Recruitment of Employees: Administrative Burdens on Slovenian SMEs in Comparison with Europe*

Article excerpt

In recent years, the issue of administrative burden on enterprises due to legislation has received much attention. Everywhere it is acknowledged that it is important to reduce and minimize this administrative burden as far as possible, because it hinders the development of enterprises and the growth of employment. In this paper we present the required procedures governing employment regulation, the administrative burden that results out of them, and finally we draw conclusions and make some recommendations for further action in government policy in the field of hiring employees. The research has been conducted on a representative sample of Slovenian enterprises and compared with the results of The 2001 ENSR Survey on SMEs.

In den letzten Jahren hat das Problem der administrativen Belastung auf Unternehmen aufgrund der Gesetzgebung große Aufmerksamkeit auf sich gezogen. Es ist allgemein anerkannt, dass es wichtig ist, diese Belastung so weit wie möglich zu verringern, weil diese die Entwicklung der Unternehmen und das Wachstum der Beschäftigung hemmt. In diesem Aufsatz zeigen wir die nötigen Abläufe zur Beschäftigungsregulierung auf und die bürokratische Last, die daraus resultiert und schliesslich ziehen wir ein Fazit und geben Vorschläge zur staatlichen Politik der Einstellung von Angestellten. Die Untersuchung wurde anhand einer Stichprobe unter slowenischen Unternehmen erstellt und mit den Ergebnissen der 2001 ENSR Survey on SMEs verglichen.

Keywords: SMEs / entrepreneurship / administrative burden / employment

1. Introduction*

In the last twenty years, the European Union countries have implemented various employment regulations which along with lasting administrative procedures present a burden for enterprises. They have a negative impact on their competitive position. It has been investigated that legal administrative burdens have an even more powerful impact on small new enterprises. The reason is their limited management resources and no specialist staff to understand and meet the legal requirements (OECD 2001: 21). On the other hand, the social importance of SMEs is becoming more and more recognized, because they are an important generator of employment. They represent over 99 % of all enterprises in Europe (as well as in Slovenia). Some 20.4 million SMEs employ 66 % of the total European workforce. Micro enterprises alone employ 34 % of the total European workforce (European Commission 2002a). This is why in recent years the major focus in European countries when specifying regulation is geared to liberalization of entry procedures that a start-up must bear before it can operate legally and, on the other hand, with the proper arrangements unburden the existing small enterprises.

The reason for research on administrative burden in hiring an employee has been chosen as the topic for last year's initiative of The European Observatory for SMEs, because it has been recognized that administrative burdens in the field of employment regulations substantially affect the recruitment decisions for 31 % of the approximate six million enterprises in Europe-19. These enterprises also show a statistically significant smaller employment growth than those enterprises that are only marginally affected by administrative burdens (European Commission 2002c: 7). With regard to this specific regulatory field the impact of administrative burdens on the employment decision to take on employees or not and therefore a possible impact on the growth of SMEs can be identified.

In this paper, we present the required procedures governing employment regulation, the administrative burden that results out of them, and finally we will draw conclusions and make some recommendations for further action in government policy in the field of hiring employees. For this reason our Institute for entrepreneurship and small business management has conducted an extensive research on a representative sample of Slovenian enterprises (see section 3). …