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The European Commission takes initiative to reform public administration and boost economic growth

European Commission - MEMO/13/935   29/10/2013

Other available languages: IT

European Commission

MEMO

Brussels, 29 October 2013

The European Commission takes initiative to reform public administration and boost economic growth

In many Member States, inefficient public administration remains one of the main obstacles to industrial competitiveness and economic growth. The Commission has made public administration reform one of its top five economic priorities for the last two years, as set out in the Annual Growth Survey.

To focus more closely on the issue, the Commission hosts today a high-level conference in Brussels to spur a debate on how public administrations across Europe can become more efficient and transparent. At the conference, European Commission President José Manuel Barroso and Vice Presidents Antonio Tajani and Maroš Šefčovič discussed with industry leaders, ministers, policy makers and advisers about how to make administrations across Europe more business-friendly.

The conference allowed them to exchange ideas and experiences about how such difficulties can be overcome. During the conference, Vice President Tajani also launched an award for best public procurement of innovative goods and services, the first award of this kind at the European level.

What is the problem?

In order to prosper, businesses need an efficient, cost-effective and high-quality public service where decisions are made without undue delay, and where there is certainty and stability when it comes to laws and the length of procedures. However, overall government effectiveness in the EU has slightly fallen in 2012 compared to the previous year, according to the latest data. Thirteen Member States either maintained or improved their position relative to 2011, while another 15 Member States fell in their ranking. Four Member States –Italy, Greece, Bulgaria and Romania – are performing very poorly (See figure 1).

Figure 1: Government effectiveness

Note: The Worldwide Governance Indicators summarise information from 30 existing data sources on views and experiences of citizens, businesspeople and experts in the public, private and NGO sectors. Government effectiveness captures perceptions of the quality of the public service, its degree of independence from political pressures, the quality of policy formulation and implementation, and the credibility of the government’s commitment to such policies (scale 0 to 100, 100 = best).

Data source: World Bank – Worldwide Governance Indicators (2011; 2012)

The differences between Member States range from time and cost required to start a company to the number of hours required to comply with tax return rules. For example:

  1. Businesses need to be able to start up a company at a low cost and quickly. The Competitiveness Council of May 2011 stipulated that Member States should ensure that companies can be set up in three days at a maximum cost of €100. While progress has been made, this target has not been reached. For example, in Belgium, Portugal, the Netherlands and Hungary it takes less than five days to start your own company. But in Malta, Poland, Spain, and Austria it takes more than 20 days (see figure 2). On average it still takes 5.4 days at a cost of €372.

Figure 2: Time and cost required to start a company

Source: World Bank – Doing Business (2013)

  1. Businesses face cumbersome tax and administrative procedures, which means they spend a long time compiling tax returns. This can vary from 60 hours to more than 400 hours in some countries. For example, in Luxemburg, Ireland, Estonia and Finland it takes less than 100 hours to comply with tax return rules. However, in the Czech Republic and Bulgaria, it takes more than 400 hours (see figure 3). Overall, the average EU company spends 193 hours per annum on tax compliance procedures.

Figure 3: Number of hours needed to comply with tax return rules across the European Union

Sources: Chart adapted by the Commission based on the PwC study Paying taxes 2013, The Global Picture

  1. Public procurement can contribute to innovation and increased efficiency in the government sector. But public authorities remain risk-averse and lack expertise and political support to purchase innovative goods and services. Countries that see high levels of innovation in public procurement are Denmark (48% of companies), Cyprus (45%) and Malta (40%), while Hungary has only 6% of companies selling innovative products or services to the public sector (see figure 4).

Figure 4: Government procurement as driver of business innovation

Sources: European Public Sector Innovation Scoreboard (2013) based on Innobarometer 2010

Exchanging ideas and best practices

The aim of the conference, The Path to Growth: For a Business Friendly Public Administration, is to identify key difficulties experienced by industry in dealing with public administrations, but also to exchange ideas and experiences about how such difficulties can be overcome and to showcase concrete achievements and best practices in public administrations among Member States. For example:

  1. To fully exploit the benefits of e-government, Denmark and the United Kingdom have taken steps towards making "online" the default channel for certain services.

  2. To increase the level of predictability and legal certainty, the Netherlands, Slovakia, Sweden and the United Kingdom have implemented a system in which all new amended regulations come into force on a limited number of pre-defined dates each year.

  3. To reduce the number of new regulations for businesses, the government in the United Kingdom has operated a "one-in, two-out" rule since January 2013. Every new regulation that imposes a new quantifiable burden on firms must be offset by removing or modifying an existing regulation to double the savings.

  4. In 2012, Spain launched an express licence regime for retail outlets. This permits retail businesses of up to 300 m2 to start operating without any local authorisation. Instead, businesses only have to provide the administration with a declaration confirming their compliance with relevant legislation and requirements. The government now plans to extend this regime to businesses of up to 500 m2.

  5. 74% of Europeans believe that the EU generates too much red tape. In response to that concern, the Commission has made a concerted effort over the past few years to streamline legislation and reduce regulatory burdens. For example, in its recent Communication on Regulatory Fitness and Performance (REFIT) the Commission sets out in a concrete way, policy area by policy area, where it will take further action to simplify or withdraw EU laws, ease the burden on businesses and facilitate implementation. It is the result of a screening of the entire stock of EU legislation. (IP/13/891). Last week the European Council endorsed the Commission’s REFIT communication calling on the Commission to submit further proposals and look forward to agreeing further steps in this direction.

The main conclusions of the conference will assist the Commission and Member States in further developing policy guidance for modernising public administration and increasing industrial competitiveness across the EU, which are priorities in the EU's Annual Growth Survey.

Encouraging innovation in public services

To fully harness the opportunities offered by public procurement (19% of Europe’s GDP) towards innovative goods and services, during the conference Vice President Tajani launched the competition for the First Public Procurement of Innovation Award and the new online Procurement of Innovation Platform. The aim of this new initiative is to promote the procurement of innovative goods and services and to provide a forum in which public authorities can exchange ideas and find guidelines on this topic.

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