Photo: Flickr user Victor1558 / Creative Commons

From time to time, our media report that Slovakia has once again fallen in another competitiveness ranking. The papers write about it for a day or two, the TV stations show a few reports, opposition barks a bit, the government refuses the criticism and challenges the results. However, the topic usually does not live to see its third day in the media. It is replaced by other, undoubtedly more urgent and more interesting headlines. The next results of a different ranking will trigger the same sequence of events. The same reactions, the same course, the same duration. And that’s how it always goes.

The responsible people in ministerial positions, who are being replaced ever so often, all have one thing in common: they do not listen and they do not act. How else can you explain the fact that they are being notified of many problems for years and they do nothing about it or when they do something, they make it even worse? But you do not need to look for evidence only in foreign institutions’ publications.

Already in 2006, a number of employment and business organizations have joined forces and published a “Comprehensive Audit of Barriers of Doing Business in Slovakia.” The project’s scope and detail of the analysis is beyond compare. It virtually covered all the business legislative framework since 2000. Among other issues, it states that “the average number of legislative measures published in the Collection of Laws from 2000 to 2005 was 663 per year.” Therefore it is not surprising that half of the respondents in the surveys conducted on the Slovak businesses claim that “in their industry you cannot do business while never violate any law.” Majority of the respondents also complained about the frequent changes of in the legislation. Such statements were confirmed with the facts; Between 2000 and 2005 there were 136 amendments to the ten most important laws governing business in Slovakia. This means that a significant change in the business legislative framework occurred on average about once every two weeks.

In other words, the main challenges of the business environment are the excessive spread and limited quality of the passed legislation. If you expect that these findings will trigger an interest of the national authorities with an attempt to remedy, you would have to live in different country than in Slovakia. We have our own way to deal with such criticism. It is customary to imply that the entrepreneurs have always moaned for something and they refuse to see the good things the government has done.

And so we have “rediscovered” the audit of the business environment of 2006, and we examined the development of legislative and regulatory framework in Slovakia in the period of 2006 – 2012. The aim was not only to recall the frequent changes in legislation that significantly affect the business environment, but particularly to provide the politicians and state officials with detailed information about the costs of regulation and excessive administrative burden on business. The primary conclusions are self evident; the total number of regulatory obligations in the period increased from 1470 to 1670, whereas the analysis focused only on the ten most important legal standards. The number of regulatory obligations decreased at only one of them. The total cost of regulation ratio to GDP stands still at 20%.

It is well known that reducing the regulatory burden has a positive impact on productivity and competitiveness of firms, and thus on employment and economic growth of the country, states the conclusion of the most recent analysis. However, it is not known why politicians in our country and the EU nevertheless continue to implement the excessive regulation.

Translation: Jakub Jurga and Zuzana Putzová