The Biggest Threat to Business? New Regulation

Union of Entrepreneurs and Employees asked Polish company owners about the new regulations and, in their opinion, obstacles entrepreneurs face today while doing business in the country. The vast majority of the poll takers indicated unstable legal provisions as the main source of their concerns. The research, conducted by Maison & Partners in cooperation with Ariadna’s research panel, was carried out among 282 SMEs. It is the second time such research has been conducted. The same poll was taken a year ago.

72% of the respondents said it is the constantly changing new regulations that are the biggest barrier to their business. Lack of stability means it is difficult for companies to make long-term plans, for example, those concerning investment projects. This is not a new problem. The existence of the so-called “legal inflation”, i.e. excessiveness of the new law in Poland (often not necessary and clumsily written) has been pointed out by Supreme Audit Office (NIK) and the Supreme Court.

Another big problem that brings new regulations may pointed out by Polish entrepreneurs is excessive bureaucracy and high employment costs. The latter is especially painful for smaller enterprises, which often simply cannot afford to employ new staff members even if they want to. Taxation constitutes almost a third of a person’s salary in Poland. Labour law is seen as unfriendly for business and legal provisions relating to enterprises as unclear and complicated. Other barriers to business are high taxation, state institutions, and a slow judiciary.

Researchers also asked about the biggest barriers to investment using new regulations. The most important one is insufficient income. Risk is also an important factor deterring Polish entrepreneurs from investing. The third biggest obstacle, in the eyes of the poll takers, is negative market trends.

Jacek Cieplak, head of the law and legislation department of the Union of Entrepreneurs and Employees, noted that all those obstacles motivate some entrepreneurs to move the location of their businesses to Slovakia or the Czech Republic, which in the view of many people offer more favorable conditions and better legislative environment for doing business than those in Poland.