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Survey denies small business “inspectionitis”

Inspections are the bane of SMEs Keystone

Small and medium-sized businesses (SMEs) in Switzerland are not over-burdened with government inspections as has been claimed, according to the economics ministry.

A survey revealed an average 1.9 inspections per company in the past five years, while a third said they had received no visits at all. But business leaders said the findings were too positive.

The State Secretariat for Economic Affairs (Seco) asked 1,600 firms about the frequency and nature of inspections since 2003. A third said they had had no visits in the past five years. Another third had experienced a maximum of two checks, while the remainder were subjected to three or more inspections.

The survey was conducted in response to a 2006 parliamentary motion condemning an increase in “inspectionitis”. Seco said its results have proved the perception to be false.

“These findings would not seem to imply that businesses face an excessive burden due to government checks,” the economics ministry agency said in a statement.

The Swiss Business Federation, economiesuisse, welcomed the survey but pointed out that 31 per cent of companies found inspections “harmful” or “very harmful”.

“The interpretation of these findings is too positive because a third of firms have problems with inspections,” the federation’s chief economist Rudolph Minsch told swissinfo.

“The report also makes no mention at all of the administrative burden that takes place in between these visits. While inspections take place every two or three years, companies have to get themselves prepared to pass such checks.

“For example, companies must fill out value added tax paperwork every three months and this uses up a lot of time.”

Follow-up work

The most common complaint in the survey was the overly formal nature of the inspection teams while other gripes focussed on repetition of checks and inconvenient timing. Most of these complaints came from the Italian- and French-speaking parts of Switzerland.

Seco said it would continue to work with 400 firms in an effort to smooth out these problems, a move that Minsch welcomed.

“It is very positive signal that Seco is getting in touch with small companies and is trying to get information about this situation from their perspective,” he said. “The goal has to be a reduction in the number of companies that experience problems with inspections.”

The Seco survey found that well over half of the inspections related to tax matters while a quarter were in the field of working conditions. The smallest firms, and those that had set up most recently, appeared to avoid the inspector more than other companies.

But Swiss firms face less red tape than in many other countries, according to a recent World Bank report. The Doing Business 2008 survey said Switzerland has the 16th best regulatory environment out of 178 nations.

swissinfo, Matthew Allen

The Seco survey of SME inspections covered 1,600 companies. Of these, 800 employed up to nine staff, 480 had a maximum of 49 employees and the remainder between 50 and 249 workers.

The smaller enterprises were subject to fewer inspections than larger SMEs, the survey discovered. Hotels and restaurants saw inspectors more frequently than any other sector.

Firms in German-speaking areas had more inspections concerning tax affairs, while French-speaking companies were subject to more controls on reimbursement of family members.

Bosses in the Italian- and French-speaking parts of Switzerland complained more about the harmful effects of such inspections as in German-speaking regions.

The study was carried out in November and December last year.

Small and medium sized enterprises (SMEs) are characterised by employing up to 250 staff – but nearly 90% have fewer than ten employees.

The European Union defines such firms as having between 10 and 249 employees.

SMEs account for 99.7% of Switzerland’s 307,000 companies and 66.8% of the workforce.

The World Bank’s “Doing Business 2008” report, released last year, ranked Switzerland as having the 16th best regulatory system for SMEs out of 178 countries.

The report compared the time and cost involved in setting up, running and closing down a business. In 2007, Switzerland was ranked 15th.

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SWI - a branch of Swiss Broadcasting Corporation SRG SSR

SWI - a branch of Swiss Broadcasting Corporation SRG SSR