Ukraine, Slovakia ranked most bureaucratic countries

Except for wartorn Ukraine, Slovakia has the most red tape in Central and Eastern Europe (CEE), according to the latest Bureaucracy Index, an annual report by the Institute of Economic and Social Studies (INESS).

The Bureaucracy Index measures the time and resources businesses must dedicate to compliance with government regulations. The 2024 edition highlights the persistent regulatory burdens faced by businesses across the region, with Slovakia topping the list for administrative complexity.

The INESS’s latest findings indicate that an average small Slovak enterprise spends 277 hours annually on bureaucratic tasks, significantly exceeding the regional average. Key areas contributing to Slovakia’s ranking include extensive reporting obligations, prolonged processing times for permits and licences, and complex labour market regulations. Business owners have cited tax compliance, employment paperwork, and sector-specific requirements as major constraints on efficiency and competitiveness.

Despite ongoing government pledges to reduce red tape, Slovakia’s position in the index suggests that progress has been limited. Analysts at INESS warn that excessive bureaucracy remains a critical factor impeding economic growth and investment. They argue that the high compliance burden discourages entrepreneurship and slows down business expansion, particularly for small and medium-sized enterprises (SMEs).

While Slovakia ranked highest for bureaucratic complexity, other countries in the region, including Czechia and Hungary, also exhibited significant administrative hurdles.

Poland top for ease of business foundation

For establishing an industrial operation, Poland was the easiest in terms of time consumption in 2024, with 19 hours of bureaucracy required to found a new business. This was the most time-consuming in Ukraine, where this task required 64 hours, complicated by the state of war. 

Slovakia ranked second worst in the bureaucratic difficulty of starting a business with 46 hours of red tape. Entrepreneurs in Georgia also needed over 40 hours. In Czechia this figure was 39 hours and in Hungary, it was 37 hours. To address these inefficiencies, the INESS advocated for policy reforms aimed at simplifying tax procedures, automating administrative processes, and expanding digital services.

The Slovak government acknowledged the need for reform, and is planning to introduce measures aimed at reducing redundant reporting and streamlining public sector interactions with businesses.

However, implementation remains a challenge, the Bureaucracy Index report adds. Past reform efforts have often been hindered by bureaucratic inertia and political considerations. Without decisive action, Slovakia risks continuing to deter investment and economic dynamism, while more agile economies in the region attract business activity.

Critical benchmark nears decade of reporting

The INESS Bureaucracy Index was founded in 2016 to establish a comprehensive list of bureaucratic burdens for SMEs. It compares Czechia, Hungary, Poland, Slovakia, Georgia and Ukraine, in cooperation with the Czech Liberal Studies Institute, the Hungarian Free Market Foundation, the Polish Civic Development Forum, the Ukrainian Institute for Economic Research and Policy Consulting and the Georgian New Economic School Georgia.

The index serves as a critical benchmark for policymakers, highlighting the need to cut red tape to enhance economic competitiveness. As Slovakia grapples with the impact of administrative burdens, businesses and industry groups continue to push for tangible reforms that would foster a more business-friendly environment.