Is bureaucracy overwhelming craftsmanship?

Is bureaucracy overwhelming craftsmanship?

A current study by SME Research Austria, commissioned by the Federal Division of Trade and Crafts of the Austrian Chamber of Commerce (WKÖ), clearly shows the extent of the burden: Austria's trade and craft businesses spend around 4.3 billion euros annually on bureaucratic requirements. Around 70 million working hours per year are lost, which corresponds to around 42,190 full-time positions and almost 6.6 percent of the total personnel capacity in trade and craft. According to the survey, 70.9 percent of companies reported an increase in bureaucratic burdens in the last three years. However, only 0.4 percent of companies reported noticeable relief.

Additional pressure for the industries

Companies find the increasing documentation and reporting requirements particularly stressful, especially in labor, environmental and tax law. These have not only increased in number, but are often complex to implement or overlap in terms of content. New challenges also arise from sustainability and EU regulations. Laws such as the EU CSR Directive on sustainability reporting obligations, the Supply Chain Act or the EU Deforestation Regulation bring additional requirements. Small and medium-sized companies in particular feel overwhelmed by this. Tax and financial burdens also pose a problem. Different collective agreements, complicated payroll accounting and differing requirements in the individual federal states increase the effort and the risk of errors, which can quickly become expensive. In addition, there are lengthy approval procedures and approval processes for operational facilities, energy issues and company start-ups, which inhibit entrepreneurial dynamism.

First government measures

The tradespeople and their representatives are already putting forward concrete suggestions for relief. A first step was taken with the government's package for medium-sized businesses: from July 1, 2025, the standard consumption tax (NoVA) for light commercial vehicles in class N1 will no longer apply, and the requirement to print out receipts up to an amount of 35 euros will be abolished. Approval procedures in the areas of operational facilities, energy and company start-ups are also to be accelerated in the future.

Demand for structural reductions in bureaucracy

The Austrian Chamber of Commerce is also calling for a broad-based stop to bureaucracy. According to estimates, reducing the additional bureaucratic effort by just ten percent could save around 430 million euros in costs and make around 4,200 full-time employees productive again. There are also calls for simplification of reporting obligations and EU regulations. In particular, SMEs should be exempt or at least relieved from mandatory sustainability reports and certain regulations, such as the Supply Chain Act. An adjustment to the implementation of the Corporate Sustainability Reporting Directive (CSRD) is viewed as urgently necessary. Companies also demand more legal certainty and clarity in bureaucratic procedures. Regulations, requirements and sanctions must be understandable and clear in order to keep risks calculable and avoid unnecessary duplication.

Europe in view – more clarity for SMEs

Although the federal government has decided to provide initial relief with the medium-sized business package, the tradespeople are skeptical about whether these measures are sufficient - especially in view of the continuing increase in EU regulations. In any case, European proposals to streamline certain reporting obligations and regulations are being received positively, especially if they disproportionately affect SMEs.

What has to happen now

To ensure that reducing bureaucracy in the craft sector does not remain just lip service, several necessary measures are emerging: These include legal impact assessments that specifically quantify the impact of new regulations on small businesses. A cross-state harmonization of regulations is also required in order to avoid contradictory requirements. The digitalization of administrative procedures should be carried out with as little additional administrative effort as possible and with a high level of user-friendliness. Existing regulations should be regularly reviewed for efficiency and relevance and, if necessary, streamlined. In addition, staggered requirements and exceptions are needed for SMEs, particularly in the areas of the environment, sustainability and reporting.

Relief as an opportunity for innovation

For Austrian trade and crafts, bureaucracy is not an abstract problem, but a daily reality. The burden is high – in money, time and lost productivity. The government's initial measures are bringing relief, but there is still little noticeable impact in many companies. If Austria wants to survive in international competition, substantial, targeted and lasting simplifications are now necessary. A sustainable reduction in bureaucracy could not only reduce costs, but also promote innovation and employment.