No C 205/16 Official Journal of the European Communities 9. 8. 82 
Opinion on the promotion of the small and medium-sized enterprises sector in the European 
Community 
A. LEGAL BASIS FOR THE OPINION 
At its 183rd plenary session held on 27 and 28 November 1980 the Committee, acting on a 
proposal from the Bureau, decided to deliver an opinion on the abovementioned subject on its 
own initiative. 
B. OPINION OF THE ECONOMIC AND SOCIAL COMMITTEE 
The Economic and Social Committee prepared its opinion on the above matter at its 198th 
plenary session held in Brussels on 26 and 27 May 1982. 
The full text of the opinion is as follows: 
THE ECONOMIC AND SOCIAL COMMITTEE, 1. Introduction 
Having regard to the Rules of Procedure and in particular 
the fourth paragraph of Article 20 thereof, 
Having regard to its decision taken on 26 November 
1980, instructing the Section for Industry, Commerce, 
Crafts and Services to draw up an own-initiative opinion 
on the promotion of the small and medium-sized 
enterprises sector in the European Community, with 
particular emphasis on certain specific aspects, 
Having regard to the Economic and Social Committee's 
original study of 26 June 1974 on the situation of small 
and medium-sized undertakings in the European 
Community, and the Committee's opinion of 23 
November 197" on the same matter (OJ No C 59 of 
8 March 1978), 
Having regard to the report submitted by the rapporteur, 
Mr Kolbenschlag, 
Having regard to the opinion adopted by the Section for 
Industry, Commerce, Crafts and Services at its 81st 
meeting, held in Munich on 12 March 1982, 
Having regard to the discussions at the Committee's 
198th plenary session held on 26 and 27 May 1982, 
Whereas Community policy has been almost exclusively 
concerned so far with the development of sectors other 
than the small and medium-sized enterprises sector (' i; 
Whereas the general environment - economic freedom, 
the willingness of all economic operators to work hard, 
the readiness to take risks, the rewards of risk-taking, and 
a business climate based on confidence - has not been 
entirely satisfactory from the point of view of providing 
small and medium-sized enterprises with the conditions 
they need in order to flourish, 
HAS ADOPTED THE FOLLOWING OPINION 
with 3 votes against and 2 abstentions: 
(') For the purposes of this present opinion, the small and 
medium-sized enterprises sector covers enterprises with a 
maximum of 500 employees in industry, craft trades, 
distributive trades and service sectors; agriculture and the 
professions are excluded. 1.1. Leaving aside the role played by the large-firm 
sector, the importance of small and medium-sized 
enterprises from the point of view of job creation and job 
protection has become increasingly evident since the 
deepening of the economic crisis. Almost all of the 
Commission proposals submitted in connection with the 
'Mandate of 30 May 1980' see this area of economic, 
cultural and political life as having an important role to 
play as a motor for economic recovery, structural change, 
technological innovation, and an improvement in living 
conditions. It is thus hoped that the SME sector will be a 
source of new, stable jobs, and there is a fresh recognition 
of the fact that SMEs can provide an impetus for growth 
in the disadvantaged regions of the Community. 
1.2. The chances of being able to implement these 
proposals would, however, be increased if the EEC were 
to develop an overall strategy for the promotion of SMEs. 
The present own-initiative opinion is intended to serve 
this aim. It details measures which the Community must 
adopt within its own sphere of competence and drawing 
on its own legal and financial resources - and measures 
which must be adopted by the Member States, with the 
Community playing a coordinating role. 
If the SME sector is to fulfil its intended role of bringing 
down unemployment levels, it is absolutely essential to 
implement the proposals systematically by means of 
phased plans of action - where appropriate relating to 
individual branches of the SME sector such as the craft 
trades, the distributive trades, industry and services. 
2. Measures to promote the SME sector 
2.1. Start-ups and management (measures to improve 
management and advisory services) 
2.1.1. Although a favourable investment climate 
created by appropriate macro-economic conditions forms 
the soundest basis for the foundation of new SMEs, we 
9. 8. 82 Official Journal of the European Communities No C 205/17 
must not forget that the same conditions make it much 
easier for large firms to expand. Since large firms have the 
necessary legal and administrative know-how and 
management resources, they - unlike SMEs - are able 
to set up new establishments (branches, associated 
companies or subsidiaries) both at home and abroad at 
will. 
2.1.2. In the view of the Committee the foremost 
requirement is to eliminate psychological and practical 
barriers since efforts to set up small and medium-sized 
enterprises often founder on red tape and complicated 
formalities, particularly in the field of tax and social 
legislation, and on excessively long waiting periods. 
2.1.3. The Community should provide support for 
the establishment of local advisory centres providing 
comprehensive professional services under the one 
roof. 
2.1.4. Advisory services must be available on a 
permanent basis before, during and after the foundation 
of a new enterprise. The services provided must cover 
such aspects as asset and capital structure, liquidity, tax 
legislation, organization, staff management and 
administration, the use of electronic data-processing 
equipment and technical innovations. 
2.1.5. The Community must increase its financial 
support for the training af advisory staff appointed by 
state bodies, chambers of commerce and trade, and other 
trade organizations, and for seminars on management 
techniques (through expansion of the European Social 
Fund and studies of the European Centre for the 
Promotion of Vocational Training in Berlin). An increase 
in the appropriation under budget item 6421 (training in 
European affairs) is also recommended. 
2.2. The raising of capital 
2.2.1. The financial requirements of SMEs when they 
first start up, switch lines of business or invest in 
expansion or rationalization measures should be 
guaranteed by the Community in the form of a 
supplementary loan and interest-rate rebate scheme. 
Community finance instruments and especially the 
European Investment Bank and the new Community 
facilities have a key role to play in financing this scheme. 
In principle the share of EIB loans earmarked for SMEs 
should be raised in line with their importance and should 
extend to up to 75 % of the amount invested per project. 
Interest rates should be reduced through Community aid, 
and repayments should not begin until 24 months after 
the granting of the credit. 2.2.2. The providers of finance should pay particular 
attention to the needs of the SMEs in the development and 
exploitation of technical innovations. 
The Committee would also draw attention to the urgent 
need to bring into force the Convention for the EEC 
Patent and, within this framework, give Community 
SMEs patent protection for technical innovations, 
especially when new SMEs are set up. The Committee 
calls on the Commission to examine ways and means of 
making it easier for the SME sector to avail itself of this 
protection in view of the high costs of registering and 
protecting patents. 
2.2.3. Guarantee facilities of trade organizations (e.g. 
credit guarantee associations and banks specializing in 
the provision of guarantees) must be developed in order to 
cover the capital needs of small entrepreneurs setting up 
in business. The cost of founding and equipping a small 
business is in fact high and the individual entrepreneur is 
not very likely to be in a position to offer the guarantees 
usually required by banks for loans. The Community 
could help here by giving extra deficiency guarantees. 
2.3. Tax relief 
2.3.1. Tax concessions have always been regarded as 
a particularly effective way of promoting the 
establishment, continuation and expansion of SMEs. But 
all public finances are now so tight that proposals to 
reduce taxation rates are hardly likely to be adopted in the 
short term. There are, however, various ways of helping 
SMEs, e.g. through direct subsidies or tax relief. 
(a) It should be made easier for SMEs to build up capital 
by allowing deferment of taxes on investment 
reserves. 
(b) Tax relief on retained profits could boost the capital 
resources of SMEs. 
(c) Carry-back of losses should be introduced - or 
expanded to meet the needs of SMEs - in all the 
Member States. 
(d) SMEs are especially vulnerable to wealth taxes and 
above all estate duties: working capital should 
qualify for relief from such taxes as well as from 
other taxes not dependent on profit. 
(e) There should be special provisions for writing off 
R&D expenditure and for the tax treatment of 
profits and capital gains arising out of successful 
innovation. 
NoC 205/18 Official Journal of the European Communities 9. 8. 82 
2.3.2. The burden placed on firms by tax returns and 
paperwork should be kept to the absolutely necessary 
minimum. 
2.3.3. Since the tax burden on SMEs varies from 
Member State to Member State, the Commission should 
carry out a survey and draw up proposals on 
alignment. 
2.3.4. The Community should make vigorous efforts 
to coordinate taxation so as to prevent distortions of 
competition. 
2.4. Social security charges 
To relieve the burden on SMEs, the Committee 
recommends that the possibility of a better distribution of 
social security charges within the economy be 
examined. 
2.5. Inter-firm cooperation 
2.5.1. To improve the possibilities of cooperation 
between SMEs located in one and the same country (inter 
alia in the form of cooperatives) the Community must (a) 
encourage the exchange of information between State 
agencies and the representative organizations of SMEs, 
(b) promote the access of SMEs to shared data-processing 
facilities, and (c) award research contracts for the purpose 
of working out new forms of cooperation. 
Cooperatives in general, and producer cooperatives in 
particular, are faced with additional difficulties resulting 
from the collective form of association and property, for 
instance in trying to raise funds, and more precisely risk 
capital. 
The Committee also supports the formation of groups of 
enterprises operating in like industries for the execution 
of export contracts; this would give that flexibility and 
speed of delivery which an individual small enterprise is 
unable to provide. 
2.5.2. As far as cooperation at Community level is 
concerned, the Committee proposes that: 
(a) The Business Cooperation Centre be expanded, and 
that it should specialize not only in the search for 
merger partners, but also in looser forms of 
cooperation between SMEs, as well as cooperation 
between SMEs and large firms. Finally, the Centre 
could endeavour to act as a central clearing house for 
subcontracting as well as patent and trade-mark 
licensing. 
(b) The European Cooperation Grouping be speedily 
introduced through adoption of the Council 
Regulation, and a European law on private limited 
liability companies be created. 
2.5.3. The Community should pay very close 
attention to inter-firm cooperation in third country markets. In the field of external relations and 
development aid, the Community has particular 
responsibility for the considerable, but not yet entirely, 
exhausted export potential of Member State SMEs. 
Conquering a foreign market is beyond the manpower 
and financial resources of any individual SME, so 
encouragement of inter-firm cooperation should be a 
major aim. One of the ways the Community could help is 
by making a financial contribution to the costs of trade 
fairs and exhibitions. 
2.5.4. The Community should also give high priority 
to encouraging cooperation between Community SMEs 
and their counterparts abroad, and should step up its 
activities in this connection, under inter alia, the Lome 
Convention. 
2.6. Information 
2.6.1. Individual SMEs have not had access to 
information facilities at Community level because of 
technical shortcomings. This can be remedied by 
systematically developing a European information 
network in the form of a Community data bank. 
2.6.2. Such a data and information bank would have 
to embrace all relevant areas, from Community 
legislation and administration to detailed information 
about Community financial instruments, third-country 
markets, subcontracting opportunities, public calls for 
tender, technical standards and the transfer of 
technology. 
2.6.3. Individual firms must have access to such data 
via terminals connected with the central data facilities of 
chambers of commerce or of trade and other trade 
organizations. 
2.7. Public supply contracts 
2.7.1. Larger contracts should be split up into 
separate parts to ensure that SMEs can also tender 
successfully. 
2.7.2 Cooperation between small and medium-sized 
contractors should be encouraged so that larger contracts 
can also be accepted; such cooperation should be 
exempted from the restrictions imposed by anti-cartel 
legislation. 
2.7.3. The authorities should, in principle, give 
preference to the 'open' procedure in inviting tenders 
rather then the 'restricted' procedure or the 'private 
contract' procedure. 
2.7.4. General suppliers should not be allowed to lay 
down more unfavourable terms for subcontractors than 
those agreed with the public contracting authority. 
2.7.5. National and Community regulations on 
public contracts should follow the GATT Agreement on 
9. 8. 82 Official Journal of the European Communities No C 205/19 
Public Procurement by allowing unsuccessful tenderers to 
obtain information about the terms of the winning tender 
so that they do not have to continually and pointlessly 
incur the high costs involved in tendering. 
2.8. Tackling the black economy 
2.8.1. The draft of the fifth medium-term economic 
policy programme is the first occasion on which the 
Commission has come to grips with and denounced the 
excesses of the parallel economy. The Committee agrees 
with the observation that this phenomenon has become a 
'major feature' of our economies and therefore provides 
one explanation for the deterioration in growth and 
employment shown by official statistics. 
2.8.2. The Committee would add that the black 
economy is not only extremely harmful to the public 
interest because of the evasion of taxes and social security 
premiums, but it is especially damaging to the SME 
sector. There is even a danger in certain areas that the 
indigenous development potential of registered SMEs will 
to a large extent be swallowed up by the black 
economy 
2.8.3. Effective action against the black economy 
must therefore be part and parcel of any Community 
policy for the promotion of SMEs. If the fight to stamp 
out the black economy is to be successful, the Community 
must also call on national governments to work together 
with the two sides of industry to draw up 
collective-bargaining or legislative provisions to 
discourage the phenomenon. 
Some Committee proposals, such as those on the 
reduction of red tape, tax relief and the redistribution of 
social charges to help SMEs, are important elements in 
the fight against the black economy. This makes the 
implementation of the proposals contained in the opinion 
a matter of even greater urgency. 
2.9. SMEs in the disadvantaged regions 
2.9.1. The problems of the SME sector in the 
Community as a whole exist in these regions in larger 
measure, while the opportunities for the sector there 
appear generally to be fewer. 
2.9.2. In its 'New Regional Policy Guidelines and 
Priorities', the Commission has concluded that these 
regions cannot any longer rely entirely on inward 
investment and that indigenous development must play a 
larger part, and be supported by any available means. 
The Commission has assigned a special role to the SME 
sector in this development, a role which the Economic 
and Social Committee has accepted in its opinion on the 
guidelines ('). 
(') OJ NoC 343, 31. 12. 1981. 2.9.3. The regional-policy financing possibilities of 
the Community should be expanded and the 
simultaneous use of several Community financial 
instruments with structural functions should be geared to 
the needs of SMEs, so that benefit is derived from their 
combined effect. 
2.9.4. The above recommendations of the Committee 
(paragraphs 2.1 to 2.8) apply with particular force to 
these regions. 
Aware that the Community has limited financial 
instruments for satisfying all the many and varied needs, 
the Committee believes that the allocation of aid should 
be based on selectivity criteria linked to the number of 
jobs to be created. 
3. Conclusions 
3.1. So as to avoid the dispersal of efforts, the 
Community authorities should pursue a uniform strategy 
for the promotion of SMEs, which would mean taking 
into consideration the proposals submitted earlier in this 
document by the Committee, combined with a timetable 
and machinery for checking the success of Community 
measures. This machinery should include adequate 
arrangements to monitor how Community and national 
measures designed to benefit SMEs are put to use. 
Otherwise there would be a danger that the SME 
proposals to be found in the Commission documents on 
industrial innovation policy, job-creation, medium-term 
economic policy, regional policy, etc. might be lost from 
view in the general debate on the implementation of the 
Mandate of 30 May 1980. 
To this end, the Commission should, without further 
delay, set up a properly equipped department for SMEs. 
The task of this department would be to analyze on an 
on-going basis the specific problems of SMEs as well as to 
propose a coherent policy and the measures needed to 
carry out such a policy. Last but not least, the department 
would be expected to ensure coordination with other 
policies at both Community and national level. 
3.2. The Commission and the European Parliament, 
in cooperation with the ESC, should organize a joint 
conference in order to make a general survey of desirable 
and politically acceptable measures that could be taken 
on behalf of SMEs. The conference would be attended by 
representatives of (a) SME trade associations, (b) other 
interested socio-economic groups, and (c) public 
authorities. 
3.3. The Economic and Social Committee recalls that 
it has already organized a number of such conferences in 
cooperation with the Commission and is ready to make its 
contribution to a Community conference oh SMEs. 
No C 205/20 Official Journal of the European Communities 9. 8. 82 
3.4. A European Parliament resolution of 16 
Febraury 1982 has proclaimed 1983 the 'Year of craft 
trades and small and medium-sized enterprises'. The 
conference would therefore have another aim, namely 
that of making the general public - and in particular the 
business circles directly affected - aware of this welcome 
initiative of the EP. It would be appropriate to hold the 
conference in January 1983 which would then usher in, 
and make a tangible contribution to, the preparation of 
the 'Year of craft trades and small and medium-sized 
enterprises - 1983'. 
Done at Brussels, 27 May 1982. 3.5. It is ultimately the task of the Council, as the 
Community's legislator, to make the abovementioned 
measures legally binding. The Council is asked to 
acknowledge the key role of SMEs in overcoming the 
present economics crisis. It should therefore pass a 
resolution in the knowledge and light of the conclusions 
reached at the conference organized jointly by the 
European Parliament, the Economic and Social 
Committee, and the Commission. The Council resolution 
should require the appropriate Community authorities to 
draw up a balanced, comprehensive and coherent 
Community policy for the promotion of SMEs. 
The Chairman of 
the Economic and Social Committee 
Tomas ROSEINGRAVE