Opinion of the Economic and Social Committee on the "European Charter for Small Enterprises"

(2002/C 48/04)

On 13 September 2001 the Economic and Social Committee, acting under Rule 23 (2) of its Rules of Procedure, decided to draw up an additional opinion on the European Charter for Small Enterprises.

The Section for the Single Market, Production and Consumption, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 21 November 2001. The rapporteur was Mr Giron.

At its 386th plenary session of 28 and 29 November 2001 (meeting of 28 November), the Economic and Social Committee adopted the following opinion with 111 votes in favour and three abstentions.

1. Introduction

1.1. In its opinions of 24 May 2000 and 31 May 2001, the Committee set out its views on the relevance and merits of the European Charter for Small Enterprises (the "Charter"), adopted by the Feira European Council in June 2000 at the conclusion of the Portuguese Council presidency. On that occasion, the Council acknowledged that small businesses are the backbone of the European economy and European employment. Among other things, the Council underlined the need for specific policies that are less general than those lumped together under a generic definition of SMEs.

1.1.1. The European Parliament strongly endorsed the Charter and, in its report on the Multiannual Programme for Enterprise and Entrepreneurship, it stressed that small enterprises, micro-enterprises and craft firms make a significant contribution to competitiveness, research and innovation and have a crucial role to play in strengthening social cohesion and spatial planning, particularly in rural and urban areas and urban conurbations.

1.2. However, more than a year after the Charter was adopted, most of its recommendations appear to be a dead letter. The Charter, which is specifically intended for small enterprises with fewer than 50 employees(1) (ESC opinion of 24 May 2000), remains a political declaration with limited practical follow-up and visibility, both as regards information on progress achieved in Member States and action taken by the Commission.

1.2.1. With more than 19 million businesses accounting for 53 % of the Community workforce in the non-agricultural private sector, small enterprises, in their various forms, play a key role in economic and social cohesion in Europe. In spite of this, Community programmes and policies concerning small businesses pay inadequate attention to their specific character, rather including them under the general heading of SMEs. The Committee notes that, in practice, little has been done to support small enterprises and the action taken has often been limited to uncoordinated, piecemeal measures.

1.2.2. The Committee nevertheless recognises that the Commission has given increased consideration to small businesses in its actions and measures, particularly in connection with the follow-up to the three European conferences on the craft sector and small enterprises held in Avignon (1990), Berlin (1994) and Milan (1997). The measures taken within the context of the structural funds, social and employment policy and promoting entrepreneurship and competitiveness are valuable and must be continued.

1.2.3. But the Committee is surprised that the momentum given to efforts to promote small enterprises and craft firms by the three European conferences on the craft sector and the wealth of experience gained from the activities of the old DG XXIII, which was responsible for SMEs, have unfortunately been lost following the restructuring of the Commission.

2. The purpose of this opinion

2.1. The implementation of the Charter is not solely the responsibility of the signatory Member States, but of all the European institutions, and particularly the Commission, which is mentioned specifically in the Charter. In addition to drawing up the annual report on the implementation of the Charter prior to each Spring European Summit, the Commission could initiate a genuine multiannual operational plan of action at Community level and within the Member States with a view to ensuring the effective and efficient implementation of the Charter.

2.2. To address this situation, the Belgian presidency of the Council undertook, in its economic programme submitted to the European Parliament on 4 July 2001, to focus on implementation of the Charter.

2.3. This opinion sets out the main measures to be taken over the coming years as a first step towards the practical implementation of the Charter.

3. Implementation of the Charter in Member States

3.1. In accordance with the guidelines set out in the Charter and requests from the European Parliament, the Spring European Council has to monitor annually the progress made by Member States in implementing the Charter. The Committee calls on the Council and the Commission to ensure that the report deals properly with the specific circumstances of the various types of small enterprises and not just SMEs in general. Furthermore, the report must be separate from other publications, such as the report on the implementation of the Best Procedure for administrative simplification or the Action Plan to Promote Entrepreneurship and Competitiveness.

3.1.1. On this subject, the Committee is somewhat dissatisfied with the short report on the implementation of the Charter presented by the Commission on 7 March 2001 in preparation for the Stockholm Summit. The report is only interested in SMEs in the general sense and says nothing about the real impact of the 11 projects mentioned in the report on small and micro-enterprises or about the results of the measures pursued under Community programmes managed by Commission departments other than DG Enterprises.

3.2. The Committee recommends that the report be followed up by real measures and proposes lines of action for small enterprises. The Committee proposes that, like the recommendations proposed for Member States in connection with the employment guidelines, the report on the implementation of the Charter be followed up by recommended guidelines for Member States on promoting the economic development of small enterprises and strengthening their role in the strategy for employment.

3.2.1. As the Charter itself states and as reiterated by the European Parliament, the Committee considers the Charter to be fully consistent with the Luxembourg, Cardiff and Cologne processes. Whilst not wishing to refer to the Charter as the "Feira process", it is nevertheless an integral part of the overall process and one of its cornerstones. Therefore the Committee feels that such recommendations would be useful for Member States.

4. Implementation of the Charter at Community level

4.1. Preliminary remarks

4.1.1. Although many policy areas aimed at promoting small enterprises remain the responsibility of Member States, the European level and Community involvement are becoming increasingly important in the areas of education and training, qualifications and taxation and even in the pursuit of some professional activities, such as those related to general safety or food safety. In the future, small enterprises will play a crucial role for each Union objective, in such key areas as enlargement, governance and economic and social cohesion. The interests, expectations and real needs of small enterprises must be taken into account.

4.1.1.1. The Committee nevertheless notes that knowledge of small enterprises' needs is partial and incomplete at European level. To date, the scientific and economic world has shown no interest in in-depth studies of small enterprises in their various forms. The Committee calls for this shortcoming to be quickly remedied.

4.1.2. It must be remembered that the Charter applies to all Community polices and measures that have an impact on small enterprises. The responsibility for implementation does not rest with one Commission department alone and coordination will be necessary. With a view to achieving a genuine open coordination policy for small enterprises, the Committee suggests that cooperation between the relevant Commission departments and coordination with the European organisations representing small enterprises be stepped up.

4.1.3. In addition, the EU must do its utmost to smooth the way for the introduction of the Charter in the applicant countries. For these countries, the Charter is a political basis of the first importance, making it possible to structure public and private efforts to promote small enterprises and craft firms and to pursue effective economic and social policies.

4.1.3.1. Mindful of this, the Committee calls on the Commission, the Council and the European Parliament to establish and strengthen measures for exchange between representative organisations, and to promote the setting-up of intermediary organisations for enterprises and to reinforce such organisations.

4.2. Action needed at European level in pursuance of the lines for action set out in the Charter

4.2.1. Education and training for entrepreneurship

- analysis and dissemination of business organisation practices, particularly on-site local operations of organisations that are closest to the people concerned;

- organisation of technical exchange meetings between the coordinators of such action, at Community level and between Member States, and flanking financial measures designed to promote exchanges;

- establishment of a specific programme and financial resources for applicant countries, including twinning or cooperation with organisations representing small businesses in the EU;

- incorporation in training courses of activities designed to bring schools and small enterprises closer together.

4.2.2. Cheaper start-up and faster registration

- disseminate results of ongoing studies, paying attention to the particular circumstances of each category of small businesses;

- study the legal, administrative and tax problems encountered both by existing enterprises intending to engage in a temporary activity in another Member State, especially border regions, and by entrepreneurs intending to set up business in another Member State.

4.2.3. Better legislation and regulation

- systematically involve European representative organisations for small businesses in the Community legislative process from the beginning and deploy financial resources to enable meetings and visits by experts;

- systematise assessment of the impact of Community legislation on small and micro-enterprises;

- make it easier for small businesses to apply Community legislation through the compilation and distribution by the relevant intermediary organisations of operational guides to good practice adapted to the actual circumstances of each category of enterprise or occupation and through the exchange of such guides between organisations in different Member States;

- analysis of the legal and tax position of enterprises not in corporate form compared with incorporated businesses, and a proposal for appropriate measures;

- study on a European Private Company Statute (see forthcoming ESC opinion; rapporteur: Mr Malosse);

- study on arrangements for protecting the assets of small entrepreneurs' families;

- the lack of a European patent system represents a handicap for small enterprises, in view of their low turnovers; it is imperative to remedy this situation.

4.2.4. Skills, availability and equivalence of vocational qualifications

- strengthen programmes for the exchange of apprentices and adopt a European Erasmus programme for apprenticeships corresponding to the programmes for university students, which have proved to be effective and of great value for thousands of students;

- establish a European Statute for Apprentices, designed to simplify procedures for exchanges and visits by apprentices, for social protection and for cooperation between those responsible for vocational training and apprenticeships;

- develop consultation and cooperation between vocational training and apprenticeship establishments with a view to supporting high-quality training;

- analysis of problems encountered by small enterprises confronted with shortages of skilled labour, and proposed solutions;

- draw up a table on the equivalence of vocational training qualifications in Europe to simplify procedures for the registration of would-be company founders in other Member States.

4.2.5. Improving online access

- help business organisations to structure supply so that it is suited to online services, especially as regards initial and lifelong training, advice, setting up and taking over a business.

4.2.6. Getting more out of the Single Market

The measures that need to be undertaken in this area fall into several categories:

4.2.6.1. Information on small enterprises and their needs

- recognition of the specific needs of small manufacturing enterprises or suppliers of services when revising the definition of SMEs, as regards the criterion "turnover";

- launch of a programme of statistical and economic studies, and a best practice analysis, by the scientific and academic community and in the context of the European Observatory for SMEs on craft industries, micro-enterprises and small firms providing professional services;

- statistical and economic analyses of small and micro-enterprises in the applicant countries;

- specific analyses and studies on the future of small enterprises and craft firms against the background of the broad policy guidelines for the future of Europe: cohesion and enlargement, governance, globalisation;

- the drawing up by the Commission and the European Academy for Craft Industries of a work and research programme focusing on knowledge of small enterprises, the implementation of the Charter and the pursuit of the measures set out in the ESC opinion of 30 May 2001 on the craft sector and SMEs in Europe.

4.2.6.2. Competition rules

- establishment of a system for observing distortions in competition faced by small enterprises, particularly in border and island regions, and development of a method for the speedy resolution of disputes.

4.2.6.3. Cooperation between organisations and between enterprises

- reactivate, in a new form that is more flexible and suitable to the purpose at hand, of the Interprise programmes for trans-border competition.

4.2.6.4. Participation of enterprises in Community programmes and action

- simplify the application and assessment procedures for small businesses and systematise recourse to intermediary organisations providing consultancy and back-up services;

- make the procedures for calls for proposals more flexible and reactivate, in modified form, the possibility of obtaining direct financing over the counter for transnational pilot and experimental measures aimed at a very large number of enterprises on the basis of proposals by national and European intermediary organisations.

4.2.6.5. Standardisation

- ensure the participation of small and micro-enterprises in European standardisation work and establish a financing scheme for the experts who represent them. The Committee feels that NORMAPME, in particular, must be supported and strengthened;

- create specific tools and technical manuals, tailored to different sectors and sizes of business;

- establish and support a network of expert advisers within the intermediary and trade organisations for small businesses, with the task of providing information and advice on the adoption of standards and the EC mark.

4.2.6.6. The environment

- ensure that the "small enterprise dimension" is included systematically in all Community texts and that the specific needs of small enterprises are recognised from the outset;

- simplify procedures in line with the new EMAS Regulation on eco-audits, which introduces greatly simplified procedures for small enterprises and makes it possible for craft chambers and intermediary and professional organisations to carry out audits that are suitable for small enterprises;

- set up and maintain within intermediary organisations a network of environmental mediators, with the task of providing information, training and guidance to small enterprises;

- introduce tax incentives and financial support for investment and compliance with environmental standards.

4.2.7. Taxation and financial matters

4.2.7.1. Adapt taxation

- strengthen the experimental measures taken to reduce VAT by applying the reduction to all labour-intensive activities.

4.2.7.2. Ease access to credit and promote a mutual guarantee scheme

- provide small enterprises with real opportunities for better access to existing financial facilities provided by the European institutions (EIB, EIF, Commission), or facilities yet to be created, in order to facilitate access to financing linked to investment, new technologies and new information and communications technologies (ITC), adherence to technical and environmental standards, and intangible investment related to training; to this end, analyse the utilisation of these facilities by small enterprises and propose new access measures;

- create a fully-fledged European strategy for supporting development of a mutual guarantee scheme;

- ensure that the banking reform proposed by the Basel Committee (Basel 2), which the Commission must take on board in a forthcoming directive, does not lead to a rise in the final cost of small loans and a deterioration of credit terms for small businesses.

4.2.8. Strengthening and upgrading the technological capacity of small enterprises

- support the establishment within the intermediary organisations for small businesses of posts for technological consultants/mediators and encourage network cooperation;

- see to it that small enterprises, including traditional businesses, are taken into account in the 6th framework programme for research and technological development;

- promote collective research activity by the intermediary organisations in concert with the scientific community.

4.2.9. Making use of successful e-business models and developing top-class small business support

4.2.9.1. e-business

- give support to business intermediary organisations' action to provide information on, raise awareness of and encourage trials with the new ICT and to provide consultancy services;

- support investment in hardware, software and training by small and micro-enterprises.

4.2.9.2. Promoting quality in small businesses

- develop a real policy at European level for networking between organisations providing support services;

- introduce European specifications for support services which set out the minimum conditions to be met for developing these services in Europe;

- establish training for business consultants at European level that complies with these specifications;

- help prospective Member States to develop a support service network in accordance with the European specifications.

4.2.10. Developing stronger, more effective representation of small enterprises' interests at Union and national level

4.2.10.1. Representation of small enterprises' interests

- strengthen and systematise direct cooperation with national and European representative organisations for small businesses in all fields of Community activity;

- promote and support cooperation between chambers, intermediary, trade and sectoral organisations for small and micro-enterprises and craft businesses and establishment of structures for these organisations at Community level so as to ensure better recognition of the priorities of small businesses in general and sectoral legislation concerning them;

- promote the establishment and operation of intermediary and sectoral organisations for these enterprises in the applicant countries and support action by them that is focused on businesses and the partnership with sister organisations in the present Member States.

4.2.10.2. Small enterprises in the social dialogue

- guarantee direct and automatic participation by representative bodies of small enterprises and craft businesses in all consultation and decision-making processes at European level and in high-level political meetings of relevance to them;

- ensure better monitoring of the implementation of agreements negotiated between the social partners by encouraging better representation of bodies representing the craft trades and small businesses in the social dialogue at all levels (European, national, sectoral, branch, firm);

- compile a compendium of good practice relating to social responsibility within small businesses and support its dissemination to decision-makers;

- help small enterprises that adopt a proactive approach to social responsibility to better inform their partners about their activities.

5. Conclusions

5.1. The Committee feels that the Charter affords an excellent opportunity for all political levels in the EU to demonstrate to 19 million small enterprises and their employees that they are aware of and responsive to the problems of small and micro-enterprises;

5.2. The Committee notes its serious concern and fear that millions of entrepreneurs, self-employed workers and employees will become estranged from the EU if their specific needs and circumstances are not taken into account at different political levels. This lack of understanding and estrangement could have adverse consequences for the construction, consolidation and enlargement of the EU at a time when European cohesion is even more important in the face of international developments.

5.2.1. The present opinion gives voice to the concerns of small enterprises and craft firms. The European Commission should see in this evidence of the necessity of launching highly visible measures aimed at supporting, in accordance with the Lisbon principles, the role and importance of small enterprises in the context of increasingly intense international competition.

5.3. There is now a need for a comprehensive range of effective and visible policies that will establish, at European level, the legal, tax and social framework necessary for the development of small enterprises. All the separate Community measures, both existing and forthcoming, pursued by the Commission's various departments must be brought together and coordinated within a multiannual operational plan of action for small enterprises. The Committee hopes that the Commission will introduce interdepartmental cooperation to coordinate its measures aimed at small enterprises and harmonise its procedures. Like the Commission group working on equal opportunities, European policy for small enterprises would benefit greatly in terms of political and operational effectiveness, if such a procedure were adopted at the highest levels within the Commission.

5.4. Accordingly, the Committee calls on the Commission and the Member States to implement the Charter by means of such a multiannual plan of action as soon as possible, in concert with the European Parliament, the Economic and Social Committee and the organisations that are truly representative of craft firms and small enterprises. The effective implementation of the plan and the success of European policy for small enterprises can only really be guaranteed by a genuine, direct dialogue, by strengthening cooperation with the intermediary organisations representing the craft sector and small enterprises and with the social partners, who enjoy the advantage of links with all levels and very long experience, and by the direct involvement of these parties in the entire decision-making and operational process.

5.5. The Committee asks the Council to adopt, at one of its forthcoming meetings, a decision on the implementation of the Charter by means of this multiannual plan of action that embraces all the initiatives of relevance to small enterprises and the measures proposed in the present opinion and at the same time to establish budgets for the programmes concerned. To this end, the Committee suggests that the European Parliament and the Council approve the proposal for a special budget formulated last year in connection with the discussion of the Multiannual Programme for Enterprise and Entrepreneurship. These funds would be used to support the innovative measures in the Charter that are not covered by other programmes.

Brussels, 28 November 2001.

The President

of the Economic and Social Committee

Göke Frerichs

(1) Commission recommendation, OJ L 107, 30.4.1996.