Study: Regulatory burden hinders growth of startups and scaleups

New research by Techleap, conducted by Panteia, reveals a striking picture: many founders of startups and scaleups believe that current social regulations weaken the business climate. In particular, the ongoing regulatory burden is seen as a major obstacle to their growth. The study involved 60 companies.

It focuses in particular on two elements that hit startups and scaleups hard: the obligation to continue paying wages for two years in the event of illness, and the combination of strict dismissal laws with rigid collective labor agreements. It is precisely these elements that make it difficult for young, fast-growing companies to remain agile.

The legislation was originally designed for traditional, stable organizations with long-term employment contracts. However, this model is increasingly out of step with the reality of modern startups and scale-ups. They work with rapid iterations, international teams, and high labor mobility. And that is precisely where the problem lies: rules intended for predictable structures clash with the dynamics of companies that need to be able to continuously scale up, scale down, and adapt.

Policy options for a more suitable system

The study presents several policy options to better align the labor market with the reality of startups and scale-ups:

• Shorter continued payment of wages in the event of illness, followed by public insurance that takes over income protection. This reduces the financial risks for employers, while employees retain security.
• Simpler contract and dismissal procedures, with faster routes and a modernized non-competition clause. This makes permanent positions more accessible and reduces the administrative burden.
• More room for customization in collective labor agreements and pensions, so that companies can reward and innovate more flexibly without affecting the basic protection of employees.

According to the study, the above options are essential to fully exploit the growth potential of startups and scale-ups.

Starting the conversation

According to Marije Dijksma, Public & Government Affairs Manager at Techleap, this report should start the conversation about the choices the Netherlands now has to make. She emphasizes that the current labor market and social security system is primarily designed for established organizations, while it is insufficiently aligned with the unique dynamics of startups and scale-ups—companies that are crucial to the future competitiveness of the Netherlands.