Cost of the Cumulative Effects of Compliance with EU Law for SMEs

Better Regulation Meeting
Vilnius, 6 June 2013
Study objectives and research plan
Existing research on measuring the cost of EU regulation
Methodological issues and questions for discussion
Study objectives
Develop an appropriate methodology to assess the cost of the
cumulative effects of compliance with EU law for Small and Mediumsized Enterprises (SMEs).
Identify and analyse the current situation of SMEs in Europe regarding
cost generated by the compliance with existing EU legislation and its
national implementation and application in five sectors. The intention
is to apply this methodological approach to commercial activity inside
a given Member State, cross-border to other Member States as well as
cross-border outside the EU.
Assess cumulative effects on SMEs of complying with regulatory
requirements of different natures and scopes incumbent on individual
companies in specific economic sectors, and comparing the cost
thereof in different countries.
Research plan
Scope of the study
The research focuses on 9 Member States - Germany, Italy, Poland, Spain,
Estonia, Sweden, Ireland, Slovenia and Slovakia.
Within each country, 5 sectors have been selected that fulfil the following
Present in all Member States covered by the study
“Vital” to those economies
Similar relative size in the Member States
Sufficient absolute size to enable robust sample sizes
Data about the economic activity must be available
The selected sectors are: Food and Drink/Food Retail, Manufacture of
Machinery and Equipment, Construction, Computer and Information
Services, and Transport
Existing research
There is quite a lot of existing research on the costs and effects to business
of EU laws but very little on the cumulative costs and effect.
As part of Phase 1 of the study, CSES has carried out a literature review to
identify methodological approaches/options for assessing the cost of the
cumulative effect of EU laws. In existing research, four generic
methodologies were identified:
Business perception surveys
Compliance cost/benefit studies
Cross-national surveys
Qualitative studies
The first approach is the most common. Each approach has its advantages
and disadvantages. They are to a certain extent complementary and it is
possible to combine elements of each approach.
Methodological issues
Which costs associated with EU regulations should be included in an
assessment - direct financial costs, opportunity and psychological
compliance costs, long term structural costs, etc?
Many existing studies ignore the effects/benefits of regulation. Which effects
should be included and how can the dynamic effects of regulation be best
assessed, for example, where regulation stimulates adaptation in business
processes and products?
How should the concept of cumulative effects be understood - the
combined effect of different EU laws; EU and national laws; cumulative
effects on SMEs over time?
How can the costs/effects on firms at different stages in the business
lifecycle (start up, expansion, etc) be captured? Should an assessment of
cumulative costs/effects seek to capture the wider value chain, e.g. the
costs/effects on firms involved in stages in the food processing/retailing?
SMEs generally find it difficult to assess how EU laws affect their activities.
Which approach to obtaining information from SMEs is best? Possibilities
SMEs might be asked an open-ended question regarding the EU
regulations they believe affect them or prompted to answer specific
questions about particular EU regulations.
An alternative approach is to focus on ‘events’ in the business lifecycle
(e.g. hiring an employee, developing new product), asking SMEs how
EU regulations affect they way they handle these ‘events’.
Given the complexity of the subject matter, and the focus of research on
particular EU laws/sectors/countries, to what extent is it possible to
produce findings that are likely to be more widely applicable?

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