Canadian small businesses dedicated 735 hours to regulatory tasks last year with more than 250 of those hours spent navigating governmental red tape, according to a new report.
This translates to a total of 92 business days lost to regulatory tasks and 32 days consumed by bureaucratic red tape, according to the report released by the Canadian Federation of Independent Business (CFIB) in partnership with Intuit QuickBooks.
The 2024 statistics represent a 58-hour increase from CFIB’s 2020 estimate of 677 hours. Time spent on red tape also rose significantly, jumping 35 percent from 189 hours in 2020 to 256 hours in 2024.
“Business owners lose an entire month’s worth of productivity to filling out lengthy or redundant forms, navigating mazes of government websites, and deciphering government jargon,” CFIB director of research Marvin Cruz said in a press release.
“That is crucial time that could be better spent on activities like training staff, planning business expansions, serving customers or even spending time with family.”
The annual cost of bureaucratic regulations comes in at more than $51.5 billion, with $17.9 billion attributed specifically to red tape. This marks a $5 billion surge from CFIB’s 2020 estimate of $45.4 billion.
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Small businesses have a heavier regulatory burden than their larger counterparts, resulting in costs that are more than five times greater per employee, the report said. Businesses with fewer than five employees spent $10,208 per person on regulatory compliance, while businesses with 100 or more employees spent $1,374.
The time commitment for compliance among small businesses was 198 hours per employee, while firms with a workforce exceeding 100 employees only required eight hours per employee, the report said.
The CFIB acknowledged that health, safety, and environmental regulations are necessary in the workplace, but said many others are excessive and yield little value.
When businesses are hindered by paperwork, permits, and compliance obligations, it results in a significant decline in productivity, wages, and overall employee morale, the report said.
Governments at every level should eliminate such regulatory barriers if they want to solve Canada’s productivity problem, Cruz said. Canadian productivity is the second-lowest in the G7, when expressed in terms of GDP per hour worked.
A notable 87 percent of small business owners said excessive government regulations greatly diminish their productivity and capacity for expansion, the report said.
Business owners told the CFIB that money saved from regulatory reductions could be used to expand operations, hire more employees, increase wages, and improve work-life balance.
The CFIB has developed a 10-point plan designed to minimize red tape and bureaucratic obstacles. The plan emphasizes the importance of assessing regulatory burden, prioritizing clear and straightforward language, and elevating regulatory and public accountability as a key political focus.
“Small business owners don’t get into business to be government compliance experts. Red tape discourages entrepreneurship, stagnates economic growth and overall, is a lose-lose situation for businesses and consumers alike,” CFIB economist Laure-Anna Bomal said in the press release.
“Imagine what an entrepreneur could do if they got just over a month back. If Canada wants to improve its productivity and economic competitiveness, it must put a renewed focus on cutting red tape.”
