A year and a half ago, together with members of the Employers' Confederation, we began mapping out excessive administrative burdens, legal regulations that hinder business development, and other unnecessary bureaucracy. The level of engagement from employers was impressive: more than 250 issues requiring change were submitted, ultimately forming 140 concrete proposals.

Last spring, the government then established an Efficiency and Economic Growth Council under the Government Office, entrusting its leadership to entrepreneurs and involving all ministries. In addition to employers, the council gathered around 750 proposals from business associations and other stakeholders to reduce unnecessary administrative burdens.

In just over a year, 609 of these proposals have gone through the government, while 156 are still being analyzed in ministries. Of those discussed, around 500 have been supported by the government, and some have already been approved by parliament and enacted into law. This shows that significant changes can indeed be achieved within a year — and that this momentum should now be maintained.

Data is the biggest concern

The largest number of proposals focused on reducing reporting requirements. Businesses submit large amounts of data to the state (applications, statistical reports, etc.), but much of this information already exists in government registers or can be derived from existing sources such as accounting software or tax declarations. Submitting the same data multiple times wastes time and resources.

To address this, the state has begun systematically implementing data-driven reporting. Instead of requiring businesses to compile and submit reports themselves, the government will automatically generate them from existing data. The guiding principle is "ask for data only once" — meaning that if the government already has the information, businesses should not have to provide it again.

This step can be considered historic, as it fully leverages the capabilities of digital information systems and advances Estonia's e-government to the next level. In some cases, resistance from businesses themselves to sharing data has been an obstacle, but this is the only way to reduce administrative burdens and, in turn, lower public costs and tax pressure.

Delays in planning processes drive up prices

A second major area of administrative burden hindering economic development is related to planning and permitting processes. For years, development projects and investments have been delayed by slow procedures, which have in turn limited business growth, reduced job creation, and increased housing costs by thousands of euros per square meter.

In May, parliament adopted amendments to the Planning Act to address these issues. In the future, detailed plans will be required in fewer cases, and procedures will become faster and more flexible. At the same time, the Land and Spatial Planning Board will, for the first time, conduct substantive oversight to ensure municipalities process plans lawfully and on time.

 Another bill to simplify planning is ready and undergoing coordination, and amendments to the Building Code have passed their first reading in parliament. These are all significant, reform-scale changes.

Labor shortages and flexibility

A third area where the government has made historic changes concerns one of Estonia's biggest weaknesses — shortages of workers with the necessary skills. This is not just an employer issue, as the size of the workforce directly affects public service funding and, for example, pension levels.

More people are entering the labor market who can or wish to work only part-time or in more flexible arrangements. Estonian labor law urgently needed updating to address this. Parliament has now passed amendments to the Employment Contracts Act that allow for more flexible working hours, as well as an exception enabling the recruitment of foreign workers in sectors facing skilled labor shortages.

Additional proposals and progress span many areas, from occupational safety and data protection to abolishing the alcohol register and easing audit requirements.

Every rule should be questioned

This clean-up effort should also help shift mindsets. While many rules may once have been necessary, each new regulation should be carefully examined: is it truly needed and beneficial for Estonia today?

Much of this work was prepared by officials at the Ministry of Economic Affairs and Communications. Based on the results, it can be said that the current Minister of Economic Affairs, Erkki Keldo, is the right person in the right place. He has managed to get his team operating effectively and to prepare necessary legislative changes quickly.

While the progress made is encouraging, it should only be the beginning — because much of the administrative burden today originates from the European Union. The government supports the principle that ministries should adopt EU requirements only to the minimum extent necessary, but the pace of new directives and regulations continues to undermine business competitiveness.

The cost of unnecessary bureaucracy in the European Union is estimated at €150 billion — roughly equivalent to 3.5 times Estonia's economy. Although the European Commission has pledged to reduce administrative burdens on businesses by at least a quarter, progress so far has been more incremental than transformative, with several proposals stalled within the European Parliament, the Council, or member states.

For example, BusinessEurope — which represents more than 20 million European employers, including the Estonian Employers' Confederation — submitted nearly 140 proposals to the Commission, of which only 7% have been taken into account.

A call for EU-level action

BusinessEurope leaders have recently called on EU leaders to follow through on their promises to reduce bureaucracy. This requires removing major barriers to cross-border business within the single market, completing ongoing simplification packages, pausing the introduction of new burdensome rules, and reviewing all existing EU legislation. One particularly pressing issue is complex environmental regulations, the simplification of which is widely awaited by businesses across Europe.

It is also important to consistently apply the principle of "one in, one out," meaning that at least one existing rule should be eliminated for every new one introduced. Such discipline helps prevent the gradual return of bureaucracy and protects the progress already made.

Excessive bureaucracy acts like a hidden tax: it consumes time and money, deters investment, weakens competitiveness compared to markets outside the European Union, slows innovation, and disproportionately burdens small businesses. For this reason, alongside national efforts, bold action is also needed at the EU level to cut unnecessary red tape.

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