtshof) issued a ruling on the scope of accident insurance coverage for students during stays abroad and university sports activities. Read our second article on this topic.

The fact that bidding consortiums are considered permissible per se and that public contracting authorities – such as universities and, if applicable, public institutions of higher education – are not allowed to use such consortiums. even as research institutions – do not have to initiate an antitrust review or demand a statement to this effect from the bidding consortium without further concrete grounds, the Düsseldorf Higher Regional Court has stated quite clearly. For more details, please refer to our third article. In addition, we have summarized for you the essential news from the field of education/research.

Sincerely yours

Public Sector Team of KPMG Rechtsanwaltsgesellschaft mbH

Mathias Oberndörfer Dr. Anke Empting

Lawyer Attorney

BMBF plans to improve working conditions for young scientists

Almost 90 % of young scientists in Germany apparently work on the basis of fixed-term employment contracts, some of which have a duration of less than one year. This is to be changed by a reform of the Wissenschaftszeitvertragsgesetz.

According to the latest education report by the German Institute for International Educational Research (DIPF), which was sponsored by the Standing Conference of the Ministers of Education and Cultural Affairs of the Länder in the Federal Republic of Germany (KMK) and the Federal Ministry of Education and Research (BMBF) and published at the beginning of January 2015, 84% of the approximately 160,000 young scientists at German universities have temporary contracts. Their share has increased significantly over the past ten years. The same applies to a large proportion of the approximately 30,000 employees at research institutions outside the universities, such as the Fraunhofer Institutes or the Max Planck Institutes.

One consequence is that young scientists’ research projects are difficult to plan and often have to be abandoned due to a lack of contract extensions. In addition, many of those affected find it difficult to plan their doctoral thesis in a resilient manner.

Reform plans of the BMBF

The BMBF has already described these conditions as “out of the question”. An amendment to the Wissenschaftszeitvertragsgesetz (German Act on Temporary Scientific Contracts) currently being discussed by the coalition is intended to ensure that doctoral students receive a contract of at least three years in the future. In the case of research projects – including third-party funded projects with a time limit – the contracts should run for as long as the research project itself.However, the BMBF rejects rigid minimum periods for all scientists.

Funding unclear

The BMBF also expressly rejects corresponding federal funding for universities and research institutions to implement the reform plans. This, he said, is the responsibility of the states. The federal government has already been taking over BAföG alone since the beginning of 2015, thus relieving the states of 1.2 billion euros each year. According to Ms. Wanka, this money should be used by the federal states to improve working conditions in the research environment, among other things.

Talks within the grand coalition on reform plans for the Wissenschaftszeitvertragsgesetz (German Act on Temporary Academic Contracts) are apparently stalling at present

Research and development spending up in Germany in 2013 – SMEs in particular benefit

In 2013, spending on research and development (R&D) in Germany increased by 1.3 percent year-on-year to almost 80.2 billion euros. This is the conclusion of a survey published on January 23, 2015 by the Donors’ Association for the Promotion of Sciences and Humanities in Germany (Stifterverband).

Accordingly, R&D spending by universities grew by 3.2 percent and by non-university research institutions by 6.7 percent, as in 2012. By contrast, R&D spending by German companies on internal projects stagnated at around the previous year’s level of 53.6 billion euros.

Despite this overall positive development, the share of spending on research and development in Germany’s gross domestic product (GDP) is only 2.85 percent. The self-imposed target of the 3 percent mark was not achieved, unlike in the previous year, for example. However, according to the Stifterverband, the reason is primarily due to the conversion of the European System of Accounts (ESA 2010), which was carried out by all EU member states in the fall of 2014.

2014 federal budget earmarks 14.63 billion euros for research and development

In response to the Stifterverband survey, the BMBF emphasizes that the R&D sector continues to be an important driver of economic development in Germany. For 2014, he said, 14.63 billion euros had therefore been budgeted for research and development in the federal budget, an increase of more than 60 percent compared with 2005. Further substantial increases are also planned in the federal budget for R&D in 2015.

Current innovation survey also positive

Just as in the R&D sector, a positive balance can also be drawn for 2013 with regard to the willingness to innovate in Germany. For example, an innovation survey by the Center for European Economic Research (ZEW), also published on January 23, 2015, concluded that companies in Germany spent 5.3 percent more on innovation in 2013 than in the previous year. Total innovation spending had risen to 144.6 billion euros.

Above-average increase in R&D spending by SMEs

Both the Stifterverband survey and the ZEW innovation survey show that – although the majority of research and innovation activities are carried out by large companies – there were positive trends in 2013, particularly among SMEs (small and medium-sized enterprises with fewer than 500 employees and certain maximum sales). In 2013, R&D spending by SMEs had increased at an above-average rate of around 4.6 percent compared with 2012. Innovation spending had increased by 4.9 percent.

In a European comparison, the innovation performance of the German economy as a whole is well above average.

Outlook

The vast majority of companies surveyed by the Stifterverband and ZEW expect the positive developments in R&D and innovation to continue in the coming years.

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Contact

Mathias Oberndörfer

Geschäftsführer
Mitglied des Vorstands Service Tax - KPMG AG Wirt­schafts­prüfungs­gesell­schaft

Theodor-Heuss-Straße 5
70174 Stuttgart

tel: +49 711 781923410
moberndoerfer@kpmg-law.com

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