Small businesses pay five times more per employee than larger businesses
January 22, 2018 – The overall cost of regulation for Canadian businesses is $36.2 billion, $10 billion of which can be considered unnecessary, redundant or overly burdensome “red tape”. This is the finding of the latest research from the Canadian Federation of Independent Business (CFIB) being released on the first day of CFIB’s annual Red Tape Awareness Week.
“Many governments across Canada are taking action to control the cost of red tape. The great news is, it’s starting to work but so much more needs to be done,” said Laura Jones, Executive Vice-President and Chief Strategic Officer.
Businesses with fewer than five employees are hardest hit, spending $6,744 per employee complying with government regulation. In contrast, businesses with 100 or more employees are spending only $1,253 per employee. The costs of regulation on Canadian businesses also continues to be significantly higher than costs on businesses in the US.
“Red tape is a huge hidden tax on all Canadians but it’s small business owners who are feeling the most pain. They are on the front lines, frequently dealing with frustrating red tape including confusing language, processes that are longer than needed and rules that just don’t make sense,” said Richard Truscott, Vice-president at CFIB.
The research also uncovers these concerns:
- Almost half (48 per cent) of independent business would not advise their children to start a business given the current level of regulation;
- 78 per cent of independent business owners say excessive government regulations add significant stress to their lives;
- 87 per cent believe government has big business in mind more than small when creating regulations.
“Most alarming is what all these rules are doing to the morale of Canada’s entrepreneurs. As baby boomers continue to retire, we need the next generation of entrepreneurs to step up. If they don’t think it’s worth it to take the risk of running a business, it’s difficult to imagine the implications on job opportunities and government revenues,” Jones said. “We need to keep working to fix it."
The Cost of government regulation on Canadian businesses by Queenie Wong, Senior Research Analyst, is based on a CFIB survey of 7,823 independent business owners in the fall of 2017.
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About Red Tape Awareness Week™
Now in its ninth year, Red Tape Awareness Week™ (January 22–26) highlights the cost and impact of excessive regulations. The annual campaign continues to influence governments across the country to launch red tape reduction initiatives. To learn more, visit CFIB.ca/redtape and follow #redtape.
CFIB is Canada’s largest association of small and medium-sized businesses with 109,000 members across every sector and region. Learn more at cfib.ca.