New rules have a big cost for small businesses, Sant says

‘When new legislation is being mooted, like in the digital area, we all stress the need for regulations to maintain proportionality...In practice, new rules are being designed for the larger enterprises, and then get scaled down for SMEs’ – Alfred Sant

Labour MEP Alfred Sant
Labour MEP Alfred Sant

MEP Alfred Sant has taken new EU compliance rules to task, highlighting to the European Parliament how, on average, the costs to comply with new rules are relatively ten times higher for small businesses than they are for large enterprises.

Speaking a European Parliament joint debate on the 'State of the SMEs Union', the former Prime Minister noted how things had been hard all around among SMEs since the COVID-19 pandemic struck, and the new compliance rules are making matters worse.

He explained, “Beyond the steep drop in their value added, jobs provided by SMEs decreased by more than 1.4 million in the past year of COVID-19 crisis.

The session, attended by the European Commissioner for Jobs and Social Rights, Nicolas Schmit, focussed on efforts to reduce the administrative burden on SMEs within the context of the recently updated Better Regulation agenda, which aims to ensure evidence-based and transparent EU law-making based on the views of those that may be affected.

“When new legislation is being mooted, like in the digital area, we all stress the need for regulations to maintain proportionality,” Sant observed. “In practice, new rules are being designed for the larger enterprises, and then get scaled down for SMEs.

“Inherently, this means that rules carry a bias against small size, which should be continually kept in mind by legislation-makers. Applying the rules should not hinder SMEs’ capacity to grow and create jobs.”

Sant noted that more and more new rules are becoming necessary to address a wide variety of global challenges from climate change to technological innovation.

Welcoming the fact that the European Union is more thoroughly applying its ‘think small first’ principle, Sant stressed that:  “Inbuilt in the design of such legislation must remain the priority of helping SMEs become more resilient in the face of on-going challenges while minimising, simplifying and streamlining administrative requirements.”

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This article is part of a content series called Ewropej. This is a multi-newsroom initiative part-funded by the European Parliament to bring the work of the EP closer to the citizens of Malta and keep them informed about matters that affect their daily lives. This article reflects only the author’s view. The European Parliament is not responsible for any use that may be made of the information it contains.

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