This report examines the impacts of administration – including that caused by regulation – on SMEs, particularly looking at how much effort and cost these companies have to spend to comply with requirements. Across the eleven countries studied, the the size of the administrative burden varies considerably, but, on average, requires around 120 man-days and USD 50,000 per company. This is a significant amount of manpower (around 5% of the total for an average company) and a large cost. By reducing this effort, enterprises could be expected to be more productive.
We examine four questions, which are set out in the report. We find clear evidence that administration is a large burden on SMEs, and this should therefore be addressed. On average across all companies surveyed, around 5% of working time is lost to administration. The exact amount varies by country, but in all cases the potential loss in productivity (even when not taking into account economic multipliers) is large.
We further find that, for accounting tasks in particular but also across all administration, increasing use of digitisation and software solutions can lead to lower costs. Despite this, our third hypothesis is that SMEs currently do not make full use of digital administration options, and this is reflected in the evidence; some tasks such as HR and talent acquisition have a very low uptake. Finally, we identify that there are ways that governments and regulators can intervene, but it is necessary for policy measures to be keenly targeted.