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Analysis of Administrative Barriers for SMEs in the Field of Labour Market Regulation

The regulation relating to development of small and business environment affect different economic categories at the macro and micro level. This paper concentrates on impact of employment protection legislation (EPL), especially hiring and firing rules on fostering small and medium-size enterprises (SMEs). Namely, overregulation of the labor market can discourage job creation and mobility of workers. Rigorous labor regulation is also connected with labor market segmentation and in such way reduces employment of vulnerable groups. Many aspects of labor regulations are considered problematic and time-consuming. By using, World Bank Doing Business measures of labor market regulations (hiring, working hours, redundancy rules and cost) our research will examine the relationship between labor market regulation and economic outcomes. In order to assess the current state of labor regulations of SMEs to remove administrative obstacles in Croatia we provided online survey in more than 700 SMSs. The SMEs were asked to project which administrative burdens represents the biggest administrative obstacle for their business. Our results of administrative barriers for SMEs in the field of labor market regulation, clearly indicate that size, age, sector and region have an impact on respondent’s perceptions. They show that medium-sized and young enterprises, enterprises from secondary sector and from Adriatic Croatia experience the highest extent of the administrative barriers in the field of labor market regulation.

Administrative barriers, SMEs, labour protection, labour regulation, Croatia

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