EK’s Study: Regulation costs Finnish companies up to six billion euros in 2024
Regulation affecting businesses imposed costs amounting to billions of euros in 2024. The figures show that efforts to streamline regulation must be pursued both domestically and at the EU level.
According to a study by the Confederation of Finnish Industries (EK), regulation imposed annual costs of 5.6–7.0 billion euros on Finnish companies in 2024. Relative to GDP, the share of these regulatory costs is 2.0–2.5%.
“These figures show that by streamlining regulation and reducing overregulation, we can improve competitiveness and accelerate growth. It is very positive that this kind of thinking has gradually gained ground also at the EU level, and that the current European Commission has taken steps to simplify regulation. The Finnish government must also sharpen its approach to regulatory streamlining,” says EK’s Director General Jyri Häkämies.
Relative to turnover, the costs caused by regulation correspond to about 2.6–5.2% for SMEs with a turnover of 5–10 million euros. This can be compared to the average operating profit margin of 4–6%.
“Although some regulation has positive effects, this does not change the fact that regulatory obligations result in compliance costs — which are an expense to companies just like customs duties or tax increases. Obligations cannot simply be added without consequences for business success and growth,” Häkämies says.
The EK’s study included interviews with 19 companies of different sizes and sectors, as well as a survey of 238 companies.
According to Häkämies, policymakers should always consider whether a goal could be achieved in a way that imposes lower costs on companies.
“If, for example, a particular set of regulations costs Finnish companies over 300 million euros, as is the case with data protection rules according to the report, then reducing that burden by one-third could free up as much as 100 million euros for investments, innovation, and growth. That kind of potential is worth pursuing — and it doesn’t necessarily mean abandoning regulatory goals, but rather achieving them more smartly,” Häkämies says.
Häkämies also argues that ministries should be required to include, with every new legislative proposal, an impact assessment of the administrative burden and costs for businesses.
“If the proposal increases them, it should be sent back for revision — and either the proposal should be changed or equivalent savings should be found in existing regulation. This requirement should also apply when implementing EU legislation,” Häkämies says.
