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Opinion of the European Economic and Social Committee on ‘Economic diversification in the accession countries – role of SMEs and social economy enterprises’

(2004/C 112/27)

On 17 July 2003 the European Economic and Social Committee, acting under Rule 29(2) of its Rules of Procedure, decided to draw up an opinion on Economic diversification in the accession countries – role of SMEs and social economy enterprises.

The Consultative Commission on Industrial Change (CCIC), which was responsible for preparing the Committee's work on the subject, adopted its opinion on 15 March 2004. The rapporteur was Ms Fusco and the co-rapporteur was Mr Glorieux.

At its 407th plenary session held on 31 March and 1 April 2004 (meeting of 1 April 2004), the European Economic and Social Committee adopted the following opinion unanimously:

1.   Introduction: definitions and objectives

2.   Comments on the special features of the accession countries as regards SMEs, SEEs and economic change

2.1   Economic changes and diversification in the accession countries

2.2   Social impact of the changes

2.3   Role and challenges of SMEs and SEEs in the accession countries

3.   Recommendation concerning an integrated programme for the promotion of SMEs and SEEs in the economic diversification of the accession countries

3.1   General comments

The features that SMEs (including micro-enterprises) share with SEEs (see point 1.6), and the positive interplay that exists between them (see points 1.9 and 2.3.5), are powerful arguments for launching a new joint effort at EU level to promote and support them. The particularly serious challenges that SMEs and SEEs are facing in the context of accession (see section 2) make it particularly important to introduce support measures, so that these two types of enterprise can make an effective contribution to the development of the new Member States.

The EESC has taken account of the existing programmes for supporting SMEs in particular, but also notes the unsatisfactory nature of the existing structures for supporting SEEs and for promoting joint initiatives between SMEs and SEEs.

The EESC therefore proposes that an integrated programme be launched to support SMEs and SEEs in the accession countries. Such a programme should be promoted jointly by the EU Commission, the European Investment Bank, the European Investment Fund, the governments of the countries involved and the organisations that represent and support SMEs and SEEs at European and national level. The Structural Funds, which will become accessible to the accession countries from May 2004 onwards, should play a leading role in funding the activities of this integrated programme. A link should be ensured with the action plan relating to the Commission's communication on entrepreneurial spirit.

3.2   10-point programme

3.2.1   Integrating the data

In most of the accession countries, statistics relating to SMEs and SEEs and their representation and support organisations are still highly inadequate and lack uniformity (37). SEEs suffer even more than conventional SMEs from such lack of precision. At present there are no precise data on such enterprises in these countries, beyond the data provided by their federations where those exist. The EESC regards as very necessary the European Commission's proposal to set up a system of satellite accounts with the national statistical institutions, already tried out in some Member States (38), while setting up a data collection system which is simple and clear enough for SMEs and SEEs to provide the data without difficulty. (39)

3.2.2   Improving compliance with and effective implementation of the acquis communautaire, and the legal and administrative framework

3.2.3   Active promotion of entrepreneurship through information and education

3.2.4   Promoting support and advice centres for the creation, development and transfer of enterprises

3.2.5   Improving the conditions for funding and access to funding

3.2.6   Promoting SMEs and SEEs in the context of local development

SMEs and SEEs form part of the local fabric. Hence they have a fundamental role to play in the context of local development, and the local authorities should set up active partnerships with them to this end. (46) The partnerships between local authorities and social economy actors which exist in the EU should be actively promoted in the accession countries (47).

3.2.7   Supporting the development of enterprise systems

The Charter for Small Enterprises underlines the importance of also developing groups, amalgamations, networks and clusters of enterprises. The experience gained in the EU countries, particularly with groups and consortia of cooperatives and mutual societies, often on a territorial or sectoral basis, shows that the development of systems of enterprises can be of vital importance for SMEs and SEEs with a view to defining together long-term enterprise strategies, increasing entrepreneurial scales in the same sector or region, developing their technological capacity and improving their competitiveness, while leaving the enterprises free to make their own decisions. In addition, the enlargement and deepening of the Single Market is a reason why SMEs and SEEs in the present and new EU Member States should use the future trans-European instrument that the European cooperative society will be. The EESC considers that the preparation of these various enterprise systems should be actively encouraged in the accession countries.

3.2.8   Strengthening the institutional representation of SMEs and SEEs

The EESC takes the view that it is necessary to develop, strengthen and make more effective the representation of the interests of SMEs and SEEs in the accession countries by representative organisations, the latter's capacity to negotiate with the authorities, their strategic action of promoting enterprise support services, and links among these organisations at all levels. The SMEs and SEEs in these countries must make their voices heard as key actors in the economic and social fabric. Hence the importance of continuing the considerable effort launched by the Phare Business Support Programme to help strengthen the representative organisations of SMEs and SEEs in the accession and applicant countries of central and eastern Europe (48).

3.2.9   Developing the social dialogue

SMEs and SEEs in the accession countries must also be considered in their role as employers, even if work in them as a conventional employee coexists with work as a self-employed person and with worker ownership. As employers they must undertake to respect European and world labour standards. In addition, their representative organisations must enter into the social dialogue as independent actors, discussing not only labour relations but also all social policies with trade union organisations and the other economic and social actors at all levels. Activities in this direction should be actively promoted under the programme proposed here.

3.2.10   Encouraging and developing activities for the exchange of best practice between SMEs and SEEs in current EU countries and those in the accession countries

Initiatives by the EU Commission (49) show the importance of systematically enabling SMEs and SEEs in the accession countries to benefit from the experience of their counterparts in the EU countries in each of the areas discussed in points 3.2 to 3.2.9. Particular encouragement should be given to the EU Commission's efforts to set up a network for exchanging good practices regarding the quality of support services for SMEs. Such exchanges enable entrepreneurial actors in the accession countries to improve their development strategy by engaging in strategic consideration of the proposed models of excellence, and to establish themselves increasingly as actors which have to be taken into account by the public authorities in their policies.

4.   Conclusions

Brussels, 1 April 2004.

The President

of the European Economic and Social Committee

Roger BRIESCH

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(1)  As early as 14-17 November 2000, at the conference held at the EESC on enlargement (Towards a partnership for economic growth and social rights), the members of the Joint Consultative Committees (JCCs) involving the applicant countries had raised the most important problems encountered by those countries and the need to engage in a dialogue on certain essential themes, such as the SMEs' contribution to the various economies and the lack of social dialogue. See EESC opinion 1635/2003.

(2)  Recommendation 2003/361/EC, replacing Recommendation 96/280/EC (OJ L 124 of 20.5.2003, p. 36), which will come into force on 1.1.2005. From the current Recommendation to the new one, these definitions remain the same. Only the turnover figures or the balance-sheet total change.

(3)  B. Roelants (co-ord): Preparatory Dossier for the First European Social Economy Conference in Central and Eastern Europe, 2002, p. 31. Common denominators drawn up on the basis of definitions prepared by the EU Commission, the Committee of the Regions, the CEP-CMAF (European Conference of Cooperatives, Mutual Societies, Associations and Foundations) and the FONDA (linked to organisations at the origin of the social economy concept).

(4)  Presidency conclusions – Lisbon, 23 and 24.3.2000, point 14

(5)  The European Charter for Small Enterprises: Luxembourg, Office for the Official Publications of the European Communities, 2002. The Commission states that the Charter was recognised in Maribor on 23.4.2002 (see http://europa.eu.int/comm/enterprise/enterprise_policy/sme-package/index.htm). The Committee and the Parliament continue to urge that the Charter should have legal force, and that it should be expressly included in the European Convention's chapter on industry.

‘A strategy for full employment and better jobs for all’, COM(2003) 6 final

(6)  Opinion of the Economic and Social Committee on The social economy and the single market, CES 242/2000 of 3.3.2000

(7)  In a recent study, the OECD specifies that the ‘social economy’ is a broader concept than the non-profit sector, since it is less strictly linked to non-distributional constraints, whereby organisations cannot legally redistribute their surplus to their owners (OECD, Paris, 2003, The non-profit sector in a changing economy, p. 299).

(8)  McIntyre et al.: Small and medium enterprises in transitional economies, Houndmills: Macmillan, p. 10

(9)  Industrial policy in an enlarged Europe, Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions, COM(2002) 714 final.

(10)  CIRIEC 2000: The enterprises and organisations of the third system: strategic challenge for employment, University of Liège

(11)  Calculated on the basis of the study carried out by the International Cooperative Alliance in 1997 and funded by the European Commission.

(12)  See the charter of the CEP-CMAF (European Conference of Cooperatives, Mutual Societies, Associations and Foundations).

(13)  Point 2.1.1.

(14)  Ibid.

(15)  Opinion of the Economic and Social Committee on Managing Change –Final Report of the high level group on economic and social implications of industrial change, CES 698/99

(16)  EESC opinion of 7.7.1999, OJ C 258 of 10.9.1999, 3.7.2 and 3.7.3

(17)  With the exception of Poland and Hungary. See European Commission: Impact of enlargement on industry,

(18)  SEC (2003) 234, 24.2.2003, p. 7

(19)  Particularly the agri-food and beverages, wood, textile and metal-based industries.

(20)  Ibid., note 18, p. 8

(21)  Especially in the case of the Czech Republic, Slovenia, Hungary and to a lesser extent Poland. This type of trade is seen particularly in the textile, electrical, optical, and transport-equipment sectors.

(22)  Ibid., note 18, p. 1 and pp. 4-5

(23)  Especially in Bulgaria, Hungary and Poland.

(24)  Vidovic, H., The service sectors in Central and Eastern Europe, Research Report, September 2002, No. 289, page 16

(25)  Such as Poland and the Czech Republic.

(26)  Some net losses were noted, particularly in Lithuania and Slovakia.

(27)  Tang et al., 2002: Winners and losers of EU integration, Washington, World Bank, p. 8. Age is one of the main factors in discrimination. Other vulnerable groups include the disabled, and minorities such as the Roma.

(28)  Women are more likely than men to leave the labour market definitively. When they do return to the labour market, they are more likely than men to be unemployed in some of the accession countries. Cf. UNICE, Economic Survey of Europe, 1999-1, Table 41, Gender differences in employment in 1997.

(29)  According to the AIM (International Association of Mutual Benefit Organisations). Among the main problems are the rapid rise in expenditure, long waiting lists, a lack of data for assessment and organisation of services, under-the-counter payments to providers of medical treatment, etc.

(30)  Kumar et al., 2002: Transitional impacts and the EU enlargement complexity, Ljubljana, University of Ljubljana, pp. 25-36

(31)  Tang et al., 2002, p. 44

(32)  Cf. in particular the Italian system of social cooperatives. See also the Best Procedure Report 2001 (SEC 2001/1704 – 29/10/2001). The measures described in the BEST report are an important source of knowledge for improving the business environment in the accession countries.

(33)  Maribor 2003

(34)  European Commission: Green Paper – Entrepreneurship in Europe, COM(2003) 27 final, point III.C.ii

(35)  McIntyre, R.: The complex ecology of small enterprises (Chapter 3), in McIntyre and Dallago (eds.), 2003, Small and Medium Enterprises in Transitional Economies, Palgrave, Macmillan, in association with the United Nations University and the World Institute for Developmental Economics Research, pp. 49-50. The conclusions of the first Conference on the social economy in the central and eastern European countries are in line with this view. See http://www.cecop.org/praha

Glinkina, S.: Small businesses, survival strategies and the shadow economy (Chapter 4), in McIntyre and Dallago (eds.), 2003, Small and Medium Enterprises in Transitional Economies, Palgrave, Macmillan, in association with the United Nations University and the World Institute for Developmental Economics Research

(36)  It is particularly urgent for SMEs to be classified according to the NACE system.

(37)  European Commission, Consulting document on Cooperatives in Enterprise Europe, 7.12.2001, p. 34

(38)  European Commission, Consulting document on Cooperatives in Enterprise Europe, 7.12.2001, p. 34

(39)  Account should also be taken of Recommendation 193/2002 of the International Labour Organisation, adopted almost unanimously (apart from two abstentions) and particularly by the governments of the 15 EU Member States and the 10 accession countries, and especially of Article 7 on tax policies and public procurement, and of Articles 4 and 6 on cooperatives belonging to a wider sector also including mutual societies and associations.

(40)  Activities covered by the concept of social responsibility of enterprises. The development of reporting activities would make it possible to take account of these progressive processes conducive to sustainable development.

(41)  In addition, it has been observed that survival chances for transfers are on average higher than those for start-ups. See European Commission: ‘Helping the transfer of businesses’, DG Enterprise, 2003.

(42)  Various European financial bodies (Crédit Coopératif, Crédit Mutuel and ESFIN in France, Coopfond (Legacoop) in Italy, and SOFICATRA in Belgium) are already working, in contact with the European Commission, to set up a ‘Coop-Est’ project involving various financial instruments to meet the needs for funding structures for SEEs.

(43)  For the public mechanisms, especially in Italy and Spain, with the single payment of unemployment benefits. For the multiplier mechanisms, groups of SEEs have, in several centres of excellence in the EU, set up solidarity and risk-capital funds to fund their development. These funds generally have a multiplier effect on other funding, such as lending by commercial banks, and have shown their capacity to generate enterprises and jobs. Such funds already exist within some cooperative federations in the accession countries, but this type of effort should be vigorously supported in the context of the Structural Funds.

(44)  By setting up a European Federation of Ethical and Alernative Banks (Febea) and a European Ethical and Alternative FinanceCompany (Sefea).

(45)  See André Douette (2003): La garantie des prêts aux petites et moyennes entreprises – Les systèmes de garantie membres de l'Association européenne du Cautionnement Mutuel, Association européenne du Cautionnement Mutuel.

(46)  Like those which exist within the European network of towns for the social economy (REVES), and which can be classified in three distinct categories:

(47)  the creation of mixed public-private structures: for example, the Job Centre of the municipality of Genoa, the ‘Gagner’ agency in Roubaix, and the SAKA BYAGARD/SOKOYAN KYATALO day care centre in Kokkola, Finland;

(48)  This point is developed specifically in point 10 of the European Charter for Small Enterprises.

(49)  Particularly the Phare Business Support Programme with the UAPME's BSP1 and BSP2 for SMEs, and the CECOP's

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