Opinion of the European Economic and Social Committee on "The role of micro and small enterprises in Europe's economic life and productive fabric"
Date: 2003-06-18
Institutions: European Economic and Social Committee
Subjects: economic growth, single market, small and medium-sized enterprises

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Official Journal of the European Union

16.9.2003

Opinion of the European Economic and Social Committee on ‘The role of micro and small
enterprises in Europe’s economic life and productive fabric’

(2003/C 220/12)

On 23 January 2003 the European Economic and Social Committee decided to draw up an opinion, in
accordance with Article 29 of its Rules of Procedure, on: ‘The role of micro and small enterprises in
Europe’s economic life and productive fabric’.

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 4 June 2003. The rapporteur was Mr Pezzini.

At its 400th plenary session on 18 and 19 June 2003 (meeting of 18 June), the European Economic and
Social Committee adopted the following opinion by 89 votes to 12 with 11 abstentions.

1.

Introduction

1.1.
The role played by small and medium enterprises in
economic growth and development in Europe is officially
recognised, both in economic literature and in official Euro-
pean Community documents.

1.2.
It has been a predominantly cultural process, moving
from an economic approach that focused strongly on large
enterprises, to one that takes account of categories that are
closer to smaller businesses. The process has been neither easy
nor swift, and has yet to be completed.

1.3.
The approach taken thus far has proved productive
and significant, but does not go far enough, considering that
the term ‘SME’ covers businesses with often very differing
features,
(the term covers enterprises
employing between 1 and 249 employees in a range of
sectors). The result is that initiatives are often designed to
encompass all businesses, when in many cases, only the larger
businesses stand to reap the benefits.

sizes and needs

1.4.
Consequently, new categories relating to the needs of
smaller enterprises have had to be defined, first of all cultural
categories, and then economic and statistical categories. The
Charter for Small Enterprises is undoubtedly the basis for such
an approach, with measures designed to stimulate and support
small enterprises.

1.5.
In Feira, Portugal, during the Portuguese presidency,
the European Council approved the Charter (1), which high-
lights the role played by enterprises employing less than fifty
members of staff, both in terms of employment and promoting
innovation for socio-economic integration. The Charter has
become a cornerstone of the Commission’s enterprise policy
and a point of reference for both current and future EU
Member States.

( 1) The Charter for small enterprises was approved on 19 and

20.6.2000.

1.6.
The European Commission has already presented the
first (2001), the second (2002) and the third (2003) Report
on the Implementation of the European Charter for Small
Enterprises (2), which reveal some interesting developments,
despite the difficulty of quantifying action by Member States
in this field.

Some such developments can be summarised as initiat-
1.7.
ives designed to yield long-term benefits, such as business
education and simplifying legislation. Others are designed to
have a positive effect in the short term, such as policies to
streamline procedures to set up new businesses (in eight
Member States a business may be set up within a week at
minimal costs), and policies to facilitate access to credit, with
credit approval subject to the business plan rather than to
actual guaranties, which remains one of the major obstacles for
small-scale entrepreneurs (especially in challenging economic
climates, such as the current one).

1.8.
According to the Commission reports, both the effects
of these initiatives and the priority they receive vary from
Member State to Member State and are, of course, subject to
further change.

1.9. Moreover, collecting and aligning data on small enter-
prises is not always a simple, straightforward task, compared
to that for larger enterprises, due to the legal requirements for
publishing company accounts, internal roles and duties etc.
The Commission should encourage the compilation of and
access to statistical data on micro and small enterprises, which
is still underprovided in Europe (3).

(2) COM(2002) 122 final of 7.3.2001, COM(2002) 68 final of

6.2.2002; COM(2003) 21 final of 21.3.2003.

(3) DG XXIII of the European Commission commissioned the Guglie-
mo Tagliacarne Institute of Rome in 2001 to carry out a
methodological study on the importance of craft businesses in the
European Union.

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1.10.
To achieve the desired results, the Charter should
have legal status and funding should be provided to help attain
the defined objectives, with particular attention given to
promoting entrepreneurship. Furthermore, it may be useful to
insert a reference to Chapter 16 of the Community acquis (on
protection of small and medium enterprises) in the European
Convention.

As indicated in the Green Paper (1), ‘Europe needs to
1.11.
foster entrepreneurial drive more effectively. It needs more
new and thriving firms ...’, and also initiatives to bolster the
existing productive fabric, currently marred by high levels of
bankruptcy of small enterprises, especially during the first
two years of business. Unlike their American counterparts,
European small enterprises are experiencing difficulties in
growing.

1.12. Moreover, enlargement policy should include a strong
commitment to small enterprises in candidate countries, with
particular focus on management culture and training.

1.13.
To this end, in order to help to bridge a number of
information gaps, and considering the need to begin
developing policies that focus more closely on the needs of
micro and small enterprises, specific areas for intervention
could be identified by exploring the following avenues:

— the contribution of very small enterprises to EU economic

growth (2);

— focus on certain areas of specific interest and ‘niche’

topics, including:

— self-employment;

— undeclared employment;

— access to finance and investments with venture
capital or stock market quotations in specific sectors;

— the business service industry;

— administrative costs for enterprises;

— standardisation;

— the costs involved in setting up new enterprises;

— women in business;

— innovation and research;

— problems associated with international representation;

( 1) COM(2003) 27 final of 21.1.2003.
( 2) See the results of the First (1994) and the Second (1996) seminar
on statistics on craft industries in Europe organised in Rome by
the Gugliemo Tagliacarne Institute, supported by DG Enterprise
(then DG XXIII) of the European Commission.

— the role of micro and small enterprises in the development

of economic democracy.

Therefore the objective will be to highlight

1.14.
the
contribution of small enterprises in the growth of the EU
economy (in terms of new enterprises, GNP, employment etc.).
This will be achieved by emphasising the role they play in
developing economic democracy, with specific attention to
certain strategic areas that could help identify specific areas for
action to be incorporated — where necessary — into EU
programmes for the growth of small business.

2. The economic and statistical situation

2.1.
In the recommendation on the definition of small and
medium enterprises (3), the Commission defined SMEs to be
enterprises with up to 250 employees, sub-divided into
medium-sized enterprises (with 50-249 employees), small
enterprises (10-49 employees) and micro enterprises (up to
9 employees).

2.1.1.
The Commission has recently taken a fresh look at
the definition of micro, small and medium-sized enterprises
with Recommendation 2003/361/EC of 6 May 2003 (4).
Unfortunately, however,
are
thresholds
unchanged, although the annual turnover ceiling varies.

the numerical

2.2.
The EESC, for its part, examines micro and small
enterprises, as defined by the Commission, and stresses the
economic and social role they play in the various Member
States, and works on the basis of clearly expressed views laid
down in several of its opinions, including the opinions of
1992 (5), 1997 (6) and 2001 (7) on small enterprises and craft
firms.

(3) OJ L 107, 30.4.1996.
(4) OJ L 124, 20.5.2003.
(5) EESC own-initiative opinion on SMEs and craft industries — OJ

C 332, 16.12.1992.
The key aspects of the Schleyer opinion of 1992 are:
— Close link between ownership and management of the

enterprise;

— Significant use of human resources associated with the latest

production and management systems;

— Ability and skill of the entrepreneur in the activity of the

enterprise and the production process;

— Direct, major involvement of the entrepreneur in organising

the production process.

(6) EESC opinion on Craft industries and small- and medium-sized

enterprises — OJ C 158, 26.5.1997.

(7) EESC opinion on The craft sector and SMEs in Europe — OJ

C 221, 7.8.2001.

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2.3.
According to current legislation, the European Union
is home to approximately 20 million enterprises (year 2000
figures), excluding the agricultural sector. Some 93,2 % of all
businesses employ fewer than 9 people. 5,8 % employ between
10-49 employees and only 0,8 % employ between 50-
249 employees; 0,2 % can be classed as large enterprises. This

means that 98,8 % of European enterprises, excluding those in
agriculture, come under the Eurostat classification of small
enterprises. The total number of small enterprises per sector is
5,56 million in trade (retail and wholesale), compared to
2,21 million in the manufacturing industry.

Table 1: Key data for SMEs and large enterprises in Europe-19, 2000

EU 15 + Iceland, Liechtenstein, Norway and Switzerland

Number of enterprises

Employment

Persons employed per enterprise

Turnover per enterprise

EUR Million

Percentage of turnover exported

Added value per person employed

Percentage of labour costs in added value

%

€ 1 000

%

SME

Large

Total

(1 000)

(1 000)

20 415

80 790

40

20 455

40 960

121 750

4

0,6

13

65

63

1 020

255,0

21

115

49

6

1,1

17

80

56

Source:

Estimates calculated by EIM Business & Policy Research based upon data from the Eurostat SME Database, European
Economy, Supplement A, June 2001 and OECD: Economic Outlook, No. 65, June 2001.

2.4.
The phenomenon of micro and small enterprises exists
in all Member States, but to differing extents. The country in
the EU with the highest percentage of micro enterprises is
Italy, with 94,9 %, followed by Sweden (93,3 %). Both Portugal
and Spain have 93 %. The percentage of micro enterprises is
lower than 80 % of total enterprises in Denmark (79,7 %),

while in Germany the figure stands at 81,4 %. In the latter two
the percentage of medium-sized enterprises is
countries,
greater, as in Austria and Great Britain (see Table 2).
In
addition, it should be highlighted that a wide range of legal
forms have been adopted for small and micro enterprises in
these Member States.

Table 2

B(2) DK (3) D(4)

EL

E(5)

F(2)

IRL

I

L

NL(6) A(2)

P(7)

FIN

S(8)

UK NO(9)

92,10 79,70 81,40

6,70 16,40 15,50

1,00

3,20

2,60

0,20

0,70

0,50

30,00 13,90 19,10

21,40 23,80 22,50

15,30 23,50 19,50

33,30 38,80 39,00

:

:

:

:

:

:

:

:

93,00 92,10

6,20

6,70

0,70

1,10

0,10

0,20

40,60 24,50

24,40 21,20

14,80 16,60

20,30 37,70

:

:

:

:

:

:

:

:

94,90

4,50

0,50

0,10

47,80

21,90

12,50

17,80

:

:

:

:

:

:

:

:

91,30 83,20 93,00 90,20 93,30 85,50

7,30 14,20

5,90

8,10

5,60 12,20

1,10

2,20

1,00

1,50

0,90

1,90

0,30

0,40

0,10

0,20

0,20

0,40

:

:

:

:

22,30 22,40 43,40 22,50 28,00 21,70 25,50

24,30 24,20 21,30 18,40 19,00 18,10 24,40

14,90 20,40 17,30 17,60 16,10 15,30 18,90

38,50 33,00 18,00 41,50 36,90 44,90 31,10

Number of enterprises

Micro

Small

Medium

Large

Number of employees

Micro

Small

Medium

Large

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Turnover

Micro

Small

Medium

Large

Added value

Micro

Small

Medium

Large

B(2) DK (3) D(4)

EL

E(5)

F(2)

IRL

I

L

NL(6) A(2)

P(7)

FIN

S(8)

UK NO(9)

24,30 11,80 10,10

22,90 18,50 16,90

19,30 22,70 20,50

33,40 47,00 52,50

19,00 13,10

8,50

20,90 20,70 16,40

18,70 22,70 20,60

41,40 43,50 54,50

:

:

:

:

:

:

:

:

27,80 20,40

24,90 20,40

19,40 17,60

27,90 41,60

30,00 19,50

23,90 19,10

18,60 16,90

27,40 44,50

:

:

:

:

:

:

:

:

30,50

23,70

17,50

28,30

32,50

23,40

16,60

27,40

:

:

:

:

:

:

:

:

:

:

:

:

:

:

:

:

16,50 32,50 15,30 19,60 16,20

21,60 22,50 15,40 19,20 16,70

24,60 21,60 18,30 18,80 17,40

37,20 23,40 51,00 42,50 49,80

16,70 30,60 17,50 20,10 20,90

21,70 20,00 15,60 17,70 20,00

21,90 20,70 16,20 17,80 18,30

39,70 28,60 50,70 44,40 40,80

:

:

:

:

:

:

:

:

Table 2b: Number of craft enterprises (given in thousands — in line with national definitions) (1)

1991

1992

1993

1994

1995

1996

1997

1998

1999

2002

Professional

Austria

Germany

Iceland

Liechtenstein

Luxembourg

Sectoral

France

Italy

42

42

42

42

42

42

42

43

n.d.

598

606

614

594

598

603

605

607

608

5

1

4

5

6

6

n.d.

n.d.

n.d.

4

4

4

6

1

4

6

n.d.

4

n.d.

n.d.

n.d.

n.d.

n.d.

n.d.

n.d.

n.d.

n.d.

—

—

—

—

—

854

857

831

811

821

828

823

819

n.d.

—

1 140 1 209 1 260 1 272 1 326 1 333 1 325 1 338

n.d. 1 429

The Netherlands

101

107

115

121

101

127

140

145

n.d.

—

Artistic

Spain

Others

Belgium

Finland

Ireland

Sweden

United Kingdom

14

15

15

15

15

15

15

15

n.d.

—

n.d.

n.d.

n.d.

n.d.

n.d.

n.d.

n.d.

n.d.

n.d.

n.d.

n.d.

n.d.

n.d.

n.d.

n.d.

54

n.d.

n.d.

n.d.

n.d.

n.d.

n.d.

17

n.d.

19

n.d.

n.d.

n.d.

n.d.

n.d.

n.d.

n.d.

n.d.

164

n.d.

n.d.

n.d.

n.d.

n.d.

n.d.

n.d.

n.d.

n.d.

n.d.

n.d.

—

—

—

—

—

(1) The following tables were compiled from indications given during the 1994 and 1996 conferences organised by the Tagliacarne

Institute in cooperation with the European Commission and relevant associations.

Source: G. Tagliacarne Institute, based upon data from national sources.

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2.5. Micro and small enterprises together form a widespread
and inter-connecting fabric within the European economy and
represent a substantial pool of employment. SMEs actually
provide two thirds of total employment (1), with only a third
of all jobs provided by large enterprises. Out of all SMEs, the
total employment is shared more or less equally between
micro enterprises (those employing less than 10 people), and
small and medium-sized businesses. However, the proportion
per type of enterprise — classed by size and employment —
differs between the Member States. For example, the percentage
of micro enterprises contributing to the total figures for
employment is 48 % in Italy, and at least 57 % in Greece. On

the other hand, the percentage of large enterprises contributing
to total employment figures in the United Kingdom is 45 %. It
is therefore clear that employment rates are strongly deter-
mined by the business structure in each Member State.

2.6.
Generally speaking, large enterprises shed jobs between
1988 and 2001, whereas employment in the SME sector rose.
Figure 1 shows that this growth began in 1997, predominantly
among micro and small enterprises. In 2001, employment
growth slowed. Therefore, between 1997 and 2001,
the
lion’s share of employment in Europe was created by micro
enterprises, whilst large enterprises were shedding posts.

Figure 1: Employment growth per size of enterprise in Europe-19, 1988-2001

2.7.
Italy, Spain and Portugal represent specific cases, where
micro enterprises play a more important role than anywhere
else in Europe in terms of turnover and added value (see
Graph 1) which represents the wealth generated by small
enterprises.

2.8.
To this end, and in order to further analyse the
distribution of added value generated by an enterprise accord-
ing to its size, the appended graphs give a summary of the
situation, listing Member States in decreasing order in respect
to the EU average. It is clear that Mediterranean countries
have a greater concentration of micro and small enterprises.
Conversely, the larger enterprises tend to be located in central-

( 1) In the private sector excluding agriculture.

northern Europe. There are interesting exceptions to this
pattern, however, such as Austria, Denmark and Great Bri-
tain (2).

(2) To complete the statistics given in this document, it is useful to
mention the recent study carried out by Ipsos in March 2003 for
the accounts of CGPME on ‘The French and enterprises’, which
revealed the following:
— 55 % of French people have a generally positive view of
enterprises and SMEs with less than 250 staff meet with the
approval of 73 %;

— the difference in image connected with the size of enterprise
is also felt at managerial level: directors of SMEs were given
the support of 88 % of those interviewed;

— 66 % of French people perceive that SMEs generate employ-

ment;

— 62 % of those interviewed believe that SMEs encourage
salary progression and provide access to a better level of
training.

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2.9.
The data provided show the dearth of available statistics
and economic analysis on the situation of small and micro
enterprises. The general practice at Community level of
studying SMEs in general terms, without distinguishing the
specific features of very small enterprises, has posed three
problems:

2.12.
The Committee expressly asks the Commission to
launch initiatives that the EESC has already requested in the
past:

— to develop the existing pool of information and method-

ologies on craft and small enterprises (3);

— the real role and situation of small and micro enterprises
in Member States, i.e. 92 % of European enterprises, is
ignored and unknown;

— there appears to be no reliable data and economic analysis
on small and micro enterprises in accession countries;

— the situation in different sectors, categories and types of
activities carried out by small enterprises is unknown at
Community level.

2.10.
The EESC opinion of November 2001 on the Charter
of European Small Enterprises (1) underscores the fact that the
European scientific and university community has not studied
small enterprises and their various components. In response
to the 6th recommendation of the Charter for Small Enter-
prises, the opinion called on the Commission to launch five
initiatives designed to fill this need. In its resolution of June
2002 on the Commission Communication on ‘Sustaining the
commitments, increasing the pace’ (2), the Parliament deplored
the scarce understanding of enterprises and of their needs and
considered that ‘if entrepreneurial Europe and the policies are
to gather momentum and take effect, the differences between
large, medium-sized, small, and micro-scale enterprises have
to be taken into account, as must the distinctive economic or
social models or approaches on which enterprises are based’.

The Committee notes with regret

2.11.
that, hitherto,
despite the increasing importance of small enterprises, the
Commission has not effectively launched any initiative to
address the demands of the Parliament and of the EESC. The
Committee feels that it is unacceptable that such studies have
not been commissioned, despite the fact that small enterprises
requested them at the 1989 Conference of European Craft
Industries in Avignon, and reiterated the request at both the
1994 conference in Berlin and the 1998 conference in Milan.
It deplores the cessation of studies carried out by DG Enterprise
on craft enterprises.

— to commission statistical and economic studies into the
full range of small and micro enterprises, in particular
those in the professions, trade, production, service indus-
tries and mutual and individual enterprises, by tasking
Eurostat and the European SME Observatory to work
alongside the relevant European organisations, notably
UEAPME, Eurocommerce and Eurochambers, CEPLIS and
the Avignon Academy;

— to resume research into craft enterprises;

— to undertake a programme of scientific and economic
analyses of issues identified in conjunction with represen-
tative European organisations;

— to include a specific chapter on small enterprises in all
Community studies concerning or potentially affecting
small enterprises, with particular reference to the impact
on the Single Market and on existing liberalisation
processes, for example privatisation in the energy sector.

3. Problems concerning the creation of micro and small

enterprises

This part of the opinion is dedicated to identifying some of the
key problems concerning the success and growth of European
micro and small enterprises. These problems represent major
challenges for these businesses and as such must be the focus
of discussion and action by the European Commission.

Promoting the creation of new businesses is a key

3.1.
priority for a series of structural reasons and objectives:

— to expand the production base and thereby reduce
unemployment, in particular, youth unemployment;

( 1) OJ C 48, 21.2.2002.
( 2) The Vlasto Report.

(3) For example,

the methodology pursued by the Tagliacarne
Institute of Rome commissioned by DG Enterprise to quantify the
information on
craft industries in Europe by using statistical
enterprises readily available from Member States and from
Eurostat.

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— to industrialise disadvantaged areas;

— to regenerate a sector or region in terms of population,

production or organisational methods, innovation etc.;

— to expand or diversify economic and productive struc-

tures in a country/region.

3.1.1.
The main problems encountered when setting up a
new enterprise are largely due to the difficulties (or obstacles)
they face. The following factors can affect the decision to set
up a new company:

i)

ii)

Financial and credit considerations (effects of credit
rationing)

Fiscal considerations (taxation that fails to encourage the
creation of new companies)

the market, the case for investment, cost
levels, available
technology etc. The latter include factors linked to the personal
decision to set up a company, such as risk management,
learning ability, the earnings ratio from self-employment and
salaried work, etc.

3.1.3.
Actions designed to promote the creation of new
companies, especially micro and small enterprises, must take
these issues into account.

3.2.

Promoting self employment and small enterprises

iii)

Features of the labour market (high labour costs, lack of
people with the appropriate professional skills)

iv) Market information (lack of understanding of the relevant

market)

v)

Unfair competition (see the section on the shadow
economy)

Some areas of Europe display a structural
feature which,
although differing in form in individual countries, differentiates
these areas from other Western countries. In 2000 there was a
high percentage of self-employed workers in the EU as a
proportion of the total employment figures, totalling 13,6 %
of the total labour force. This figure differs widely between
Member States: in Greece, the figure (31,3 %) is even greater
than that for Italy (23,6 %). These figures are way ahead of
those recorded in Germany (9,7 %), France (10 %) and the
United Kingdom (10,9 %). Spain and Portugal record similar
figures to Italy, with 18 % and 20,2 % respectively.

vi)

Slow and costly bureaucracy

vii) Excessive burden of harmonisation, often poorly suited

to small enterprises

viii) Difficulties in entering the profession

ix)

Initiatives to promote the unpaid involvement of family
helpers for limited periods in the case of force majeure (1).

In addition, employment distribution per sector in
3.2.1.
individual Member States varies widely, as a percentage of
the total
figure for self-employed workers. However, the
percentage of trade and service professionals is relatively low
in many Member States. The figures for Italy, on the other
hand, show a high level of workers employed in commerce
(23,6 % compared to the EU average of 9,4 %) and craft
industries (21,6 % compared to 18,6 % in the EU-15).

3.1.2.
In addition to these structural factors (the economic
climate of the set-up area) there are a number of factors linked
the new
to the business cycle and to the character of
entrepreneur. The former include the growth and state of

( 1) See Article 45 of the Italian 2003 Budget.

3.2.2.
However the statistics do not show the process of
profound change that self-employment has undergone in
recent years, including technological change, predominantly
caused by the IT revolution. There has been a radical change
in lifestyle and production methods. An enormous wealth of
information is now at our fingertips, businesses can buy on
line some of the raw materials they need to provide their
services and products and can also trade on line and acquire
new customers.

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Table 3: Self employment per profession in some European countries — 2000

Profession

Den-
mark

Ger-
many

Spain

France

Italy

Nether-
lands

Finland

UK

EU-15

Percentage of total employment per
sector

Government, business

43,4

47,4

78,5

40,3

42,5

36,7

42,7

15,5

39,4

Academic professions

Mid-level technical professionals

Employees

Trade and service professionals

9,7

2,7

0,0

2,2

17,8

12,8

13,3

25,9

11,7

7,7

1,1

5,3

10,4

2,4

7,6

4,4

0,0

2,1

23,2

3,2

36,1

58,6

40,2

65,7

53,6

64,7

6,5

5,9

0,0

7,2

13,8

15,5

15,1

10,5

2,3

2,6

1,6

9,8

64,7

53,3

58,3

7,2

1,3

4,3

5,5

Farmers

Craft workers

Heavy industry workers

Unskilled workers

Total

Percentage of total self-employed

9,1

3,1

1,3

9,7

1,7

0,9

8,2

18,9

16,2

29,4

11,4

10,6

23,6

17,5

15,0

2,6

2,4

0,0

11,3

15,1

10,1

18,2

10,1

24,2

5,2

2,4

9,6

5,7

1,7

9,8

8,2

7,3

4,8

12,9

11,3

14,1

Government, business

38,7

27,0

33,9

29,7

7,6

42,8

31,6

20,8

23,5

Academic professions

15,3

22,6

13,8

11,1

18,7

Mid-level technical professionals

Employees

Trade and service professionals

Farmers

Craft workers

Heavy industry workers

Unskilled workers

8,1

5,5

1,3

5,9

6,8

0,0

4,1

18,5

15,6

1,4

6,0

8,3

15,8

12,1

7,5

0,0

2,6

1,8

23,6

1,5

5,2

1,0

17,1

22,4

8,6

9,5

7,2

0,0

6,6

28,9

19,6

14,1

11,7

11,1

3,3

3,5

4,7

1,5

9,4

14,2

13,1

15,7

17,5

21,4

21,6

10,3

10,5

24,2

18,6

1,4

1,4

2,3

1,1

8,8

2,0

2,5

0,0

4,4

0,0

3,1

2,0

3,9

1,0

6,6

5,6

4,5

3,0

Total

100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0

Source: Compiled by Confartigianato — Tagliacarne Institute, using Eurostat data.

At

3.2.3.
the same time, many types of new, highly
professional, individual jobs have been created and there has
been a growth in atypical workers or professional agents and
in their status as new economic actors. Such workers need to
be recognised in socio-economic terms and they must be
considered active members of the services and manufacturing
industries.

the group into self-employed and employed individual work-
ers (1). The results showed that
this group encompasses
over 12 million people, including 7,4 million self-employed
workers and 4,9 million employed workers, amounting to
50,6 % of the total figures for employment.

3.2.4.
A recent survey of over 500 people in Italy sought
to quantify the ‘Individual Worker’ phenomenon, and divided

(1) Survey by Censis entitled: Gli

Italiani al

lavoro: un’impresa

individuale, I Quaderni di Impresa Artigiana, No 51, May 2002.

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3.2.5.
This is an extremely diverse and sub-divided group
encompassing different types of professions. For example, the
category of self-employed workers includes entrepreneurs and
various forms of professional workers (regulated and non-
regulated, affiliated, VAT registered). The category of employed
individual workers is even more diverse:
in addition to
managers, this category encompasses ‘coordinated’ consultants
and freelancers (which often denotes ‘casual’ workers, or at
best, workers who are ‘waiting’ to be offered a permanent job,
especially in Southern Italy),
temporary workers, agency
workers, etc.

the concept of

3.2.5.1. Within this group,
the micro
enterprise needs to be more closely identified with the
individual person. Such people tend to consider themselves
their own bosses, and take a dynamic view of their own life,
continually putting themselves on the line and planning
medium/long-term projects. Sometimes, however, this role is
assumed for economic reasons only and places stress on the
individual, who would willingly give it up in favour of
employed status.

3.2.6.
Despite the marked diversity we have seen within the
group of individual workers, the survey shows that they
share a series of common values:
independence, mobility,
responsibility, skills and networks of relations, which could
certainly apply to Europe as a whole and provide food for
thought.

Independence appears to be the core value. Some
3.2.7.
69,5 % of those interviewed stated that independence was the
main feature of their work, and that this was a definitive
decision, whilst 75,3 % considered their decision ‘stable’.
Moreover, 66 % of those interviewed felt loyal to themselves,
whilst only 34 % felt that their loyalty lay with the organisation
they worked for (1). Only 24,7 % of the sample viewed
independence as a temporary choice.

3.2.8.
Cultural and professional mobility was also a key
value. For 76,4 % of individual workers, it was more important
to extend their skills than maintain and update those previously
acquired, whilst approximately half of
those interviewed
(48,1 %) valued the opportunity to change jobs over relative
security and stability.

3.2.9.
clearly in at least two ways:

The responsibility of the individual worker emerges

— forsaking the short-term economic benefits of employ-
ment in favour of investing in a personal pension plan
for the future (72,8 %);

— recognising that work, whilst important, should not take

over their private life.

3.2.10.
The importance given to skills can be seen in the
behavioural changes individual workers are willing to make in
order to improve their professional standing since vocational
training is part and parcel of survival and progress. It is
therefore necessary to revaluate the tools available to small
entrepreneurs and professional agents to enable them to
establish themselves according to their own specific pro-
fessional needs. 38,2 % stated that they were willing to study;
22,1 % would be willing to change their employment status
from employee to self-employed or vice versa; 19,9 % would
move to another city and 18,5 % would be willing to work for
longer.

Lastly,

the network of relations was extremely
3.2.11.
significant: 72,1 % of
individual workers considered the
opportunity to exchange ideas with other people more
important than relying on themselves to resolve problems.

3.2.12.
In short, the results of the survey show that Italy
and parts of Europe have undergone profound change in
recent years, culminating in a different approach to the world
of work, unrelated to traditional employee patterns. Moreover,
this expanding group of individual workers will most probably
have a substantial impact on the socio-economic system. In
particular, many of them — with high earning potential and
limited welfare support — will increasingly turn to the private
sector for their welfare, pension and education needs. This
does not affect the need to maintain high-quality public
services.

( 1) Data supplied in this paragraph has been taken from various
sources, including Confartigianato and the Guglielmo Tagliacarne
Institute.

The supply of jobs and a sound social security
3.2.13.
network continue to be of decisive importance to the pros-
perity and effective operation of European society.

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3.3. Bringing the shadow economy out into the open

3.3.1.
The shadow economy has long been overlooked, but
has recently been the subject of specific studies and analysis,
both due to an increased awareness of the impact it has on the
economy (understanding that there is an element of disease),
and due to its persistence, and often proliferation, within well-
developed economic systems. A useful reference in this regard
is the study by Professor Friedrich Schneider of the University
of Linz on the shadow economy in 2003 in Germany, Austria
in Switzerland: recent developments, which provides a useful
comparison with the OECD countries.

A recent report by the Avignon Academy (1) high-
3.3.2.
lighted that ‘small business and craft firms are deeply affected
by the shadow economy in the EU Member States ...’.

3.3.3.
The issue has provoked increasing interest in Europe
at political, cultural and legislative level, to the point where the
European Commission called on all Member States to tackle
the issue specifically in the National Employment Action Plans
from 1999.

Over and above the very scale of the problem,
3.3.4.
the most worrying aspect
is the structural nature of the
phenomenon, and the realisation that the shadow economy
has now dangerously become a ‘logical’ place in which to do
business.

3.3.4.1.
These factors highlight the real need for a policy
that, instead of punishing such activities and treating them in
the same manner as unlawful activities, seeks to bring them
into the legal arena.

The other worrying aspect of undeclared work is its
3.3.5.
constant growth. The shadow economy continues to grow
throughout Europe, and does not always correspond to official
estimates of it size. This is probably due to the fact that the
it concerns
shadow economy is a social phenomenon, i.e.
human behaviour. The decision to conceal one’s work often
stems from specific events (for example increased taxation —
Italy being a classic example — or red tape), and therefore
depends upon a series of external factors.

3.3.6.
A vast and varied set of factors lay at the heart of this
phenomenon and its persistence. The European Commission,
in its document of 1998 exclusively dedicated to undeclared

work, emphasised that ‘the main motivation for employers,
employees and the self-employed for participating in the
undeclared economy is economic. Working in the informal
economy offers the opportunity to increase earnings and to
evade taxation on income and social contributions. For
employers, the incentive is to reduce costs’. To be specific, the
key factors in the growth of undeclared activity in Europe are
as follows:

— firstly, infringement of the tax rules by some entrepre-
neurs, whose behaviour is economically damaging to
honest entrepreneurs;

— tax and social contribution levels. A high tax and
contribution burden is an incentive to enter the under-
ground economy both for the worker and the employer.
A reduction in tax and social contribution levels (the
difference between labour costs and net salary after
taxation and contributions) increases disposable income
for the same labour costs, or reduces labour costs for the
same income;

— regulatory and administrative burdens. One of the expla-
nations for undeclared work is the burden of excessive
overheads and administrative procedures (for example,
formalising an employment
relationship, obtaining
licenses, certain trade barriers or simply registering as a
service provider). Excessive regulation is a particular
burden in the labour market: the introduction of certain
standards, such as the shorter working day, early retire-
ment and part-time work, have encouraged the growth
of the shadow economy;

— efficiency of public administrations. The level of govern-
ment efficiency is directly related to the size of the
shadow economy. The more efficient the authorities are,
the more probable it is that activities will be discovered
and therefore the greater the risk of having to pay the
appropriate penalty. Corruption in the public sector has
been the focus of particular attention as it affects all
countries, although to differing extents. Studies carried
out in countries with a high level of corruption (Schneid-
er, Enste, 2000) concluded that there was a strong link
between the scale of corruption and the size of the
shadow economy;

( 1) The Avignon Academy, Undeclared work: Empirical evidence and

new policy issues at European level. Brussels, 2002.

— inadequate labour market legislation. Limited recognition
within current legislation for new kinds of work (for
example non-standard contracts or temporary work) is a
contributory factor in forcing people into undeclared
work and therefore swells the shadow economy.

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3.3.7.
The debate on the shadow economy has specific
political, economic and social relevance, over and above
the repercussions on economic policy. The existence of a
substantial shadow economy has a significant impact mainly
in terms of:

— quantifying macro-economic variables;

— achieving economic policy objectives;

— distortions in competition due to costs (administrative,

fiscal and contributory, labour).

In this case the unemployment rate therefore appears
3.3.8.
excessively high, at least insofar as some individuals form part
of the labour force but are employed in underground activities,
escaping the employment statistics. The extent to which
unemployment figures are overestimated clearly depends upon
the size of the shadow economy. Since the Member States’
economic policies are largely based on these macro-economic
variables, the action lines chosen may be based upon different
values, thereby doing more harm than good.

3.3.9.
In addition, the shadow economy reduces funding
for public services and social welfare. A decrease in state
revenue leads to a reduction in the level of services that
Member States are able to provide, thereby creating a vicious
circle, since a fall in fiscal receipts due to the growth of the
shadow economy increases the public deficit. In turn, the state,
in order to continue to provide services, increases taxation,
thereby further fuelling the rise of undeclared work (1).

3.4.

Improving access to credit for small enterprises

3.4.1.
Access to credit is essential for the growth of a
business, and practically a pre-requisite for the development
of small enterprises, for which access to credit is often impeded
by over-estimating the risk. The high turnover of enterprises
set up and closed down should not give rise to generalisations.
On the contrary, it should stimulate the need for more in-
depth analysis of entrepreneurial quality and of the market
prospects specific to each enterprise.

3.4.3. With this in mind, it is essential that alongside the
mergers and acquisitions of European banks which are radically
altering the EU lending environment, support structures be set
up for smaller enterprises. In this context, it is also important
to stress the importance of regional banks, which, although
forming part of a larger group, are able to win over customer
confidence.

Direct contact with enterprises and an understanding
3.4.4.
of specific local funding problems is the only way to maximise
the positive effects of financial support. Equally, this will
prevent excessive inflexibility in funding arrangements and a
subsequent increase in risk, especially with regard to Basle II
Agreement developments.

3.4.5.
To achieve this objective, the company must strike a
financial balance by using a suitable combination of the tools
available.

Self-financing plays a key role in this process. This is
3.4.6.
usually an option for income-generating businesses, especially
cash flow businesses, but also facilitated through correct
decisions regarding profit-distribution, financial policies and
fiscal legislation.

implementation of

However, small enterprises are not always able to
3.4.7.
their investment plans
achieve ideal
through self-financing alone,
i.e. with resources generated
internally. In this case, by no means the exception, either the
company’s business plan is reviewed or a plan for additional
or replacement funding is drawn up.

3.4.2.
Consequently, adequate financial resources for the
business plan the company intends to implement (2), and an
efficient method of financial support are a precondition for
the growth of small enterprises.

3.4.8.
There are essentially two steps in this phase to
provide support to the enterprise: launching information and
consultancy initiatives to facilitate the choice of type of capital
needed for the investment plan; and selecting the financial
tools and methods to use.

( 1) Regarding the shadow economy, see European Commission
‘Undeclared labour in Europe; towards an integrated

(2001)
approach’.

( 2) Finance needs are related to certain events, such as an increase in
activity (financing cash flow, covering fixed investments) or debt
reduction.

3.4.9.
There are two possible approaches to the first step:
financing through risk capital markets or, alternatively, debt
instruments with different maturities. The second option
would involve selecting the most appropriate instrument and
approach to the process.

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3.4.10.
The type of instrument chosen must be suited to
the nature of the planned investment. For example, short-
term investment should be financed with short-term debt
instruments (1). Investment in fixed assets should be financed
with medium or long-term debt capital (2) or risk capital (e.g.
venture capital) which, however, is often mistrusted by small
enterprises.

to set up new businesses (PCE), established in Autumn
2001 is another such example, but is still relatively
unknown and seldom used. Although granted subject to
obtaining a bank loan, this type of scheme should be
encouraged and developed.

— Money rate to more closely reflect the standards applied

to major European businesses.

The priorities identified to bridge the existing gap
3.4.11.
between finance and small enterprises can be summarised in
the following five points:

— Encouraging financial engineering, combining (European)
state aids and the banking system to stimulate employ-
ment growth.

— Higher quality services provided by credit agencies:

it
should be noted here that in a continually evolving
business climate, the banking system must
tailor its
financial/consultancy services to the specific needs and
characteristics of its clients, pursuing a policy of customer
satisfaction.

— Credit agencies carrying out a greater role in providing
consultancy services throughout the life of the enterprise.
Banks are asked to be more actively involved with
businesses, not only financially but also in a consultative
capacity, in order to stimulate their growth and encourage
transparency and the publication of company accounts.
Small enterprises need this assistance in particular, both
in order to become a corporate enterprise, and to prepare
an initial approach to using venture capital and, for the
more structured enterprises, being floated on the relevant
trading index (in Italy, the SME index is called STAR).

— Facilitating access to credit for micro enterprises by
reducing the ties to security required for granting a loan.
In this case, the credit agency should review its security
requirements, which may seem excessive compared to
actual risk of bankruptcy, and give greater support for
finance needs with appropriate financial instruments. An
example of such best practice would be the credit
consortia in Italy, which,
through the provision of
securities, has lead to the investment in craft enterprises
of over EUR 5 billion in 2001 and could form a
model for intra-Community cooperation to improve the
standard of less-advanced systems, notably in the new
accession countries. The French system of granting loans

( 1) Examples of suitable banking products include: bank contracts
(applications for loans, reducing securities, advance on securities,
stand by financing, evergreen financing, etc.); and para-bank
contracts, such as factoring, securities such as commercial paper
and promissory notes.

( 2) Such as bank contracts (e.g. mortgages), para-bank contracts

(leasing) and stocks (bonds).

3.5. Reducing the costs of bureaucracy

3.5.1.
For many years, policy makers and entrepreneurs
have taken an increasingly close interest in the effects of
regulation and the costs associated with complying with
administrative procedures.

3.5.2. Many EU countries propose to implement policies to
reduce these costs, which can, in some cases, be considerable,
especially for small enterprises. Simplifying bureaucratic pro-
cedures and cutting down on red tape underpin the strategy to
encourage the creation of new enterprises and especially to
foster the development of existing businesses.

3.5.3.
The main aspects of efficient administrative house-
keeping designed to simplify and streamline the red-tape
involved in setting up and running micro and small enterprise
activity include:

— eliminating superfluous, turgid documents;

— streamlining bureaucratic procedures with self-certifi-
cation, coordinating services, electronic signatures;

— enhancing relations with the public administration (PA)
through initiatives promoting administrative
trans-
parency, easier contact with the person responsible for
the procedure, staff training, etc.

3.5.4.
One of the challenges currently faced by public
authorities is the constant monitoring of public administration
costs for businesses. Some countries, such as the Netherlands,
Denmark, the United Kingdom and Italy, have made significant
progress in this domain. In particular, Italy has developed a bi-
annual monitoring system. Unlike the first survey carried out
Istat and Unioncamere have organised surveys
in 1996,
comparing data on approximately 14 000 Italian enterprises
with that from other European countries.

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3.5.5. Moreover, it would be worthwhile examining the
considerations and the positive experience gained by pro-
fessional organisations (see the experiences of the one-stop
shop initiative for businesses), those already highlighted in the
first progress report on the European Charter for Small
Enterprises. In addition to this, these organisations could assist
the PAs in structured agreements,
following the current
practice in Italy with the Centri di Assistenza Fiscale (tax
assistance) and employers’ organisations.

3.6.

Improving the quality of and access to business support services

The presence of high-quality business support ser-
3.6.1.
vices (1), especially for micro and small enterprises, is essential
to develop certain business functions that otherwise could not
be carried out in-house, and therefore affect business activity
and capacity for innovation. These include certain aspects of
product design, promotion and marketing,
financial and
market research consultancy services, and so forth. In short,
all those activities that are not strictly production-related, and
that small enterprises and craft firms largely carry out in-
house.

3.6.2.
The main challenges for business support services,
i.e. support for the non-productive aspects of small businesses
and tools for outsourcing business activities, can be summar-
ised as follows:

1.

2.

Creating services that meet the needs of micro and small
enterprises

Ensuring a coherent system of service provision for micro
and small enterprises

legislative changes to the European socio-economic landscape
in recent decades. A particular aspect of this ever-changing
environment is the role of women in setting up and managing
enterprises, especially small enterprises.

3.7.2.
It is therefore important to consider initiatives to
promote the rise of women in business, by exploring the
following avenues:

— improving understanding of the role women play in the

economy by compiling reliable statistics;

— creating social structures enabling work to be combined

with family life;

— applying and strengthening legal, financial and social

policies and programmes;

— training, to target not only the skills needed for business
management but also those to help acquire and improve
confidence in running a business;

women often play an important role in family businesses.
There should be official recognition of this work in terms of
remuneration, insurance and pension rights.

3.8.

Succession and reestablishment of an enterprise by workers

3.8.1.
The Committee endorses all initiatives designed to
facilitate the handover of enterprises following succession or
the reestablishment of the enterprise by its workers.

3.

Ensuring quality services

3.9.

Social enterprises

4.

Providing business management and employee training

5.

Identifying tools to assess the services provided

3.7. Women in business

3.7.1.
The role of women in modern European society is
continually changing, both in terms of social and economic
relations. The percentage of women in the labour market has
continued to rise, following the cultural, technological and

( 1) See: European Commission, DG Enterprise, support services for

small, micro and individual enterprises, Vienna 2002.

social

Enterprises providing

3.9.1.
insertion schemes
through economic measures are autonomous economic enti-
ties whose main objective is the social and professional
integration of handicapped or socially disadvantaged people.
Very often they are small or micro enterprises whose role
helps boost both economic growth and social cohesion. All
initiatives to give recognition at European level of the specific
role played by such enterprises should be supported.

4.

Implementing the European Charter for small enter-
prises

4.1.
In January 2003, the Commission sent its third annual
report on the implementation of the Charter to the Parliament
and the Council. The Committee is pleased to note that the
Commission had taken account of some of its requests
concerning the importance and presentation of the report.

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4.1.1.
notably:

The Committee highlights several positive elements,

— the adoption of the European Charter in Maribor by the
accession countries: the Committee was also informed
that the Region of Sardinia had adopted the Charter and
that other regions would follow suit, in particular those
in accession countries;

— the presentation of example initiatives carried out in
Member States to implement the ten recommendations
laid down in the Charter. However, in their current form,
these good practices have not proved very useful. The
EESC recommends that the Commission draws up a guide
of good practices incorporating and explaining these
initiatives in detail in order to enable Member States and
business organisations to benefit from them;

— the Commission’s repeated recognition of the importance

of the principle of ‘start thinking small’.

4.1.2.
The Committee however notes several shortcomings,
including the fact that the Charter remains a political declar-
ation without solid practical follow-up at Community level.
The Committee opinion of November 2001 still remains
strikingly relevant and the criticisms, remarks and proposals
remain valid. The EESC would like to focus the attention of
the Community institutions on four essential shortcomings:

— Community initiatives presented in the report still refer
to SMEs in general, without examining their real impact
on small enterprises;

— the report does not

lay down recommendations to
Member States, despite the fact that the Charter forms
part of the Lisbon Strategy and that an efficient national
and European policy for small enterprises is one of the
essential conditions for the success of the Lisbon process;

— it still fails to tackle the impact on small enterprises of
the main Community policies, notably the Convention
and economic and social cohesion;

— consultation with organisations representing small enter-
prises is still too limited. The Committee deplores the
continuing inadequate involvement of small enterprises
through their representative organisations’ participation
in EC work. It considers that the currently preferred forms
of consultation with the political group on enterprises
and on line consultation have only had limited success:
only European and national representative organisations
know the real needs of enterprises and are able to
effectively advise European Commission services.

4.1.3.
Regarding the implementation of the Charter, the
EESC asks the Commission not to underestimate its role. Its
role includes, following the example of the 6th research and
development programme, ensuring that the priorities listed in
the Charter and the priorities of small enterprises are involved
in all Community programmes and initiatives. It is equally
responsible for gauging the impact of all decisions and
legislative measures on small enterprises, not only SMEs in
the broad sense. The Committee is committed to closely
monitoring the application of those key measures.

4.1.4.
The position of the Commission on the multi-annual
plan for small enterprises is disappointing and displays a lack
of understanding of the needs of small enterprises. Firstly, it is
no secret that the current multi-annual programme only
partially and inadequately meets the needs of small businesses:
it is not enough to simply state in multi-annual programmes
that such action is part of the guidelines of the Charter for it
to actually help enterprises. Secondly, this multi-annual plan,
of which the Parliament asked the Commission to submit a
draft, aims to regroup and coordinate all Community initiatives
for small enterprises to make it easier for them to become
involved, rather than creating a new specific programme.

The EESC renews its call to the Commission, and expressly
asks it to respond to the Parliament’s request.

4.1.5.
In this context, the Committee asks that the follow-
up given to the Green Paper on entrepreneurship — notably
the action plan requested by the Competitiveness Council and
the Spring Summit — includes small enterprises and provides
a clear response to the recommendations laid down in the
Charter. In addition, it calls on the Commission to ensure that
the future multi-annual programme for enterprises (on which
negotiations are due to commence shortly) properly integrates
the recommendations laid down in the Charter and the
requests made by representatives of small enterprises.

4.2.

Legal and political recognition of the Charter

4.2.1.
The Committee and the Parliament have asked the
Commission to propose that the Council adopts measures
designed to give legal value to the Charter. The arguments in
favour of doing so have been put forward on several occasions.
The EESC is extremely disappointed and disheartened with
what it considers to be unjustified procrastinations by the
Commission. It welcomes the decisions taken by the Competi-
tiveness Council of 3 March 2003 and by the Spring Council
of the same month aiming to strengthen action by Member
States to implement the Charter. Since the very concept of the
Charter comes under the Lisbon process, forming one of its
pillars, and since implementation of the Charter at all levels is
an essential condition for its success, the Committee asks:

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— the Convention: to include a specific mention of the
implementation of the recommendations of the European
the
Charter on small enterprises in the chapter of
constitution on industry;

— the Council: to supplement the decisions taken by the
Competitiveness Council of 3 March with a three-point
decision asking the Commission:

— to refer to the Charter, mention small and micro
enterprises in all Community programmes and
adopt specific measures in their favour in such
programmes;

— to carry out impact assessments specifically regard-
ing small and micro enterprises before adopting all
Community decisions;

— to involve European organisations representing
small enterprises in the Community decisions that
concern them.

4.3.

State of progress in implementing EESC and Parliament
proposals

In its opinions (1), the EESC and the Parliament (2)
4.3.1.
have laid down lists of actions to be taken at Community level
concerning the ten guidelines of the Charter. In addition,
representatives of small enterprises organisations tabled very
specific proposals during the seminars organised by the
Commission and a list of 55 actions was compiled in July
2002 by the UEAPME on a proposal from the two French craft
enterprises organisations. The Committee regrets that they
were not mentioned in the report on the implementation of
is pleased that, according to information
the Charter.
provided by business organisations, many of the requested
actions have been undertaken with remarkable success,
especially concerning standardisation, business support ser-
vices, access to funding with SME securities, the environment
and so forth.

It

4.3.1.1.
The Committee calls on the relevant Commission
DGs to redouble their efforts and work closely with organis-
ations representing small businesses to enhance implemen-
tation of the actions.

4.3.2.
As part of the 2003 EU budget, the European
Parliament adopted on 19 December 2002 five amendments
tabled by MEPS from the budget committee asking for priority
to be given in 2003 to several budgetary lines targeting the
the Charter and initiatives specifically
implementation of
designed for small, micro and craft enterprises.

The EESC endorses

4.3.2.1.
this politically important
decision taken by the European Parliament. French craft
industry organisations and the UEAPME put forward practical
initiatives for implementation to the Commission. These
initiatives are listed in the appendix, with references to the ten
recommendations of the Charter. The Committee supports
those projects which directly address the action lines it adopted
in its opinion of November 2001 on the implementation of
the Charter and reiterates them. It asks the Commission to
integrate them fully into the 2003 work programme and
invites the Parliament to use all available means to ensure they
are implemented.

4.3.3.
Regarding the 2004 priority actions, the Committee
invites the Parliament to strengthen the measures in the 2004
PDB on implementing the Charter’s priorities. It reiterates its
call to the Commission to boost cooperation with business
organisations to this end.

5. Re-focusing European programmes and policies on
the needs of micro and small enterprises, in accord-
ance with the European Charter for small enterprises

5.1.
The issues raised previously could in part be solved by
the Community programmes that deal with the concerns of
small enterprises, which will have to address them, if they have
not already done so, and if they have, by giving them higher
priority by creating new-generation programmes designed for
small and craft enterprises centred on the multiplier effect of
business associations. To this end, action lines will be identified
to focus the attention of Community initiatives and pro-
grammes. These action lines could help in a number of ways
to improve the economic climate in which new and existing
small enterprises have to operate. Above all, in accordance
with the principle of subsidiarity, these action lines must be a
tool for the European Union to manage and fund projects in
line with common initiatives designed to bring about real
improvements to whole sectors.

( 1) OJ C 158, 26.5.1997 and OJ C 48, 21.2.2002.
( 2) Notably with the Vlasto report.

In this context, action lines will be drawn up reflecting

5.2.
those laid down in the afore-mentioned Charter.

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5.3.

See Point 1 and 4 of the Charter on Education and training
for entrepreneurship and Availability of skills

5.5.4.
In this context, collection of indirect taxes must be
reviewed in the light of IT developments, e.g. by making
electronic payments.

5.3.1.
Education and training programmes can be provided
and developed for small enterprises involving SME and craft
industry organisations through Erasmus programmes for
apprentices, Leonardo for business experience and Socrates for
educational curricula to promote entrepreneurship within
schools.
Incentives should be provided for University pro-
fessorships on education and economics, focusing on a ‘can-
do’ philosophy and developing individual initiatives.

5.3.2.
Furthermore, public administrations should be trai-
ned to recognise the value of enterprise, alongside those bodies
that provide support to micro and small enterprises.

5.4.

See Point 2 and 5 of the Charter on Cheaper and faster start-
ups and Improving online access

5.4.1.
Governance instruments should encourage the devel-
opment of small enterprises from their creation, with online
registration and the creation of a single gateway to link up
with a European network. To this end, exchanges of experience
and professionalism must be promoted between civil servants
and small entrepreneurs (or their representatives).
In this
context, DG Enterprise could organise a study to be carried
out by the relevant bodies in EU Member States with a view to
finding common solutions and instruments.

5.5.

See Point 3 and Point 7 of the Charter on Better legislation
and regulation and Taxation and financial matters

5.5.1.
European bankruptcy law must be overhauled and
action must be taken against those States that have not yet
transposed the directive on the irrevocability of payments (1),
which imposes high costs on micro and small enterprises.
Furthermore, the legal procedure for calculating inheritance
tax on businesses must be accelerated, as many enterprises
these days do not continue to operate after the death or
retirement of the owner.

5.5.2.
Therefore, for firms with a turnover below a certain
threshold (to be established), administrative and tax procedures
should be simplified (for example, by providing a single form
and procedure for starting micro and small enterprises).

5.5.3.
For new micro enterprises involved in manufactur-
ing, commerce and service provision, authorisations should be
drastically simplified and an estimated flat-rate tax should be
applied during the start-up phase.

5.5.5.
Conventional venture capital only applies to 5-6 %
of micro and small enterprises (totalling 19 million and
1,1 million enterprises in Europe respectively), of which 90 %
are individual companies or partnerships. Consequently, there
is a need for new forms of venture capital that are also
available to partnerships. Failing this, take-up will continue to
be negligible, thus creating a barrier to the financial growth of
micro and small enterprises.

5.6.

See Point 6 of the Charter on More out of the Single Market

5.6.1.
10 years after the completion of the Single Market,
results have not matched expectations, and structured and
analytical information on the relative benefits for SMEs and
craft
industries is lacking. Results have been particularly
weak in areas such as the services, mutual recognition of
qualifications, cross-border payments, financial and insurance
markets and on products from third countries which distort
market movements and foster illegal forms of business. This
has huge repercussions on the economic and productive
activities of micro and small enterprises.

5.6.2.
Another aspect to highlight is the development of
cross-border agreements between enterprises operating in
different countries. In particular, this would mean aiding the
‘new outlying areas’ of an enlarged Europe with specific
programmes and stronger links with island and cross-border
SMEs. In addition, initiatives must be developed to set up
business networks between SMEs and specific districts to
promote competition on global markets.

5.6.3.
The statute for a European cooperative society is a
particularly useful tool for the creation of such a network. This
will enable SMEs to set up cross-border or European groups to
develop joint activities. Therefore,
it is very important to
ensure Member States act swiftly to take the measures needed
to apply the statute.

5.6.4. Moreover, in accordance with its own-initiative opin-
ion (2), the Committee aims to call upon the Commission to
put
forward a proposal on the European company for
SMEs. Furthermore, procedures already underway, such as the
adoption of simplified auditing and accountancy procedures
and the review and simplification of procedures under De
Minimis rules, should be promoted and accelerated.

( 1) Directive 98/26/EC in OJ L 166, 11.6.1998; EESC opinion in OJ

C 56, 21.2.1997.

(2) A European Company Statute for SMEs: OJ C 125, 27.5.2002.

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5.6.5.
Initiatives should be stepped up, with increased
funding for small enterprises located in the new outlying and
disadvantaged areas.

5.7.

See Point 8 and Point 9 of the Charter on Strengthening the
technological capacity of small enterprises and Successful e-
business models and top-class small business support

5.7.1. Where possible, voluntary agreements should be
preferred over European standardisation, in order to lower the
entry barriers that small enterprises come up against and
reduce costs, which are currently calculated for large enter-
prises, and consequently:

a)

b)

strengthen certification through approved bodies (CEN,
Cenelec and ETSI) and through voluntary professional
organisations (such as Normapme);

encourage the involvement of micro and small enterprises
by including their professional organisations in the above
bodies.

5.7.2.
Small enterprises should receive aid for innovation,
focusing particularly on sectors that are sensitive to compe-
tition from newly-industrialised countries, such as the textiles
sector. This could be achieved through product traceability,
the creation of a ‘Designation of Industrial Origin’ label, greater
clarity and simplification regarding access for small enterprises
to the 6th RTD Framework Programme, and promoting access
for small enterprises to EMAS, ISO, LIFE and other similar
environmental programmes.

Brussels, 18 June 2003.

5.7.3. Widespread access should be provided and developed
for small enterprises in disadvantaged areas (outlying, rural,
cross-border areas etc) concerning the services available
through new information technologies by adopting specific
support programmes, also promoting forms of public-private
partnerships.

5.8.

See Point 10 of the Charter on Developing stronger, more
effective representation of small enterprises’ interests at Union
and national level

5.8.1.
The growth and development of micro and small
enterprises must be underpinned by closer involvement of
their organisations at all levels of social dialogue. Extending
the scope of action of social dialogue at European level
(economic, social and employment) means fully involving the
organisations representing micro and small enterprises, that
are social partners, in all activities of tri-partite cooperation
with Community authorities, and recognising such organis-
ations as equal and present partners in all aspects of European
and national bi-partite social dialogue, considering the positive
effect that such approach has at macroeconomic level.

5.8.2.
Another important factor is the involvement of small
enterprises in national and European bodies set up to advise
on and/or draft business development policies. The objective
to ‘start thinking small’ can be achieved by drawing on the
experience of those the initiatives are designed for, i.e. people
who carry out a range of roles in micro and small enterprises.

The President

of the European Economic and Social Committee

Roger BRIESCH

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APPENDIX

to the opinion of the European Economic and Social Committee

The following amendments were defeated by the assembly, but received at least one quarter of the votes cast:

Point 3.3.6, third indent

Add the following at the end of the indent:

‘... the shadow economy, in that some employers remain within the law while others do not.’

Result of the vote

For: 39, against: 52, abstentions: 11.

Point 3.3.6, third indent

Delete the last sentence.

Reason

This is not ‘excessive regulation’. If we make this claim, then we must say which regulations are unnecessary. The
proposal to work shorter hours or part time can come from either the employer or the employee (e.g. the 35 hour
week in France). If, in certain cases, this leads to undeclared work, then the problem must be solved some other way,
rather than by amending the rules on part work, for example.

Result of the vote

For: 45, against: 54, abstentions: 7.

Point 3.3.6, fifth indent

Add the following at the end of the indent:

‘... the shadow economy, the consequence of which is to undermine their present (labour) rights and to mortgage
their future benefits (pension), while boosting employers’ profits and generating unfair competition.’

Result of the vote

For: 45, against: 55, abstentions: 13.

The following text of the section opinion was replaced by an amendment, but received at least one quarter of the
votes cast:

Point 3.3.6, fifth indent

‘inadequate labour market legislation. Limited recognition within current legislation for new kinds of work (for
example non-standard contracts, part-time work, agency and temporary work) is a contributory factor in forcing
people into undeclared work and therefore swells the shadow economy.’

Result of the vote

For: 45, against: 51, abstentions: 15.