Kai Realo: bureaucracy must be approached radically

A radical reduction of bureaucracy is an untapped opportunity for the Estonian economy, explains Kai Realo, vice-chairman of the council of the Estonian Employers’ Confederation, in the opinion columns of the newspaper Postimees. Otherwise, we will process all good initiatives to death, and only those that have managed to break through the bureaucracy and get the attention of politicians or top officials will remain or become viable.

Duplicative submission of the same data to the state, the obligation to insure vehicles also in closed areas, the idea of requiring every restaurant to indicate the origin of meat for every meal, the obligation to collect and share with the state data that nobody actually uses, or additional conditions imposed at the whim of officials to comply with any requirement. In addition to the foregoing, there is also the transposition into Estonian law of rules that are stricter than those required by the European Union.

These are just a few of the more than 30 examples of pointless bureaucracy that have already been highlighted by business in the Confederation of Employers’ public ideas basket and could be abolished.

Businesses and employers are not fighting against increased red tape and administrative burdens simply out of principle or because they have nothing else to do. On the contrary, unnecessary bureaucracy prevents them from getting on with their core business of creating added value. Even the smallest obligation that an entrepreneur has to fulfil, but which does not add value to the company or to society, is a cost to both employer and society.

Society pays for red tape

Every requirement means that someone has spent time and energy developing it, someone has to enforce it and someone has to monitor it. This snowball has been quietly rolling and inflating and inflating.

For example, employers in France calculated that between 2017 and 2022, the European legislator adopted 850 new commitments for businesses, totalling 5422 pages. That’s an average of 12 pieces of legislation and 75 pages per month. Mario Draghi recently pointed out in his Competitiveness Report that the European Union has introduced 13,000 new regulations since 2019, while America has introduced 3,000.

In fact, more than half of Europe’s businesses see administrative burdens as a brake on development. Larger companies have had to create jobs just to deal with reporting and compliance documentation, at a cost of hundreds of thousands of euros per company, while we as a society pay the price for unnecessary increases in public sector administrative burdens. This resource spent on fruitless activities could be put to much better use elsewhere.

As much as you need, but as little as possible

One of the new government’s priorities, rightly, is to boost defence capabilities alongside economic development, as this will improve the very low levels of confidence among both domestic and foreign investors, as well as among people. The wealth of society and the tax revenues of the state are generated by business, and it depends on this whether the state has the money to invest in the common areas that are needed.

This is why we also need to help business develop by cutting red tape decisively to strengthen our defence capabilities. The principle of “as much as you need, as little as possible” must apply.

The article appeared in the opinion columns of the newspaper Postimees.