October 25, 2018 Print

The Institute of Economic and Social Studies (INESS) first introduced its Bureaucracy Index in Slovakia in 2016 to draw the attention to the amount of red tape a small entrepreneur has to overcome on a daily basis just to do business.

The index is based on a straightforward methodology, using an analysis of a model company (micro-company with 4 employees producing blacksmith products) and all its bureaucratic duties (ranging from taxes, worktime planning through health, safety, and waste management) are assigned a specific time cost. The main goal of the Bureaucracy Index is to define the abstract concept of bureaucracy and quantify it so that people can see the burdens that extra requirements place on people trying to run their businesses.

INESS has been actively seeking international partners to adapt and promote the index. This year, Slovakia was joined by Atlas Network partner think tanks from Lithuania (Lithuanian Free Market Institute/Enterprise Lithuania), Czech Republic (Liberální Institut) and Ukraine (EasyBusiness). All of the partners announced their 2018 national results in the first half of October 2018.


The press conference for the Slovakian Bureaucracy Index attracted journalists from 9 national media outlets.

Slovak entrepreneurs have to spend 222 hours per year on bureaucracy, followed by the Czechs with 233 hours, the Lithuanians with 252 hours and ending with the Ukrainians, who have to devote 469 hours to bureaucratic burden annually. The summary results can be further divided into subgroups of “employment” and “operations.” While in the Slovak and Czech republics these two groups have comparable time costs, Lithuanian bureaucracy is friendlier towards the employment-related agenda but high in the operation realm, compared to SK/CZ.

Despite ongoing reforms, Ukraine seems to have a long road ahead, scoring around 180 hours of bureaucracy just in tax-related issues,and the country also struggles with massive bureaucracy concerning various reporting duties on fuel consumption and carriage of goods.

“Ukrainian small enterprises comprise 99 percent of all registered businesses in the country, and employ ⅓ of Ukrainians,” said Andriy Shpakov, CEO of EasyBusiness, the group that facilitated the Ukrainian index. “The smaller a company is, the harder and costlier it is to maintain regulatory and bureaucratic procedures. Ukrainian small entrepreneurs lose time and money to excessive bureaucracy.”


The press conference for the Ukrainian Bureacracy Index (Shpakov seated second from left).

Ukrainian businesses lose €1,171 every year (USD 1,344) to burdensome government regulation.

“First, the goal of the project is to measure and widely communicate the level of bureaucracy in Ukraine: how much money and time one company spends on bureaucracy both directly and indirectly,” said Shpakov. “Second, the clear understanding of such measure will enable us to design further policy recommendations for the government on how to reduce the red tape. A commitment received from the government representative during the International Bureaucracy Day motivates  us to do further work in this direction.”


Leaflets produced by EasyBusiness for the release of the Ukrainian Bureacracy Index.

The Bureacracy Index has a growing reputation; it attracted media attention in all participating countries. More importantly, the Index caught the attention of the responsible policymakers in all four countries, with the Ministries of Economy either guest-starring in the related press conferences or even directly participating in the creation of the Bureaucracy Indices. INESS believes that rankings like the Bureaucracy Index do not have to serve solely as a tool of criticism against public administration. They can be utilized in building bridges and even potentially to inspire new reform ideas.

Notable outcomes:

Slovakia

  • 9 representatives of different national media attended the press conference,
  • Director General of the Business environment section of the Ministry of Economy joined the press conference,
  • 30+ media mentions (including 2 live TV broadcasts),
  • Further participation of INESS on the Ministry’s pro-business initiatives.

Ukraine 

  • 5 journalists and 50 other visitors to the PR conference,
  • Live streaming of the conference,
  • 15+ media mentions including 4 live TV and radio broadcasts,
  • Panel discussion between the Head of the State Regulatory Service of Ukraine and business and civil society representatives,
  • Achieved a commitment from the government.

Czech Republic

  • 10 journalists attended the press conference,
  • 15+ media appearances in all major national prints and interview for the public TV broadcaster,
  • Markéta Šichtářová, the most popular female economist in Czech Republic, commented on the results in her article,
  • Ministry of Industry and Trade has been following the creation of the Index and promised active cooperation.

Lithuania

  • 15+ media mentions, including the main business daily,
  • LFMI was joined in their efforts by Enterprise Lithuania, a non-profit agency under Ministry of Economy established to promote entrepreneurship, support business development and foster export.

INESS has been negotiating with potential partners from all over the world and it hopes to spread the idea to more partner countries to make the index global. If you are interested to learn more about the Bureaucracy Index or even join and prepare your own country calculations for 2019, visit bureaucracyindex.org/ or contact INESS directly!

The Bureaucracy Index project was supported by the Friedrich Naumann Foundation.

Atlas Network provided a grant to EasyBusiness in support of the Bureaucracy Index project for Ukraine. Click here to learn more about grant opportunities.