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Small entrepreneurs spend over 140 hours per year tied up in red tape

Companies which run a business in Slovakia have to fulfil, in total, 75 administrative operations per year.

Entrepreneurs in Slovakia have to fulfil 75 administrative operations per year. Illustrative stock photo(Source: Sme )

In 2016 an average small company with four employees spends 140 hours dealing with red tape, according to the first version of the Bureaucracy Index of Slovakia introduced by the Institute for Economic and Social Studies (INESS) non-governmental think tank, 

The Bureaucracy Index is a simple and transparent quantification of the bureaucratic burden prepared by INESS in cooperation with experts from various spheres. Though much has been said about the problem of bureaucracy in business, nobody has broken it down to actual numbers, according to INESS’s director Richard Ďurana.

“We tried to do it with the Bureaucracy Index project” said Ďurana at a press conference held on September 29.

Following the results of the index, dealing with red tape takes 140 hours, or 17.5 business days, and requires the completion of 75 administrative operations which cost €1471.5 per year, according to INESS analyst Martin Vlachynský.

“This is almost a full working month that must be devoted by an entrepreneur to meet all of the legal terms,” Vlachynský told the press.

Analysts have calculated the index based on a model company which trades within the metal-working industry producing vices, has an annual turnover of €300,000, profit, is a VAT payer, trades only within the EU, produces a variety of waste and owns a van and one operational building.

While INESS has considered tax administration, obligations to employees, occupational safety and protection of health (BOZP) and waste management in the index, accounting was not included in the analysis as it is a part of all business, according to Vlachynský. Analysts have assigned time and financial requirements to selected operations in a similar form to the united methodology used by the Economy Ministry.

Read also: Read also:Slovakia’s competitiveness slightly up

INESS with its foreign partners decided to unofficially identify September 29 as International Bureaucracy Day, as this is also the birthday of Ludwig von Mises, the first economist who systematically studied the phenomenon of bureaucracy.

“All should remember on this day how much time they have spent filling in papers and whether they can do something with that,” said Vlachynský.

In terms of the future, Vlachynský pointed out that INESS plans to continue with quantification of the index in following years to compare its variation and thereby assess the government’s efforts to improve the business environment. In addition, the institute has spread the idea of the index among the members of the network of dozens of European associations of think tanks to ensure its international scope, the analyst told the press.

Topic: Economics

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