1. Measuring Administrative Costs in Serbia
Branko Radulović

2. What is the Standard Cost Model?
The Standard Cost Model (SCM) is a simple way to measure administrative costs and administrative burdens.
The SCM disaggregates administrative requirements (requests for information) into necessary steps (activities) that need to be done, measures time and other costs needed, and, based on the frequency of these steps and the number of entities subject to regulation, calculates total administrative costs and administrative burden.

3. What is not measured? What is measured? Expenses of...
Paying taxes, customs duties, charges, fines...
Adjustment to technical requirements and standards
Acquiring professional licences
Waiting to get licences, approvals, etc.
Appeals and court proceedings
“Annoyance costs”
National level
Construction permitting procedures not taken into account
Business sector
Not administrative costs of individuals
Includes service of process fees, but not charges
E.g. forestry charge
Costs of procedure are measured, but actual charge is not taken into account

4. Detailed, simple and understandable What gets measured gets done
Pros
Cons
Detailed, simple and understandable
What gets measured gets done
E.g. daily takings, travel orders
Easily adjustable and correctible
Not statistically representative
But compatible with survey
Issues in estimating savings
Would time lost have been used productively?
Are regulations actually implemented?

5. Comparability with other countries Measurability
Aims
Comparability with other countries
Measurability
Comprehensive assessment of administrative costs carried out for the first time
Some 30 proposed procedures measured using SRP – not enough to provide an objective assessment of success
Identifying new avenues to cutting costs

6. How were procedures selected?
Basic criteria – reach, frequency, costs
Final tally: slightly under 800 administrative compliance requests
Survey used the 20/80 rule
20% of procedures generate some 80% of costs
20% equals about 150 procedures

7. Large number of post-SRP new and amended regulations
“Regulatory tsunami”
Large number of post-SRP new and amended regulations
900
800
Laws
700
Gov’t orders
600
354
475
Regulations
500
400
300
186
214
203
200
100
195 80
116 42
2009
2010
September 2011

8. If I… ...have a fiscal cash register ...pay VAT ...sell...
…and register staff
...pay VAT
...have a fiscal cash register
...to cosumers
...sell...
…employ staff…
...tobacco
If I…
...import or export
...have a vehicle
...package holidays
...take part in public procurement
...own office space
...issue securities
…generate waste or emissions
...sound equipment
...use...

9. Example (1) Registering staff for pregnancy leave
Compliance Requirement
Type of Request for Information
Appropriate Body
Regulation Imposing Requirement
Article
Administrative Activity 
Tariff (Hourly Rate, in RSD)
Time Required (in Minutes)
Administrative Fees and Other Direct Costs (mail, forms, etc.)
Potential
Actual
Registering staff for pregnancy leave  
Other
Social Services Centre
Law on Financial Support for Families with Children (Official Gazette Nos. 16/2002, 115/2005 and 107/2009) 10
Getting acquainted with request for information
324.60 30
Preparing new data and documentation 45
180
Copying, marking, etc. 20
Submitting forms 60
Filling in information

10. Example: Registering staff for pregnancy leave
Cost of Administrative Activity
Frequency(Annually)
Number of People/Businesses Subject to Regulation 
Total Number of Administrative Activities at the Annual Level
Total Administrative Costs
Total Savings/Additional Costs
Potential
Actual
162.3 1
30,918
5,017,918
243.45
973.79 12
371,016
90,322,520
361,290,081
270,967,560.43
54.1
138.2
20,071,671
51,273,822
31,202,151.14
324.6
120,430,027
108.2
40,143,342
Σ P x Q
P (Price) = Tariff x Time + other expenses
Q (Quantity) = number of businesses x frequency of requests

11. Ratio of administrative costs in GDP stands at about 4,2%, or €1.35 bn
Total of 157 procedures covered (nearly 300 individual calculations)
Assuming Lower Wages
Assuming Higher Wages (x1.2)
Overheads
(x1.2)
20/80 rule
Ratio of Administrative Costs in GDP
2.31%
2.77%
3.33%
4.16%

12. Most expensive administrative requirements
Maintaining business records
27,432,590,141
Inventory of assets and liabilities
7,081,702,749
Import and customs clearance of goods
3,612,397,443
Auditing
2,588,024,328
Daily report ledger
2,198,290,714
Keeping turnover and payments ledger (retail)
2,125,127,476
Payment of daily takings
1,940,657,550
General public procurement procedure
1,285,771,954
Registering staff for social security
1,269,598,788
Preparing and filing PP OPJ and PP OD forms (for PAYE/withholding tax and contributions)
1,082,112,970
Invoicing
1,071,122,519
Servicing fiscal cash registers
944,215,893
Deregistering staff for social security
928,752,320
Registering staff for pregnancy leave
578,155,190

13. A minimum of €66.9 mn in savings identified
Potential for savings in as many as 90 procedures
Assuming higher wages and overheads, savings amount to €96.3 mn
Reforms would result in a 7.4% decrease in administrative costs
Percentage slightly higher if administrative burden concept is used

14. Preliminary calculation of major potential savings
Keeping turnover and payments ledger (retail)
General public procurement procedure
Preparing and filing PP OPJ and PP OD forms (for PAYE/withholding tax and contributions)
Invoicing
Mandatory company reports published in daily newspapers (sum total)
Registering staff for pregnancy leave
Preparing daily turnover reports (catering establishments)
Application for licence for retail sale of tobacco products
Issuance of certificate of taxes paid
Certification of health insurance IDs
Electronic registration with BRA (sum total)
Forestry charge payment procedure
Filing M4 forms
Entry of years of service into employment IDs

15. How can administrative expenses be reduced?
Remove requirements
Forestry charge, retail ledger, employment IDs
Reduce requirements
Keeping documents – five instead of ten years
Simplify procedures
Pregnancy leave
Ensure government bodies exchange information
IT solutions and service
BRA, Foreign Currency Operations Inspection, Tax Bodies...
But private sector as well (invoicing)
Better user instructions

16. Comparison with other countries
Administrative burden in Austria 2.8%; Czech Republic, 2.8%; Denmark, 2.1%; Netherlands, 1.7%
Serbia has begun to make cuts, but a great deal of work still lies ahead
EU countries needed several years to achieve target reduction of 25%