Opinion of the Economic and Social Committee on "The craft sector and SMEs in Europe"
Date: 2001-05-30
Institutions: European Economic and Social Committee
Subjects: EU Member State, craft business, small and medium-sized enterprises, statistics

7.8.2001

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II

(Preparatory Acts)

ECONOMIC AND SOCIAL COMMITTEE

Opinion of the Economic and Social Committee on ‘The craft sector and SMEs in Europe’

(2001/C 221/01)

On 2 March 2000, the Economic and Social Committee decided to draw up an opinion, under Rule 23(3)
of its Rules of Procedure, on ‘The craft sector and SMEs in Europe’.

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 16 May 2001. The rapporteur was
Mr Pezzini.

At its 382nd plenary session (meeting of 30 May 2001), the Economic and Social Committee adopted
the following opinion with 107 votes in favour and one abstention.

1. Objectives of the opinion

‘Article 1

1.1.
This opinion is a response to the need to examine the
progress made in the 1990s in defining small business and the
craft sector in Europe, and the policies that have resulted, by
analysing the work done by the Economic and Social Com-
mittee, the European Commission, the national governments
and the representative organisations.

Small and medium-sized enterprises, hereinafter referred

1.
to as “SMEs”, are defined as enterprises which:

— have fewer than 250 employees, and

— have either,

1.2.
This study is not an end in itself, but will pave the way
for an ex-post evaluation (limited to the main effects and
therefore not exhaustive) of what has been done and what
remains to be done, with special reference to the lines of action
proposed in the ESC’s 1997 opinion on craft industries and
small and medium-sized enterprises (1). It will go on to suggest
lines of action for the new decade.

an annual turnover not exceeding EUR 40 million, or

an annual balance-sheet
27 million,

total not exceeding EUR

— conform to the criterion of independence as defined in

paragraph 3.

1.3. The statistical definition of small business and the craft

industry

2. Where it is necessary to distinguish between small and
medium-sized enterprises, the “small enterprise” is defined as
an enterprise which:

1.3.1.
small and medium-sized enterprises (2) as follows:

In its recommendation, the Commission defined

— has fewer than 50 employees and

(1) OJ C 158, 26.5.1997, p. 53.
(2) OJ L 107, 30.4.1996.

— has either,

an annual turnover not exceeding EUR 7 million, or

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an annual balance-sheet
5 million,

total not exceeding EUR

Article 2

— conforms to the criterion of independence as defined in

paragraph 3.

3.
Independent enterprises are those which are not owned
as to 25 % or more of the capital or the voting rights by one
enterprise, or jointly by several enterprises, falling outside the
definition of an SME or a small enterprise, whichever may
apply. This threshold may be exceeded in the following two
cases:

— if the enterprise is held by public investment corporations,
investors,
venture capital companies or institutional
provided no control is exercised either individually or
jointly,

— if the capital is spread in such a way that it is not possible
to determine by whom it is held and if the enterprise
declares that it can legitimately presume that it is not
owned as to 25 % or more by one enterprise, or jointly
by several enterprises, falling outside the definitions of an
SME or a small enterprise, whichever may apply.

4.
In calculating the thresholds referred to in paragraphs 1
and 2, it is therefore necessary to cumulate the relevant figures
for the beneficiary enterprise and for all the enterprises which
it directly or indirectly controls through possession of 25 % or
more of the capital or of the voting rights.

5. Where it is necessary to distinguish micro-enterprises
from other SMEs, these are defined as enterprises having fewer
than 10 employees.

6. Where, at the final balance sheet date, an enterprise
exceeds or falls below the employee thresholds or financial
ceilings, this is to result in its acquiring or losing the status of
“SME”, “medium-sized enterprise”, “small enterprise” or “micro-
enterprise” only if the phenomenon is repeated over two
consecutive financial years.

7.
The number of persons employed corresponds to the
number of annual working units (AWU), that is to say, the
number of full-time workers employed during one year with
part-time and seasonal workers being fractions of AWU. The
reference year to be considered is that of the last approved
accounting period.

The Commission will amend the ceilings chosen for the
turnover and balance-sheet
total as the need arises and
normally every four years from the adoption of this Rec-
ommendation, to take account of changing economic circum-
stances in the Community.

Article 3

The Commission undertakes to adopt the appropriate
1.
measures to ensure that the definition of SMEs, as set out in
Article 1, applies to all programmes managed by it in which
the terms “SME”, “medium-sized enterprise”, “small enterprise”
or “micro-enterprise” are mentioned.

2.
The Commission undertakes to adopt the appropriate
measures to adapt the statistics that it produces in line with
the following size-classes:

— 0 employees,

— 1 to 9 employees,

— 10 to 49 employees,

— 50 to 249 employees,

— 500 to 499 employees,

— 500 employees plus.

3.
Current Community programmes defining SMEs with
criteria other than those mentioned in Article 1 will continue,
during a transitional period, to be implemented to the benefit
of the enterprises which were considered SMEs when these
programmes were adopted. Any modification of the SME
definition within these programmes can be made only by
adopting the definition contained herein and by replacing the
divergent definition with a reference to this Recommendation.
This transitional period should in principle end at the latest on
31 December 1997. However, legally binding commitments
these
entered into by the Commission on the basis of
programmes will remain unaffected.

4. When the Fourth Council Directive 78/660/EEC is
amended, the Commission will propose that the existing
criteria for defining SMEs be replaced by a reference to the
definition contained in this Recommendation.

Any provisions adopted by the Commission which
5.
mention the terms “SME”, “medium-sized enterprise”, “small
enterprise” or “micro-enterprise”, or any other such term, will
refer to the definition contained in this Recommendation.’

8.
The turnover and balance sheet total thresholds are those
of the last approved 12-month accounting period. In the case
of newly-established enterprises whose accounts have not yet
been approved, the thresholds to apply shall be derived from
a reliable estimate made in the course of the financial year.

In the Committee’s view,

1.3.2.
‘small enterprise’ should
be understood to mean both small enterprises and micro-
enterprises as defined in the Commission recommendation and
also craft firms, given their economic and social importance in
the Member States where they are covered by law. The ESC

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expressed this view clearly in the opinions it adopted on small
enterprises and craft firms in 1992 (1) and 1997 (2).

methods which do not allow a satisfactory comparison of data;
in any case, such data are not always available.

To clarify the objectives of

1.3.3.
is
necessary to look into some of the problems that arise in
the statistical quantification of small enterprises and craft
firms in Europe.

the opinion,

it

1.4. While much is known of the productive fabric of
SMEs in Europe, there is a lack of data on the subgroup of
craft sector firms (with the exception of a few European
countries).

1.5.
In many cases it is difficult to gain a clear picture of
the important economic role which craft businesses play in
the EU. This is due to inadequate Member State coordination
on craft sector statistics and the use of widely varying survey

(1) The principles set out in the 1992 Schleyer Report were as

follows:
— close owner/manager links within the firm;
— great reliance on human resources which can be used in
conjunction with up-to-date manufacturing and management
techniques;

— management and manufacturing skills of the head of the firm;
— fundamental role of the head of the firm who is directly

involved in organising the manufacturing process.

(2) OJ C 158, 26.5.1997 p. 53.

In the European Union there is a productive fabric of
1.6.
approximately 19 370 000 companies (in 1998) not including
the farming sector, of which close on 19 330 000 are small or
medium-sized, employing an average of six people. From a
sectoral point of view, the trade sector (retail and wholesale)
accounts
compared with
for 5,56 million companies
2,21 million companies in the manufacturing sector.

1.7.
93 % of all companies have fewer than nine employees;
5.8 % have 10-49 employees and only 0.8 % have over
50 employees: this means that, according to Eurostat, 98.8 %
of non-agricultural European companies fit the definition of
SME.

1.7.1.
In Europe, SMEs employ 66 % of the workforce, as
compared with 42 % in the USA and 33 % in Japan. SMEs
therefore play a greater role in generating employment in
Europe than in other directly competing geographical areas.

1.7.2.
Nationally, the country with the highest number of
companies is Italy (3 940 000 companies) followed by Ger-
many (3 515 000) and France (2 325 000). Businesses are
distributed very widely across the various countries. In Italy,
France, Greece and Spain the most common are micro-
enterprises (with under nine employees), while in Germany
and the other EU countries, small companies (companies with
10-249 employees) are prevalent.

Table 1 — Breakdown of non-agricultural companies in the EU Member States

Companies (1 000s)

Average size

A

B

DK

D

EL

E

F

IRL

I

L

NL

P

FIN

S

UK

EUR

Source: European Observatory for SMEs.

285

530

150

3 515

620

2 510

2 325

85

3 940

15

450

690

210

385

3 660

19 370

11

5

8

8

3

5

7

10

4

13

12

4

5

7

5

6

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Table 2 — Main indicators of non-agricultural companies in the European Union

SMEs

Large

Total

Micro

Small

Medium

Total

Number of companies (1 000)

18 040

1 130

160

19 330

38

19 370

Employees (1 000s)

38 360

21 320

14 870

74 550

38 680

113 230

Average size of company:
— Employees per company
— Turnover per company (million Euros)

Exports as a percentage of turnover (%)

Value added per employee (thousand Euros)

Labour costs as a percentage of value added

Source: European Observatory for SMEs.

2
0,2

6

30

40

20
3

13

50

53

90
23

16

95

43

4
0,5

11

45

45

1 010
215

22

90

38

6
1,0

16

60

42

Table 3 — Percentage breakdown of employees working for private non-agricultural companies

Breakdown of employees by company size

SMEs

Micro

Small

Medium

Total

34

11

19

19

13

12

n/a (*)

n/a (*)

n/a (*)

66

42

33

Large

34

58

67

European Union

USA

Japan

(*) Not available (the Japanese statistics are compiled using different criteria and do not therefore lend themselves to comparison).
Source: European Observatory for SMEs.

Table 4 — Size of non-agricultural companies by sector

Companies (1 000s)

Employees per company

Mining

Manufacturing

Construction

Wholesale

Retail

Transport and communications

Financial intermediation

Hotels and restaurants

50

2 210

2 775

1 490

4 070

1 090

395

1 460

36

14

4

5

4

8

14

5

(*) Small and large companies (there are not generally any medium-sized companies in these sectors).
Source: European Observatory for SMEs.

Size

S&L (*)

S&L (*)

Micro

SMEs

Micro

S&L (*)

S&L (*)

Micro

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1.8. Whilst these statistics enable us to quantify the number
of firms in the EU that are non-agricultural, it is more difficult
to determine how many of these can be termed craft firms and
how many agricultural enterprises there are. This is a serious
shortcoming, given the role which agriculture plays in safe-
guarding the hydrogeological balance of the land and, more
broadly, in conserving the environment and promoting rural
development.

In recent years, the Commission’s efforts have made it
1.9.
possible to quantify the number of firms in the EU more
accurately. However, it is still difficult to tell how many of
them can be defined as craft firms. In some countries the
number of firms and the size of the workforce in companies
that could be defined as craft firms are underestimated because
definitions and criteria are applied indiscriminately. In Spain,
for example, there are officially approximately 15 000 craft
firms, which is probably an underestimate. On the other hand,
in countries where craft industry estimates are based simply
on firms with a workforce of less than nine, the figures may
err in the opposite direction.

1.10.
The type of legal definition used can also affect the
size of the firm, e.g. in countries where there are no size
restrictions on craft firms, they are much bigger than in
countries where there is a legal ceiling.

1.11.
The above comments show how the absence of a
European statistical methodology for quantifying craft-type
firms prevents a proper assessment of the sector. There are
three main problem areas:

— it is not currently possible to assess the size of the
European craft sector, owing to differences in legal
definitions and survey methods;

— there is no method for compiling statistics based on

minimum common denominators;

— the scale of the phenomenon is changing.

1.12.
The final resolution adopted in 1996 by 15 European
craft sector experts (one for each Member State) during the
second symposium on European craft industry statistics (1)

marked a step towards a common research programme whose
main objective is to help solve the statistical side of these
problems.

At

that

symposium,

in anticipation of

further
1.13.
methodological developments(2), an attempt was made to
group together available statistics, using the three approaches
mentioned in the ESC’s 1996 report: sector/size, professional
and artistic (3).

1.14.

The following features emerge:

— an economic comparison of the data is not possible;

— the available data tend to underestimate the phenom-

enon;

— where there is national legislation, defining the character-
istics of craft firms, the economic significance of the craft
industry for the national economy emerges;

— in general, countries that have a legal definition of the
craft industry have a higher number of craft firms;

— the significance of

industry is probably
the craft
underestimated in countries such as Spain and the
United Kingdom.
is no coincidence that both
countries tend to use the term ‘artistic’ when defining
crafts-related firms;

It

— in countries where the professional approach prevails (the
activity is the factor determining whether the company is
a craft firm and there are no company size limits), the
size of the craft workforce compared to the total number
of people employed by companies is greater than in other
countries.

1.15.
These differences should not be seen as a problem
but rather as a cultural and economic asset and a starting point
for a common strategy that develops and enriches the identity
of small companies and craft firms in Europe.

(1) The second symposium on European craft industry statistics was
organised by the Istituto Guglielmo Tagliacarne, under the aegis
of Commission DG XXIII in Rome on 20-21 March 1996.

(2) In 2000,

the Istituto Tagliacarne in Rome was awarded a
European Commission (DG Enterprise) contract to prepare a pilot
methodology for quantifying the European craft sector.

(3) These distinctions have also been adopted by the European

observatory for SMEs — European Commission.

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Table 5 — Number of craft firms (in thousands — in accordance with national definitions) (1)

Professional approach

Austria

Germany (*)

Iceland

Liechtenstein

Luxembourg

Sector/size approach

France

Italy

Netherlands (**)

Artistic approach

Spain

Other approaches

Belgium

Finland

Ireland

Sweden

UK

1991

1992

1993

1994

1995

1996

1997

1998

1999

42

598

5

1

4

42

606

5

n.a.

4

42

614

6

n.a.

4

42

594

6

n.a.

4

42

598

6

1

4

42

603

6

n.a.

4

42

605

n.a.

n.a.

n.a.

43

607

n.a.

n.a.

n.a.

854

857

831

811

821

828

823

819

1 140

1 209

1 260

1 272

1 326

1 333

1 325

1 338

101

107

115

121

101

127

140

145

n.a.

608

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

14

15

15

15

15

15

15

15

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

17

n.a.

104

n.a.

n.a.

n.a.

54

n.a.

n.a.

n.a.

19

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

164

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

(*) Owing to changes in calculation methods, the data for 1994 and after are not comparable with earlier data.
(**) As inactive companies were excluded in 1995, the data for 1995 and after are not comparable with earlier data.
NB: Owing to the varying definitions of ‘craft firm’, direct comparisons between countries are not possible.

Table 6 — The craft sector’s contribution to GDP in a number of

European countries (*)

Country

% of GDP

France

Germany

Greece

Italy

Luxembourg

Netherlands

Spain

(*) The figures are indicative.
Source: National statistics.

5,1

9,6

3,0

12,0

15,0

3,5

0,3

(1) The following tables are the fruit of methodological guidelines that grew out of the 1994 and 1996 conventions hosted by the Istituto

G. Tagliacarne in conjunction with the European Commission and the sectoral associations.

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Table 7 — Craft sector exports in a number of European countries (*)

Country

% of total exports

Austria

Denmark

France

Germany

Italy

(*) The figures are indicative.
Source: National statistics.

2,8

6,0

4,2

2,0

18,3

Figure 1 — Distribution of the 15 European countries according to the four factors

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Table 8 — Statistical definition of craft in Europe: characteristics of the available data for each country

Austria

Belgium

Denmark

Finland

France

Legal definition

Yes

No

No

No

Yes

Size

Activity

Profession

Entrepreneur

Legal Nature

Other

Belonging to one of
the following econ-
omic sectors: con-
struction, metals,
health
carpentry,
and hygiene, cloth-
ing, food, cleaning,
glass, paper, etc.

There is a list of 43 There is a definition A list of craft trades
of craft worker and and professions is in
craft professions.
a list of 45 craft pro- preparation.
fessions divided into
11 categories.

The
entrepreneur
must own the title
of master craftsman.

Only self-employed
people can be con-
sidered to be run-
ning craft firms.

Companies with 1 Companies with 1 to
10 workers. This limit
to 3 workers.
can be exceeded in
some cases.

Belonging to one of
the following econ-
food,
omic
sectors:
metals,
textiles, car-
pentry and furniture,
other manufacturing,
construction,
repair,
transport and other
services.

Enrolment on craft
registers
is compul-
sory.

Entrepreneurs
are
enrolled on craft regis-
ters.

Goods and services
produced manually.

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Germany

Greece

Ireland

Legal definition

Yes

No

No

C 221/9

(cont.)

Italy

Yes

Luxembourg

Yes

Size

Activity

Profession

Entrepreneur

Legal Nature

Other

Companies
under 10 workers.

with

Varies depending on
sector of activity.

Belonging to one of
the following econ-
omic sectors: con-
struction,
elec-
tricians, technicians,
carpentry,
health
and hygiene, pot-
tery, clothing, food,
cleaning, glass, pap-
er, etc.

There is a list of craft
occupations (94 tra-
des
pro-
fessions).

57

+

Craft firms are run
by
self-employed
people or families.

Technology can be Craft enterprises do
sophisti-
used as a craft tool, not
technologies
but must not replace cated
tra-
but prefer
a
manual skill.
ditional way
of
work.

use

All sectors, with the Belonging to one of
exclusion of health the following econ-
sectors:
and public adminis- omic
con-
struction, mechanics,
tration.
health and hygiene,
clothing, food, etc.

There is a definition Craft entrepreneur.
of a craft worker and
39 trades are con-
sidered to be crafts.

Craft is identified by
the way work is done
in
company.
the
(152 trades)

craft

entre-
The
preneur must
be
directly involved in
the work of
the
company.

Run
self-
by
employed people or
as companies.

enterprises
Craft
produce
tailor-made
products and services
and work for a known
market/client.

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(cont.)

Netherlands

Portugal

United Kingdom

Spain

Sweden

Legal definition

Yes

Yes

No

No

No

Size

Activity

Profession

Entrepreneur

Legal Nature

Other

SMEs
nition).

(EU

defi- Companies with a
maximum of nine
workers,
plus
apprentices.

Companies with 10
to 15 workers (flex-
ible limits).

Com-

sectors:

instal- work,

food, metals omic

the following econ- definition.

tex- panies involved in activities are

Belonging to one of Belonging to one of There is no legal Only
six economic sec-
tors:
and furniture, con-
struction,
lations, sales and ser- hides, wood
cork, metals
vices.
stonework,
and
engraving, building
and
restoration
work.

companies
involved in artistic
con-
tiles, pottery, straw- artistic activities can sidered to be craft
leather and be considered to be firms. Activities are
and craft firms: carpen- divided
into
and try, basket making, 4 groups: popular
paper hand made pottery, craft, artistic craft,
production of food
products, services.

graphics, metal work.

There is a list of craft The
craft
professions divided fessions are
into 12 categories.

pro-
those
listed in section 5 of
SOC2000.

There are 100 pro-
fessions (a diploma is
not
optional
necessary to run a
craft business).

but

Entrepreneur who
carries out a special-
ised activity involv-
ing both esthetic and
manual expertise.

Run
self-
by
employed people or
as companies.

The activity must be
carried out by some-
one who knows the
entire
production
process and prod-
ucts must be custom
made.

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Table 9 — Statistical definition of craft in Europe: characteristics of the available data for each country — Summary of all data

Summary of all data

Legal definition

Size

6 out of 15.

7 out of 15.

Limits: 3, 10, 15, 40, 50.

Activity

10 out of 15.

7 countries include manufacturing, construction, repairs, transport (France and Italy) and services,
while Spain and the UK restrict the definition to artistic activities.

Profession

11 out of 15.

In general th ese countries refer to group 7 of the international classification ISCO 88, (craft and
related trades workers).

Sometimes professions connected to health services (group 513), household services (group 514)
and vehicle drivers (group 83) are included.

Entrepreneur

4 out of 15 have an explicit definition.

Luxembourg also gives consideration to ‘non-entrepreneurs’.

Legal Nature

6 out of 15.

With the exception of Italy and Portugal (where companies are included) only self-employed craft
workers are considered craft firms.

Other

5 out of 15 refer to the use of technology in the production process.

2.

From Avignon to Milan

2.1.
The 1990s were a key period in building a new set
of reference points for small companies and craft firms. This
repositioned them in the value chain,
in terms both of
participation in the production process (sub-contracting for
instance) and of links with the business world in general.

There is now a ‘new’ awareness that these companies
2.2.
play a significant role in the general economy. This makes it
even more important to develop a specific policy for small
business and craft firms in Europe.

the Committee has always championed a specific role for small
businesses and craft firms and has repeatedly suggested to the
institutions, and the Community bodies in general, ways of
taking action that would be more in line with the scale and
economic bearing of the small business world.

In practice, the special nature of the sector has been
2.4.
affirmed. This does not mean that
the craft and small
business sector is not fully integrated in the economy, but
rather that it can no longer be dealt with under the same
general ‘SME’ heading as other companies when it comes to
enterprise policy measures, but that specific and less generic
policies are needed.

2.3.
The Economic and Social Committee has made a
major contribution to the understanding of events and the
identification of appropriate solutions. Over the years, through
the work of its constituent bodies and the resulting reports,

In close cooperation with the sectoral organisations,
2.5.
the European Commission began looking into the craft sector’s
in
needs after the first European conference,

in Avignon,

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October 1990. The changes that grew out of that conference
reinforced the need to promote exchange and dialogue
between companies, between their national and European
representatives and with the EU Member States.

2.6.
The second conference, in Berlin, in September 1994
and the Milan conference in December 1997 helped to further
this process and to pinpoint companies’ main causes for
concern in the face of the economic and social changes
happening in the European Union and other parts of the
world.

2.7.
These conferences were a major step towards greater
consideration of the craft sector at European level, bolstering
the principle that the craft sector represents a harmonious
it
culture of difference. More than other forms of work,
expresses a social way of conducting economic activity and
can therefore bring the public closer to the business world.

2.8.
It was also realised that what was needed was not only
an affirmation in principle of the importance of craft firms and
small businesses in Europe, but also a precise quantification of
the phenomenon in order to draw the necessary conclusions.

— establishing the European Academy for Craft Industries

and SMEs;

— supporting the development of a European identity for
the craft industry and small business culture throughout
Europe;

— securing an enhanced role for apprenticeships and pro-

moting combined work/training schemes;

— improving information for micro-businesses;

— simplifying bureaucracy;

— providing incentives for cooperation and exchanges

between micro-businesses;

— promoting a culture of innovation for craft workers and

small businesses;

— supporting professional organisations in their work to

promote the growth of craft firms and small businesses.

2.12.
The aim now is to use an ex-post evaluation approach
to ascertain what has been achieved and whether the lines of
action chosen four years ago are still relevant and important,
with regard to new development trends, or in what terms they
should be fleshed out and/or modified.

2.9.
Here too major progress has been made, thanks to the
combined work of the ESC, the European Commission, sectoral
organisations and specialised institutes. This work, which is
still going on, should result in a quantification of the craft
sector in Europe and above all a statistical definition of craft
firms.

2.13.
The ten priorities have been divided into four groups,
combining two types of information: degree of implemen-
tation and relevance.

2.10.
In 1997 the ESC issued its second opinion on the
craft sector in Europe. This opinion, which was the fruit of an
internal debate in the Committee and of the views expressed
more than once by the Commission and the Parliament,
proposed 10 priority lines for action that were echoed in
the European craft industry charter three years later. They
corresponded closely to the needs of small businesses and craft
firms, in anticipation of the current debate.

2.14.
The first group contains the lines of action that have
been implemented and which are still relevant; the second
covers those that are still relevant but which are harder to put
into practice; the third includes lines of action that irrespective
of their degree of implementation are less relevant now and
should therefore be revamped; the fourth group, lastly, features
measures that have been implemented only partially or
insufficiently.

2.11.
following:

The ten lines of action proposed by the ESC were the

— social consultation;

— boosting business competitiveness;

2.15.
The first group includes: the establishment of the
European Academy for Craft Industries and SMEs in Avignon,
although this has yet to reach its full potential; cooperation
between companies, especially through the Euro-partnerships;
the enhancement of the place of apprenticeships and the use
of combined work/training schemes; and support for the
development of a European identity and culture for the craft
industry and small business.

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This business culture must

2.16.
involve both self-
employed people and employees and must promote the
concept of work as a factor in social cohesion. This process is
highly developed in areas with a high concentration of small
and craft firms (such as the ‘industrial districts’), which often
show the highest income levels in Europe.

2.18.
The relationship between business and government is
just one aspect of a broader problem concerning the modern
role of government in the post-industrial age. The challenge
facing public administrations is cultural change, which will
require civil servants to move from a traditional culture based
on reading and writing to the ‘digital culture’. All this must be
brought about largely through continuous training and the
introduction of new job descriptions.

2.16.1. While education and vocational
training pro-
grammes have gone some way towards enhancing the value of
apprenticeships, the Committee feels that work should also be
done to encourage apprentice exchanges and to adapt the
existing programmes to the reality of small business.

This means joining all central and local government
2.19.
in a network, and linking it to companies and the region.
Government must be a factor for growth and competitiveness,
and must be a constructive partner, especially for small
businesses and craft firms.

2.17.
The second group includes administrative simplifi-
cation, which is being addressed slowly and painfully in all EU
Member States (1), with varying degrees of success. Failure to
succeed still carries a high cost — not only financial — for
small businesses. Administrative simplification (one example
being the one-stop shop) should be accompanied by simplifi-
cation of
the tax system and the wage structure. These
concepts, once suggested rather hesitantly, are now very real,
with the Luxembourg process and the subsequent achieve-
ments after 1997.

The third group — areas requiring a review of the
2.20.
concepts expressed and a different approach, more in line with
recent market developments — includes boosting business
competitiveness, and promoting the culture of innovation
among craft firms and small businesses. When these ideas
were proposed it was impossible to envisage the incredible
growth of the new economy and the impact this could have
for two such classic economic concepts as competitiveness
and innovation (2).

2.17.1.
Simplification of tax formalities should go hand in
hand with an improved tax climate for small companies, in
particular by reducing the burden on the labour factor. This
factor, which is of paramount concern to small companies and
craft firms, tends to be especially affected by the restraints
arising from the complex array of fiscal and social requirements
that stifle recruitment and contribute to the spread of unde-
clared work, with all the negative repercussions for employ-
ment and the social security system.

2.17.2.
As is underlined in the eighth principle of the
European Charter for Small Enterprises, administrative simpli-
fication should help to improve the status of entrepreneurs.
On this note it is important to ensure equality of treatment
among companies, regardless of their legal form, and to
improve the situation for self-employed workers, who in some
Member States do not enjoy fair competition with businesses
with company status.

2.21.
The paragraphs below provide a more detailed analy-
sis of one of the main priorities that small businesses and craft
sector should focus on in the next decade.

2.22.
The fourth and final group covers social consultation,
support for professional organisations, and information for
micro-enterprises.

it

On social consultation: the 10th action line of the
2.23.
is
European Charter for Small Enterprises states that
necessary to develop stronger, more effective representation of
small enterprises’ interests at Union and national level. Small
enterprises are not yet recognised as fully-fledged social
partners with the right to sign agreements independently,
the
they account
despite the fact
Community’s companies. Clear representation is obviously not
helped by the high degree of fragmentation among small
enterprise associations.

for over half of

that

(1) See: European Commission, Joint Employment Report 2000;

Part II: The Member States. COM(2000) 551 final, Vol. I.

(2) See: Action Plan for Innovation in Europe, COM(96) 589 final;
Lisbon European Council, March 2000; Towards a European
research area, COM(2000) 6 final; Innovation in a knowledge-
driven economy, COM(2000) 567 final.

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2.24.
On the subject of support for professional organis-
ations in their work to promote the development of craft firms
and small businesses, the Committee welcomes the stance
taken by the European Parliament on the Multiannual Pro-
gramme for Enterprise and Entrepreneurship, recognising and
supporting the role of professional and sectoral associations
that represent SMEs and craft firms, and calling on the Member
States to create the right climate for that role to develop. The
Committee believes it is important to devise Community,
national and regional measures, with a view to bolstering
the work of small-business support organisations, and to
encourage dialogue among organisations from the various
Member States at Community level. This final measure is
especially necessary in the context of enlargement which will
require an active dialogue with small business associations in
the applicant countries.

3.2.3.
The Committee regrets that despite its requests and
those of the Parliament, the Commission has abandoned
measures for cooperation between companies in the new
Multiannual Programme for Enterprise and Entrepreneurship
at a time when other programmes are seeking to develop
them, especially in research and development, international
cooperation and cooperation with the applicant countries.

3.2.4.
The Committee also regrets that the moves taken by
the Commission’s Enterprise DG to set up an expert committee
on small firms are not in keeping with the principles enshrined
in the Feira Charter for Small Enterprises.

3.

The European Charter for Small Enterprises

3.3.
The charter is the result of a long-term process, and is
a crucial staging post in identifying the tools needed to achieve
the goals it expresses so clearly.

3.1.
Insufficient and poorly timed economic information,
red tape, difficult relations with the credit system, and rules
that have often been designed for more complex and structured
productive systems are just a few examples of an economic
‘habitat’ that needs to change.

The charter recognises the energy of small enterprises,
3.4.
their importance for job creation and thus their contribution
to local economic development and the social development of
a country.

3.2.
In June 2000, this thinking led to the adoption at
Community level of the European Charter for Small Enter-
prises, at the end of the Portuguese presidency (1). For the first
time at a European Council meeting, small enterprises were a
topic in their own right, moving beyond the usual concept of
SME, now obsolete on a number of counts.

3.5.
The charter stresses the need, in line with what the
Committee has been stating for some time, to remove the
legislative, administrative and tax obstacles that prevent small
enterprises from responding in an effective way to the
challenges of globalisation.

3.2.1.
The Lisbon and Feira European Councils stressed
the importance of small businesses for the EU’s growth,
competitiveness and employment. Small companies form the
backbone of the European economy and are the main driving
force behind job creation in Europe. The Member States are
committed to focusing on small enterprises and taking their
specific requirements into account.

3.2.2.
The European Parliament, meanwhile, in its report
on the Multiannual Programme for Enterprise and Entrepre-
neurship, has stressed that SMEs, micro-enterprises and craft
firms make a significant contribution to competitiveness,
research and innovation, and that they have a crucial role to
play in strengthening social and regional cohesion. The
European Parliament asked in particular that the European
Charter for Small Enterprises be annexed to the Multiannual
Programme for Enterprise and Entrepreneurship in order to
give the charter legal value.

Back in May 2000 (2), the Committee welcomed the
3.6.
Lisbon European Council’s plan for a charter for small
enterprises, and urged the Commission and the Council to
‘continue to provide strategic assistance for small companies
and craft businesses, using appropriate methods and instru-
ments’.

In the light of this EU initiative, the OECD’s European
3.7.
charter on SME policies seems to make a step backwards. The
document that the OECD approved in the same month of June
2000, in Bologna, is anchored in an old view of company
support, using undifferentiated policies that discriminate
against small companies and craft firms.

(1) Feira European Council, 19-20 June 2000.

18.7.2000.

(2) Opinion on the European Charter for Small Enterprises, OJ C 204,

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It

is clear that

3.8.
the OECD still views SMEs as a
homogeneous ‘mass’ of players, whose needs are identical and
require the same solutions. This approach is wrong, and
offers ineffective answers to the many problems facing small
businesses.

The European Parliament asked in particular that the
3.8.1.
European Charter for Small Enterprises be annexed to the
Multiannual Programme for Enterprise and Entrepreneurship
in order to give the charter legal value.

3.9.
The progress made on the charter, following the Feira
Council, is the subject of a brief communication from the
Commission to the spring Council (1).

Portugal has already begun to apply the Feira
3.10.
approach by adopting Law 44/2001 of 9 February 2001 (DR
I-A No 34) which defines the constitution, limits and functions
of the craft sector and craft enterprises, aligning itself on the
French and Italian position.

4.

Strengthening the competitiveness of small compa-
nies and craft firms by promoting a culture of
organisational/commercial
innovation and partici-
pation in the new economy

4.1.
In recent years, the context for this issue has changed
enormously. The capacity of small business to manage inno-
vation has improved, and this is reaffirmed in the Bologna
charter (2). Furthermore, much of the capacity to stay on the
market and be competitive depends on the opportunities that
each entrepreneur or group of companies has to innovate, not
only with their processes/products but first and foremost
organisationally and commercially.

The new innovation phenomenon that has developed
4.2.
in Europe, especially in the last three years, is the new economy.
It is spurred by many factors linked to the dissemination of
information and communications, as well as the commercial
use of the Internet. The Internet is a new means of communi-
cating which complements traditional forms and has greatly
facilitated the creation of networks of processors at diverse
levels.

4.3.
It is an extremely pervasive tool and it is helping to
change not only our way of communicating but also economic
relations and our quality of life. Currently, companies can use
the Internet in three ways: to increase the efficiency of certain
areas of business, to transform the entire company, or to set
up new Internet-based companies — ‘dot.coms’.

4.4.
The new economy is not in opposition to the old but
is becoming an adjunct to it. The traditional economy is
changing and playing a part in managing this change. In a few
years’ time, there will no longer be a linguistic distinction, it
will all simply be called the ‘economy’.

4.5.
In the traditional economy, as it is commonly under-
stood, the production of goods and services is based on the
utilisation of resources, raw materials and the work force. In
contrast, the new economy has been defined as the economy
of knowledge and information, whose distinguishing features
are the dissemination and (world-wide) acceptance of the
Internet (3) as the means of distributing information and
knowledge through hypertext pages, following a predefined
and agreed model. The framework behind the dynamic
effect is the electronic interconnection of individuals (people,
companies and organisations). Every element of the latticework
is both active and passive in the process.

4.6.
The use of the Internet by small companies means not
only opening up new commercial sectors, developing new
products and new forms of distribution, but also cutting costs,
which in a functioning marketplace should lead to lower prices
in the following areas, as the Committee underlined in its
opinion on ‘The effects of e-commerce on the single market’ (4):

— Disappearance of traditional middle men (dis-interme-

diation)

— Lower communication costs (telephone, computer etc.)

— Transfer of some costs to customers (customers obtain

information themselves, etc.)

— Lower cost of distributing digital goods

— Internet use has opened up real new employment oppor-

tunities for people able to work with the Web.

(1) European Charter for Small Enterprises — Annual Implementation

Report, COM(2001) 122 final of 7.3.2001.

(2) The term ‘Bologna Charter’ is used to refer to the document
approved at the OECD conference on SMEs, held in Bologna in
June 2000.

(3) The term Internet was formed from ‘Interactive network’.
(4) OJ C 123, 25.4.2001.

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4.6.1.
E-commerce is the term used to describe any use
of the Internet for the exchange of information, goods or
services. Its importance stems from its capacity to accelerate
the distribution process, enhancing opportunities to use
goods and services by attempting to bridge the gap between
producer and customer. In essence, e-commerce is like a
virtual market in which each producer is faced with an
international raft of potential customers. Clearly, this is not
a panacea for all market problems, but it can help to contain
them.

4.7.
Currently, electronic transactions can be defined as
either business to business or business to consumer. In the
first
instance, on-line sales create alternative distribution
channels and shorten the chain of intermediaries, changing
traditional patterns. In the second instance, (‘B2C’) producers
and consumers can make direct transactions, reducing the
time and cost of supply and thus of production.

also be reviewed and changes made to suit small companies’
requirements.

4.12.
On this note, an important role will be played by the
use of funds under the EU’s fifth (and soon sixth) framework
programmes for research and development, and by company
training in these areas.

This means that it is necessary to pinpoint problems,
4.13.
development schemes and lines of action that
favour a
symbiosis between innovation, the new economy, and small
companies, and above all that facilitate small companies’
access to national and international
innovation networks,
Community R&D programmes and financial services on a fast
track tailored to their needs as opposed to those of more
structured companies.

4.14.
Nowadays, it would be a major mistake to talk about
competitiveness and innovation without reference to these
processes and to limit the approach to product innovation
in a world where organisational and commercial
alone,
innovation is becoming increasingly important.

the situation,

From these brief comments and a superficial reading
4.8.
of
the two types of
it would seem that
economy are separate and associated with two types of
market:
‘market place’ and a ‘market space’
based on information, with the former appearing to be of
lesser importance.

the physical

Not

to support

the introduction of

these inno-
4.15.
vations, which probably have the greatest innovative benefit
for craft firms, would be restrictive and inappropriate in
terms of
the definition of support measures for small
companies, and it would prevent them holding a competitive
position (1).

The key to understanding the situation is not that
4.9.
simple, however. If it is assumed that work is at the root of all
value-adding processes, then the seemingly separate concepts
(old and new) should be merged into one (one economy
without distinctions).

4.10.
Small businesses and craft firms, where the labour
factor in many ways predominates over the capital factor,
could make the connection between these two worlds, which
are only seemingly distinct as the new economy is changing
business practices everywhere, not only for medium-sized and
large companies.

4.11.
This is at once a challenge and an opportunity for
small companies and craft firms that are not highly structured.
They could however be helped to overcome the time- and
space-related barriers to access. Security-related issues must

One solution could come from the ‘go digital’
4.16.
initiative (under the eEurope programme), which was taken
following the Lisbon and Feira Councils. This is designed
to introduce the new information and communication
technologies into companies, small and micro-enterprises in
in a similar way to the measures provided for
particular,
under
the Commission programmes: Structural Funds,
the multiannual programme for enterprise, research and
development, EIB financing. The Committee in any case
hopes for better cohesion between the various measures and
urges the Commission to involve the associations that
represent small businesses and craft firms directly in design
and implementation.

(1) In addition to dissemination on the Internet, it is necessary to
support the factors that promote innovation in SMEs. Some of
these factors, perhaps the most important, were highlighted at the
forum held in Lyons in November 2000 (Towards a European
innovation area), namely: business culture, education systems,
the tools of the information society, opening up to science,
organisational innovation, support for private investment, the
promotion of venture capital, support for small businesses and
the craft sector, the dissemination of research and technological
development initiatives.

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5.

The financial obstacles to development and inno-
vation facing small businesses and craft firms

One of the main problems faced by small companies
5.1.
in their day to day existence, and which is a genuine barrier to
competitiveness and innovation, is their difficulty in tapping
into the credit system and the need nevertheless to finance
their own investments, especially those intended for inno-
vation. This problem blocks companies’ growth and prevents
them from introducing innovative factors.

5.2.
This was underlined in the conclusions of the Lisbon
European Council of 23 and 24 March 2000, which
emphasised the importance of considerably improving the
financing of innovative SMEs and paying special attention to
new entrepreneurs, in order to promote employment.

Finding the capital necessary for productive invest-
5.3.
ments is extremely important in the economic activity of a
company, especially for small companies and craft firms.

5.4.
One of the main problems that companies, especially
small companies, must face every day is the difficulty of
securing capital for business start-ups and/or expansion, which
leads to excessive dependence on loans in relation to their own
funds, as well as higher costs compared with medium-sized
and large companies, especially where interest rates are
concerned.

5.6.1.
Some important initiatives can be stymied by com-
munication problems, or by technical or budgetary difficulties.
Here, an important contribution can be made by programmes
such as: SME guarantee, ETF — start-up (European Technology
Facility) and JEV (Joint European Venture) (1).

5.7.
In practice it is a matter of promoting real small
company access to financial services and creating a favourable
climate that supports company growth, cooperation between
companies and company innovation.

5.8.
These issues have been aired several times, by the
Committee in its opinion on the multiannual programme for
enterprise (2), and by the European Commission in its recently
published ‘Review of specific Community financial instruments
for SMEs’ (3), which lists the panoply of financial facilities
provided by the European institutions (EIB, EIF, Commission,
EBRD).

This document shows that the problem to be addressed
5.9.
is not so much the need for new ad hoc financial instruments,
given that existing financial products already offer a vast range
of options for varying financial needs, but rather the actual
accessibility and use of these instruments by small companies
and craft firms.

If the criteria were solely quantitative, unstructured
5.10.
companies would be the first out and would be excluded — as
in practice they currently are — from public and private
international finance facilities.

6.

The European crafts academy

5.5.
In this context it is vital that, alongside the European
Company Statute, work be completed on the statutes for
associations, cooperatives and mutual societies.

One of the main objectives of the European Academy
6.1.
for Craft Industries and SMEs is to monitor and pass on
experience of traditional trades to the appropriate institutions,
not only to safeguard traditions, but also as a source of
employment and social development.

5.6.
Businesses find it difficult to secure capital at all stages
of company life, from start-up to consolidation and expansion.
Hence the need to promote alternative forms of financing
among small entrepreneurs and craft firms for both start-up
(e.g. seed capital) and company expansion, through finance
cooperatives, venture capital, etc.

(1) For further details see the ESC opinion on the ‘Proposal for a
Council Decision on measures of financial assistance for innova-
tive and job-creating small and medium-sized enterprises (SMEs)
— The growth and employment initiative’ (COM(98) 26 final) —
Brussels, 26 March 1998 — rapporteur-general: Mr Pezzini.

(2) OJ C 116, 20.4.2001, p. 4.
(3) COM(2000) 653, European Commission Communication of

18 October 2000.

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6.1.1.
The Committee hopes that the academy will strength-
en its activity and become more involved in measures, work
and studies on the situation and recognition of the status of
small companies and self-employed people, the development
and enhancement of apprenticeship, cooperation between
companies and business organisations, and support for the
development of a European identity and culture of craft and
small business. The academy should also be responsible for
monitoring and verifying the implementation of the European
Charter for Small Enterprises, and forming proposals for
practical measures for the effective implementation of the
charter’s action lines.

By means of

its constituent parts,

6.1.2.
the scientific
committee, and the network of universities and specialised
institutes to which it is linked, the academy must step up its
work and fulfil its statutory duties, namely to:

— enhance the cultural dimension of the craft sector and

small business;

— prepare useful strategies for the national and European

organisations;

— rediscover traditional trades;

— spread an entrepreneurial spirit;

— foster a culture of labour socialisation;

— support apprenticeship.

6.2.
The European Parliament has also asked that pro-SME
measures implemented by the European Union take account
of the objectives established in the European Charter for Small
Enterprises, and in particular that the Multiannual Programme
for Enterprise and Entrepreneurship plan specially-targeted
measures for small companies, micro-enterprises and craft
firms, by applying a definition of their specific characteristics
and requirements. Acceptance of the principle of evaluation
would furthermore enable an assessment of
the positive
and negative effects of Community measures (in particular
regarding health and safety) on the running of small compa-
nies, whose survival and development depend on strategies
and production methods that are quite different from those of
major industrial groups.

6.3.
The European Charter for Small Enterprises underlines
the need to ensure that policy makers give adequate consider-
ation to small companies. The Committee is therefore glad
that by adopting the Multiannual Programme for Enterprise
and Entrepreneurship (1) the Council has decided (Articles 2
and 3) to use this programme to take further steps towards
achieving the objectives set out in the charter.

7. Conclusions

7.1.
The European Charter for Small Enterprises stresses
the central role that small companies play not only in
economic growth and innovation, but also socially, by
in developing personal
providing jobs and as a factor
responsibility. In practice, the fabric of small businesses and
craft firms is more than just an economic asset, and it must
be developed, enhanced and in come cases protected,
with the establishment of a more supportive economic
environment. The charter contains statements of principle to
that end. It states that it is fundamentally important to set
up a legislative framework that does not impose unjustified
burdens on small companies,
in accordance with the
principle that government should serve the public, and
therefore small businesses, and not vice versa.

7.2.
Special emphasis is placed on the importance of
education and human resource management policies, effective
access to financial services (more specifically: start-up capital,
innovation policies
venture capital and working capital),
and the new economy, stronger public-private partnerships,
political and social dialogue, and all forms of support for the
bodies that provide assistance for SMEs(2).

7.3.
In any economy, SMEs — and particularly craft firms
— are a key factor in the training of skilled workers. This
applies not only to trades offering apprenticeship training
but also to ICT professions. Given demographic trends in
the EU and Europe as a whole, and the growing need for
well-trained skilled workers, a radical review of tax systems
and labour costs seems to be an urgent necessity at Member
State level, especially as regards the period of apprenticeship
and/or
training. Appropriate human resources, equipped
with the requisite skills, are the only way to achieve the
objective set in Lisbon of making the EU the most dynamic
and most competitive innovation- and knowledge-based
economy.

7.4.
The business environment must therefore be favour-
able to entrepreneurial initiative, innovation and growth. This
also means promoting a clear distribution of administrative
responsibilities, applying a fair and transparent competition
policy, combating corruption, and establishing stable and non-
discriminatory tax regimes. Special attention should be paid to
the establishment of national and European legislation to
protect entrepreneurs’ private property and private life in the

(1) OJ L 333 of 29.12.2000.

(2) For a more detailed analysis see the Commission’s two-yearly
‘The activities of the European Union for small and
(SMEs)’, COM(2001) 98 final of

report:
medium-sized enterprises
1.3.2001.

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event of bankruptcy, especially if it is the result of external
causes not related to the business, by using measures such as
drawing a distinction between personal and business assets.

7.9.
The use of guarantees for micro-credit should be
encouraged by establishing associations to finance certain
types of investment, such as integrated Internet use, in order
to facilitate the acquisition of hardware, software and the
necessary training.

The Committee would like to suggest a number of
7.5.
lines for action,
in accordance with the above-mentioned
principles and in continuation of the social, economic and
cultural debate on small businesses and craft firms in Europe,
which developed during the 1990s and to which the Com-
mittee’s contribution has already been noted. These action
lines draw together the points already made in the ESC’s 1997
report on the craft industry.

7.6.
Existing financial instruments should be simplified and
the eligibility criteria for these and investments for in-company
innovation eased for smaller businesses, in order to reduce the
cost of access to finance (especially the cost of preparing the
relevant files). This is necessary because, very often small
entrepreneurs judge that the definite costs of the undertaking
(interest rates, excessive guarantees, administrative costs, lack
of information, long time waiting for loans to be granted, etc.)
outweigh the ‘possible’ benefits.

7.7.
The types and number of Community financial instru-
ments should be reduced, as many of them have the same
purpose and technical and legislative coordination should be
stepped up. The result would be an increase in available
resources,
to users, ensuring
that more structured companies, medium-sized companies in
particular, do not have a monopoly on the facilities available.

fewer risks, and lower cost

7.8.
Awareness of these instruments must be raised by
providing companies and regions with more information and
promoting the establishment of one-stop shops for requesting
information and submitting applications (one-stop credit
shops).

7.8.1.
As small craft firms tend to be fully occupied with
strictly productive activity and lack adequate organisational
structures, they often do not receive or manage to procure the
necessary information. In a market where information is an
economically precious good whose circulation is not always
optimal and which does not reach all companies, one reason
for the scant use of financial and credit facilities by small
businesses is actually an information deficit. Any initiatives
designed to rationalise and spread information, such as those
proposed above, could therefore help to bridge the gap
between medium-sized and small companies.

7.9.1.
The existence of guarantees for micro-credit could
enhance the relationship between commercial banks and small
companies and encourage the former to be more active in this
sector (20 % of the companies that fail in the first five years do
so for reasons linked to inefficiencies in the credit system).
Micro-credit schemes are often managed by specialised non-
banking institutions that generally have limited access to bank
finance because of their low levels of available collateral. A
micro-credit guarantee scheme could be a very effective way
of bridging this gap.

7.10.
Equity guarantees are needed for investments in
early-stage companies, with special facilities for women and
young people going into business. Another possibility is
mentoring by mature professionals who are able to assist
young entrepreneurs, or
to start up their own new
companies.

7.10.1.
This is notoriously the most delicate phase of the
business life cycle and the one in which most business
failures occur. Tax systems should therefore encourage the
expansion of small companies and help them in the start-up
phase, for instance by offering facilities designed to increase
equity guarantees for investments made during the start-up
in certain Member States but
phase. These already exist
should be extended to the entire European Union. If they
were properly structured and financed they could help to
persuade national and international
investors to invest in
risk capital.

7.11.
means of an active input
organisations,
participation of small companies and craft
financing arrangements available under
programmes.

Research and innovation should be encouraged by
from the ESC and support
in order to improve information and the
firms in the
framework

the

7.11.1.
The European Parliament’s report on the Multiannu-
al Programme for Enterprise and Entrepreneurship stressed
that SMEs,
like micro-enterprises and craft firms, make a
significant contribution to competitiveness, research and inno-
vation and that they play a vital role in strengthening social
and regional cohesion.

C 221/20

EN

Official Journal of the European Communities

7.8.2001

7.12.
The network of associations that help and advise
SMEs in the manufacturing, commerce, tourism and general
services sectors should be encouraged and supported in their
work, with a view to furthering the dissemination of good
practice among small companies and boosting their economic,
commercial and social performance.

7.14. Measures for small companies should be monitored
and coordinated in order to prevent overlaps and increase
their impact.

7.15.
Community legislation on public contracts must be
brought more into line with the pattern set by the United
States and adopted by the Senate of the French Republic, i.e.
setting aside a share of public contracts for small companies
and craft firms.

7.13.
In a sector which employs 66 % of the working
population, it is particularly necessary to involve the social
partners and to actively develop employee participation by
encouraging business-owners to promote guaranteed social
standards, for instance in the retail sector and in subcontracting
firms in the industrial and building sector.

7.15.1.
The methodological route taken in the early 1990s
must be pursued, gleaning more information about the nature
and scale of small companies and craft firms in Europe, in
order to gain a clearer idea of their qualitative and quantitative
contribution, and to design increasingly effective and well-
targeted measures.

Brussels, 30 May 2001.

The President

of the Economic and Social Committee

Göke FRERICHS

Opinion of the Economic and Social Committee on ‘Counterfeiting’

(2001/C 221/02)

On 19 December 2000, the Economic and Social Committee, acting under Rule 23(2) of its Rules of
Procedure, decided to draw up an additional opinion on ‘Counterfeiting’.

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 16 May 2001. The rapporteur was Mr
Malosse.

At its 382nd plenary session held on 30 and 31 May 2001 (meeting of 30 May) the Economic and Social
Committee adopted the following opinion by 112 votes to one.

1.

Introduction

1.1.
The Economic and Social Committee, at its 361st ple-
nary session (meeting of 24 February 1999) adopted an
opinion (1)
in response to consultation by the European
Commission, in accordance with Article 198 of the Treaty
establishing the European Communities, on the Green Paper
on combating counterfeiting and piracy in the single market.

1.2.
On 30 November 2000, the Commission submitted a
Communication to the Council (2), the European Parliament

and the Economic and Social Committee on the follow-up to
be given to its Green Paper. The Committee Bureau decided at
its meeting on 19 December 2000 to issue an additional
opinion in order to send out a political signal
to the
Commission, the Council and the European Parliament and to
European civil society, in view of the considerable impact this
problem has within the Community.

(1) OJ C 116, 28.4.1999, p. 35.
(2) COM(2000) 789 final of 30.11.2000.

The Committee opinion adopted on 24 February 1999
1.3.
was the result of in-depth work; this had given rise to a hearing
which brought together more than 30 economic and social