Over the past 16 months the government and its ministries have reduced the bureaucratic burden by an impressive EUR 137.047 million, while at the same time it grew by EUR 4.7 million, which slightly reduces the net balance of this reduction, explained Jānis Endziņš, head of the Bureaucracy Reduction Action Group, presenting information compiled from State Chancellery (VK) data at a sitting of the Saeima’s Committee on Public Administration and Local Government Affairs. He noted that the crucial thing is to understand whether the bureaucratic burden is rising or falling, and that this measurement is carried out after every Cabinet of Ministers sitting. Endziņš explained that the measurement follows a system developed in the Netherlands and internationally recognised (by the OECD) – a formula used to calculate the burden a given piece of regulation places on the whole environment over the course of a year – the methodology also used by the European Commission. At the expert level, it is first determined how much time (30, 45, 60 minutes or more) is needed to prepare and fill in a single form, which is then multiplied by the number of times per year the form must be filled in (if once a month, multiplied by 12, and so on), multiplied by the average hourly wage of the employee filling in such a form, and multiplied by the number of entities obliged to submit such a report.
“That gives us the price businesses pay in a single year,” Endziņš said, explaining that this calculation shows the monetary impact of filling in just one form: “In fact, filling in a single form over the course of a year costs a considerable sum of money – not from the state budget, but money that is ‘burned’ by private businesses or residents in order to meet regulatory requirements.”
Best performer – the Ministry of Economics
State Chancellery data show that since 1 January 2025 the best results have been posted by the Ministry of Economics, which by 22 April 2026 had cut the bureaucratic burden by EUR 135.36 million. This was achieved through changes in the construction and real estate sector. The second-largest reduction was achieved by the Ministry of Transport – just under EUR 70,000 – and the Ministry of Health – just over EUR 64,000. The Ministry of Finance reduced the burden by EUR 11,438. At the same time, the bureaucratic burden grew by EUR 2.845 million at the Ministry of Agriculture, by EUR 1.275 million at the Ministry of Climate and Energy, by just over EUR 21,000 at the Ministry of Culture, and by EUR 19,000 at the Ministry of Smart Administration and Regional Development. The change in bureaucratic burden was assessed at zero for the Ministries of Welfare, Education, Justice, Foreign Affairs and Defence. “Some ministries are still dodging the issue, and to make sure the calculation captures everything, the government has adopted amendments to the Cabinet of Ministers’ rules of procedure providing that any legislation submitted by the government that affects the administrative burden must be coordinated with the State Chancellery – which means that in future we will be able to pull the handbrake on projects for which the change in bureaucratic burden has not been calculated,” explained Endziņš, adding that it is impossible to do without administrative burden (regulation) altogether: “The goal is to reduce the existing burden, make it harder for new burden to arise, and ensure that every institution manages its own affairs.”
Saeima’s work goes uncounted
Oļegs Burovs, chair of the Saeima’s Committee on Public Administration and Local Government Affairs, asked about the methodology for counting the bureaucratic burden, since, on a proposal by five MPs, the committee is currently considering amendments that would allow construction to be split into stages, saving three to six months and huge sums of money. “There are also proposals from several Saeima members concerning other laws (the Archives Law, for instance) that reduce bureaucratic requirements, but if these are not included in the burden balance, the result looks different,” Burovs stressed. Endziņš acknowledged that the Saeima’s own activity (adopting amendments to existing laws or new ones) is not currently included in the calculation of the administrative burden, but that it should be.
Burovs asked who should be entrusted with calculating the Saeima’s administrative burden. Endziņš promised to submit proposals on how and by whom this should be done. Saeima member Andrejs Ceļapiters pointed out that more than 90% of the administrative burden originates in the ministries and the Cabinet of Ministers, and is approved by the Saeima without the burden even being assessed – something that should be evaluated by the State Chancellery – while the rest comes from MPs’ own initiatives, whose impact on the administrative burden could be assessed by the Saeima’s Analytical Service. Endziņš also pointed out that the Cabinet often sends a bill to the Saeima that, during its passage, accumulates numerous and varied nuances that were not present when it was considered by the government, so that the original assessment of the administrative burden changes.
Institutions’ internal bureaucracy is “burning” state money
Saeima member Ingmārs Līdaka pointed out that, alongside the impact of the administrative burden on residents and businesses, there is also a huge internal administrative burden inside state institutions (ministries). As an example, he cited VARAM, which converted the National Botanic Garden from a derived public entity into a direct state administration institution, attaching it to the Nature Conservation Agency.
“Before these changes, an invoice for a school excursion could be issued on the spot by the bookkeeper; now four sign-offs are needed before it reaches the Treasury, which then calls to ask what exactly the invoice was issued for, so that getting the four sign-offs takes four days,” Līdaka explained. He pointed to another example of internal bureaucracy: to buy ten AA batteries, an institution’s employee used to be able to go to a shop, buy them, bring the receipt to bookkeeping and be reimbursed for the purchase; now three sign-offs are required, a price comparison of the batteries between different retailers has to be carried out with a formal record, and a supply contract is also needed.
“That’s how we’re fighting bureaucracy. What one person used to be able to do in 15 minutes now takes four or five people four days, and that’s how we’re ‘burning’ budget money that need not be spent that way,” Līdaka said. Burovs agreed that any school head teacher could say exactly the same thing. Endziņš noted that the impact of local government regulations, which also create an administrative burden, is not yet being assessed, and that this is something that will need to be worked on.
A billion euros to cut
In Europe, the administrative burden is estimated at between 4% and 12% of GDP, which is already a huge range. According to expert assumptions, the bureaucratic burden in Latvia is above the European average.
“If we assume, based on expert estimates, that the bureaucratic burden in Latvia amounts to 10% of GDP, then according to 2025 data the total administrative burden is EUR 4.3 billion,” Endziņš explained. If Latvia wants to cut it by 25%, that would mean, in money terms, a reduction of just over one billion euros. “That would be the optimal amount, one that should be ‘gnawed away’ over roughly three years,” Endziņš said, adding that, on the one hand, this looks like a very large figure, while on the other hand it is not state budget money but time spent by residents and businesses, and time costs money. “Our goal is to be able to report, by 31 December 2028, a reduction in the bureaucratic burden of just over one billion euros; at present we can conclude that 13% of the plan has already been achieved, and ten more reforms still need to be carried out, of the kind already under way in construction and real estate, in order to reach that target in monetary terms,” Endziņš explained, noting that one of the smaller tasks under way at present is reviewing and eliminating reports businesses are required to submit.
“I printed out how many different reports a single car repair shop has to prepare and submit in a year, and weighed it – 1.55 kilograms; there are no pictures in there, just arrays of data,” Endziņš said critically, pointing out that this more-than-a-kilogram of reports ‘burns’ the money of private business owners, because someone has to compile, write up and submit all that data.
Artificial intelligence to be put to use
At the sitting of the Saeima’s Committee on Public Administration and Local Government Affairs, a proposal was raised for the Bureaucracy Reduction Group to develop, together with the Artificial Intelligence Centre, an analytical tool that would make it possible to identify cases where mandatory EU requirements have been transposed into Latvian legislation in an excessive or expanded form.
Some areas remain untouched
“It is hard to judge a fall in the administrative burden of more than EUR 130 million, since a survey of our members shows nothing of the kind, though it is a positive thing if real estate developers are given the chance to carry out projects faster,” says Kaspars Gorkšs, LDDK director general, noting that a reduction in the administrative and bureaucratic burden should be reflected in a smaller workload and less time spent by businesses, residents and state institutions alike.
“If the state does not ask for something, businesses do not prepare the relevant documents and do not spend time and money on them; in turn, the relevant institution does not request or check those documents either, and state budget funds are saved – which, given the budget deficit, combined with rising interest rates on servicing the state debt and society’s constantly growing need for healthcare, security and the like, is very important if we are to avoid having to return, before long, to raising tax rates or cutting or scrapping tax reliefs,” Gorkšs says, pointing out that the administrative burden is created by several layers – EU directives and regulations, which Latvia often transposes with additional requirements on top; legislation drafted by the Latvian government and its subsequent amendments, which are often made by the Saeima; and internal public administration forms, which govern the operation of institutions, including local governments and their bodies.
“In a situation where the legacy the previous government has left for the coming years is a state budget with negative fiscal space, cutting government spending and cutting bureaucracy are two key ways of finding the funds for growing needs such as security and healthcare,” Gorkšs stresses, adding that despite the decline in Latvia’s permanent resident population, the shrinking of the economically active population and the ageing of society, the number of filled posts in the public sector has remained unchanged; general government expenditure in Latvia stood at 46.1% of GDP.
“To find the funds, structural changes will be needed, eliminating and consolidating functions and also cutting posts,” Gorkšs says, noting that the Latvian government, like the EU as a whole, has committed to reducing the bureaucratic burden by 25%, which has a significant bearing on the competitiveness of EU businesses outside the EU.
A European dimension
Excessive bureaucratic burden and its negative impact on the competitiveness of small and medium-sized enterprises in the EU was addressed in an opinion issued by the European Economic and Social Committee (EESC) in February last year.
The EESC welcomes the European Commission’s initiatives to reduce the regulatory burden, but concludes that small and medium-sized enterprises in particular face double and triple sets of regulatory requirements and penalties, driven by a wave of additional regulation on top of requirements already in force. Empirical studies, business surveys and the reports by Mario Draghi and Enrico Letta all confirm that the bureaucratic burden keeps growing at the expense of consumers, productivity, job creation and global trade.
An assessment of how the Commission has implemented its voluntary 2019 commitment to the ‘one in, one out’ principle also shows that the EU legislative process is overloaded. The European Parliament, which typically tightens the stringency of legislation, complained that this principle was not being observed, a point also raised in the Draghi report, which calculated a ratio of 2.5 to 1. Small and medium-sized enterprises and their employees in manufacturing, hospitality and agriculture in particular complain about the time and cost burden created by excessive bureaucracy. In 2023, 55% of SMEs said that regulatory obstacles and the administrative burden were their biggest problem. Surveys carried out at national level have confirmed a significant rise in the costs and time that have to be devoted to increasingly complex bureaucracy.
The rapid rise of bureaucracy as a factor influencing where businesses choose to locate is also reflected in the Draghi report, which points to the regulatory asymmetry EU businesses face compared with competitors in China or the United States. “The regulatory burden on European businesses is heavy and keeps growing,” Draghi writes. According to a survey by the European Investment Bank, 61% of European businesses consider (excessive) regulation to be a major long-term obstacle to investment.
Any legislation regarded as excessive creates additional costs for businesses, diverting funds that could otherwise be used for innovation and investment in human capital to raise added value, potentially increasing both business profits and employee compensation, the EESC opinion states.
In the 2024 edition of TOP 500, Toms Grīnfelds, chairman of the board of the Association of Metalworking and Engineering Industries, stressed that European bureaucracy and excessive regulation is precisely the central issue raised in the Helsinki Declaration adopted by the council of the European engineering industries association ORGALIM on 30 October 2024, which draws attention to the fact that between 2019 and 2024 the United States adopted 3,500 pieces of federal legislation, while the EU adopted 13,000 – almost four times as many.
Start with layered requirements
Uldis Cērps, chairman of the board of the Finance Latvia Association, has sent the Bureaucracy Reduction Action Group proposals for cutting bureaucracy, noting that the competitiveness of the banking system is falling further and further behind the global financial centres. One of the main reasons is excessive regulation of the banking sector, which negatively affects the price of funding, its diversity, access to financial services, and banks’ ability to invest in innovation and digital development. This applies fully to Latvian banks, which, on top of EU regulation, are also subject to Latvian national regulation – a phenomenon known in English as ‘regulatory gold-plating’. Additional requirements both drive up the cost of financial services in Latvia and fragment the EU single market, making it harder for new entrants to come into the Latvian market.
The Finance Latvia Association is focusing on substantial improvements to banking regulation. Specifically, when transposing EU legislation, additional requirements (regulatory gold-plating) should be avoided, and requirements should be introduced only to the minimum extent set by the EU.
The countercyclical capital buffer, the level of which is decided by Latvijas Banka, should be set at 0% in the middle of the economic cycle (during normal economic development, when there are no signs of either overheating or crisis). Changes to EU regulatory acts should be pursued to make it possible, in the event of financial difficulty, to convert the Pillar 2 capital requirement (P2R) from a minimum requirement into a buffer. For banking groups whose subsidiaries operate in Latvia, regulatory barriers to the mobility of capital and liquidity within the group should be reduced. Cērps calls for the introduction of a ‘report once’ principle, under which banks would provide information to state institutions only once, after which state institutions would exchange that information among themselves. Reporting requirements to Latvijas Banka and other state institutions should be consolidated. Banks should be able to access, through a single channel, the data they need from state registers for their operations. The risk-based approach to preventing money laundering and terrorist financing should continue to be applied consistently and in full – the volume of formal requirements for low-risk clients should be reduced; and when the new EU legislative package on preventing money laundering is transposed, no additional national requirements (regulatory gold-plating) should be applied.
It should be recognised that fully digital processes and business models are now the basic standard in banking services. Regulation requiring banks to open branches in the regions on a mandatory basis should be abolished. Banks should be allowed to decide for themselves where to open branches, and to decide whether to keep open the more than 20 branches that were opened under the mandatory requirement. Advertising restrictions on banking services, particularly lending services, should be lifted. Only the requirements of EU legislation should be transposed, without additional national requirements (regulatory gold-plating). Outdated requirements and other rules should be reviewed and repealed on an ongoing basis.