The Reduction of Red tape: the point of view of European SMEs Luc Hendrickx UEAPME Director Enterprise Policy and External Relations ICHNOS Plus Project 11th December 2008 T Hotel - Cagliari

UEAPME Employers’ organisation representing the interests at European level of crafts, trades and Small and Medium-Sized Enterprises 83 member organisations (national cross-sectoral associations and European trade federations) Represents 9 million enterprises in EU which employ over 30 million people. EU + : 12 million businesses in 36 countries with nearly 55 million employees Recognised European Social Partner

Simplification: do not simplify!  Does not mean deregulation / liberalisation  Less legislation is a myth !  Broader objective: Better regulation  Rethink the whole regulatory process – need for a cultural shift

Why better regulation? Reduce costs: for enterprises and authorities Competitiveness Better enforcement Attract foreign investment Close the « gap »

European Charter for Small Enterprises 2000 “Small enterprises are the first to suffer if weighed down with excessive bureaucracy. And they are the first to flourish from initiatives to cut red tape.” Action line 3: “New regulations at national and Community level should be screened to asses their impact on small enterprises and entrepreneurs. Wherever possible, national and EC rules should be simplified. Governments should adopt user-friendly administrative documents.” 25 % EU-Action Programme target is thus step back…

Old problem – new solutions? Awareness in all the EU countries with a lot of initiatives EC plays active role in promotion of regulatory management in the MS and in implementing it in its own policies But: Too slow…credibility politicians is at stake; High number of new legislation AND the bad quality has reasons, which cannot be solved by “simplification” initiatives only Rethink the whole regulatory process - need for a new regulatory culture

What is the problem? Regulations create red-tape and are (too) complex But there is more…the content: The claimed objectives are not clear or not reached Unbalance between advantages and costs Costs are unnecessary high due to not adapted rules (no room for alternatives) Rules are not executable or enforceable Implementation (= how applied) Transposition (= how incorporated) Gold plating

Need for a Regulatory Management Three components: 1. Judicial and technical simplification 2. Administrative relief 3. Business Impact Assessments

1.Judicial and technical simplification (1) Simplification: two opposite aspects: 1. Modification of legislation without effecting the substance of the underlying policy 2. Efforts to simplify the substance of a policy, e.g. its objectives or scope; Codification: good governance Simplification has nothing to do with the length of the legal text or its generality

1.Judicial and technical simplification (2) Criteria: Necessity and effective Efficient and balanced (cost-benefit!) Implementable and enforceable Legitimate Coherent with other legislation Simple, clear and accessible Founded (data based) and consulted on Lastingly relevant and topical

UEAPME calls for “Think small first” approach Application of the real “think small first” principle: Measures and legislation should be conceived from the point of view of small enterprises, taken as the rule, not as the exception. No exemptions for SMEs! All measures to simplify existing legislation and administrative procedures should also use this “think small first” approach

UEAPME calls for “Think small first” approach Better in time (early stage) consultation of the representative small business community Reasonable consultation times Reasonable (consulted) time frames for the implementation of legislation; (but equal for all stakeholders) Conducting effective information campaigns regarding changes required by new legislation Staff in (European, national,…) public administrations should be encouraged to become more aware of the small businesses EU: Avoiding “gold plating” – dialogue between COM and MS

2. Administrative relief Rewrite administrative procedures Need for development of specific tools: readable, user-friendly forms; “only once” principle; pre- filled forms; one-stop-shops. Better regulation Units (in DGs – Ministries) Setting coherent, transparent and clear understandable criteria for administrative procedures to access EC funds

3. Impact assessments To allow to make choices on the basis of analysis of economic, social and environmental impact Cost – benefit! In-depth, neutral and scientific To be paid by the legislator Specifically for SMEs-SEs

Key points The fastest way to reduce a lot of administrative burden for small enterprises is the application of 2 principles: “Only once” principle: Enterprises should not be obliged to provide all over again information that the authorities have already received by another route, at all levels (European, national, regional and local level). The proportionality principle should be applied as a basic rule whenever SME policy is concerned and particularly in the framework of environmental policy. This principle means that SMEs should be treated differently according to the level of dangerousness of their impacts.

Need for a new approach?? Prohibition by EU legislation of national measures which Member States currently apply in addition to requirements imposed or permitted by EU-legislation More use of regulations? Increased administrative cooperation Need for follow-up

Need for a new EU approach?? Now : top- down Future: bottom-up?

Thank you! Rue Jacques de Lalaingstraat 4 B Brussels