Raul Aron: cutting pointless red tape can make history

As previous promises to reduce bureaucracy have not proved very fruitful and unnecessary red tape has continued to proliferate, it is now possible to make history by controlling it, writes Raul Aron, an advisor and analyst at the Confederation of Employers, in the newspaper Postimees.

When we started collecting proposals for cutting pointless red tape and administrative burdens in the Confederation of Employers this spring, we had no idea that we would get more than 200.

Expectations were kept in check by the fact that there has been much less red tape in words but less in deeds. Entrepreneurs and other enterprising social thinkers have repeatedly met, spent their time and energy, formulated the necessary steps and then witnessed little change.

That’s why the expectations for politicians are now high – you have the chance to make a real difference and make history. Take it.

Bureaucracy is overwhelming society

Scepticism has been exacerbated by the speed with which regulation is being added. Officials’ vision of possible solutions to any problem is often limited to regulatory measures and increased reporting. For example, French employers calculated that between 2017 and 2022, the European legislator adopted 850 new obligations for businesses, totalling 5,422 pages, or an average of 12 pieces of legislation and 75 pages per month. In total, the European Union has created 13,000 new regulations in the last six years. This volume of legislation is simply overwhelming for societies.

This was illustrated by the Wall Street Journal, which last year described the economic policies of the regions, with the US innovating, China copying and Europe regulating. The calamity is accurate, but it is far from a joke, as Europe’s lag behind the rest of the world has been exacerbated by bureaucratic blindness. Now, initiatives such as the Omnibus should thin Europe’s layer of bureaucracy.

Excess burdens hundreds of thousands of businesses

Procedures and reporting are the main concerns for businesses here, followed by the requirements and obligations imposed on businesses and, thirdly, the stricter transposition of EU requirements. More than 150,000 businesses are burdened by excessive requirements.

However, requirements that do not add value and unnecessary administrative burdens are not just a pain for businesses. Every inefficient or unnecessary move is paid for by society as a whole – whether it is the creator of the requirement, the person who subsequently controls its implementation or the employee in some companies who brings it to the table. All pointless requirements make production or the provision of services more expensive in Estonia. This is not apparent in everyday life, but it is reflected in the customer’s price tag. What is harder to measure is the time and energy lost that could have been spent on something that would have been of benefit to businesses and society.

For example, many of the larger companies here have spent hundreds of thousands of euros on sustainability reporting and auditing, the impact and necessity of which is questionable. Companies are already looking for efficiency because materials are a cost and efficiency is a competitive advantage, and social and governance risk management does not need to be prescribed to them because customers and the pursuit of strategic objectives do it. This is borne out by the fact that unemployment did not increase significantly in the crises of the last few years – employers kept workers on the payroll until the last resort. Reporting should therefore be voluntary.

Within Estonia, there is an unexploited opportunity to cross-use data, harmonise data formats and automate data transmission. This would help to stop the state asking for the same data repeatedly and duplicatively.

Co-operative must analyse the working environment

Another memorable example was described by the head of a Võru housing association. They employ two adults – an accountant and a steward. But the law obliges and the Labour Inspectorate requires a work environment risk assessment.

Alongside this cooperative, tens of thousands of employers here feel affected by this requirement. In many organisations this small, people often work only part-time, in home offices, etc. What is the point of thinking through the fact that some of the time spent at home is linked to work and the risks that suddenly arise? Therefore, the obligation to have both a risk assessment and the appointment of a specialist should be abolished in organisations with fewer than 10 employees and in areas where the likelihood of a serious accident at work is low.

Labour law must move with the times

The working environment is also affected by outdated labour law. For example, every change of workload has to be formalised, and this creates a lot of dead time, so the Employment Contracts Act should allow for more flexible working time arrangements. The government is already planning to update it.

In addition, employment contracts contain a large number of mandatory statutory provisions, which must be duplicated in the contract, i.e. if the law changes, everyone’s contracts and the mandatory part will have to be amended again. It would be helpful to reduce the mandatory elements of the employment contract and to remove the requirements already laid down by law from the mandatory elements.

These are just a few of the more prominent examples that were highlighted as major obstacles during the brainstorming. We collated all the proposals and presented them to around 170 government advisers on growth and efficiency. In turn, 12 of these, with a broader impact and which could be done more quickly, could be implemented this spring, making it easier for businesses to operate.

As the government has set itself the goal of increasing the competitiveness of the economy, it is through this perspective that both existing and additional requirements should be assessed – whether they contribute to or work against the goal. Fast procedures and overall ease of doing business will help attract new investment and businesses to expand here.

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