Opinion of the European Economic and Social Committee on the ‘Ability of SMEs and social economy enterprises to adapt to changes imposed by economic growth’
Date: 2004-10-27
Institutions: European Economic and Social Committee
Subjects: ESC opinion, cooperation policy, economic and social cohesion, economic development, labour market, regional development, small and medium-sized enterprises, social economy

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Official Journal of the European Union

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Opinion of the European Economic and Social Committee on the ‘Ability of SMEs and social
economy enterprises to adapt to changes imposed by economic growth’

(2005/C 120/03)

On 27 April 2004, Ms Loyola de Palacio, Vice-president of the European Commission, asked the European
Economic and Social Committee, on behalf of the European Commission, to draw up an exploratory
opinion on the ‘Ability of SMEs and social economy enterprises to adapt to changes imposed by economic
growth’.

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 6 October 2004. The rapporteur was Ms Fusco.

At its 412th plenary session of 27 and 28 October 2004 (meeting of 27 October), the European Economic
and Social Committee adopted the following opinion by a majority of 169 votes to two, with five absten-
tions.

Preliminary remarks

In line with the European Commission's request, the object of
the present opinion is to examine the subject from the perspec-
tive of existing and potential
interaction between SMEs,
including micro-enterprises, on the one hand, and social
economy enterprises (SEEs) on the other, and to examine
different SEE models and tools that have made, or are likely to
make, a substantial impact on the ability of SMEs and SEEs to
adapt.

1. Objectives and regulatory framework

1.1
Believing that the role of SMEs and SEEs is of particular
relevance to the Lisbon Strategy, the European Commission
asked the EESC to deliver an exploratory opinion on the above-
the
mentioned
Committee should identify those factors which should make up
the regulatory and support framework required by these opera-
tors.

it proposed

Furthermore,

subject.

that

1.2
This request followed the publication of an EESC own
initiative opinion on the role of SMEs and social economy
enterprises in economic diversification in accession countries,
which was adopted unanimously on 1 April 2004. This
opinion dealt jointly with both types of operators, defining
them and referring to their importance in the EU as a whole, in
the light of their contribution to the economy, employment
and social cohesion, and their deep interactions and synergies.
It further specified that the difference between the concepts of
economic change is substantially broader and more dynamic
than the concept of restructuring.
It alluded to the Gyllen-
hammar report delivered by the high-level expert group on
Managing Change set up by the European Commission, which
stresses the need for job creation whilst recognising the validity
of an approach built on benchmarking, innovation and social

cohesion. It recommended an integrated ten-point programme
for the promotion of SMEs and SEEs in the economic diversifi-
cation of accession countries, a programme largely inspired by
several examples of SEE good practice in the EU.

1.3
SEE good practice in the EU could form the basis for
interaction and synergy between SEEs and SMEs, opening new
avenues for the spirit of cooperation,
innovation and the
growth of SEEs and their considerable potential use by SMEs.
In this way, they would contribute real added value to the
growth of SMEs, fostering, by their very structure, cooperation,
representativeness and mutual confidence they need.

The European Council of March 2000 put forward the
1.4
Lisbon Strategy with the intention of making Europe the most
dynamic and competitive knowledge-based economy in the
world, whilst stressing the need for ‘creating a friendly environ-
ment for starting up and developing innovative businesses, especially
SMEs’ and adding that ‘the competitiveness and dynamism of busi-
nesses are directly dependent on a regulatory climate conducive to
innovation, and entrepreneurship’ (1). Basing itself on
investment,
this premise, the Feira European Council of 19 and 20 June
2000 adopted the European Charter for Small Enterprises,
which states that ‘Small enterprises are the backbone of the Euro-
pean economy [and] are a key source of jobs and a breeding ground
for business ideas’ (2). Furthermore, the Lisbon Strategy also states
that economic growth is a key factor for ensuring social cohe-
sion in Europe. The Commission subsequently argued that the
challenges presented by the implementation of
the Lisbon
agenda were the need to create employment, and increase the
rate of employment, improve technical know-how, and ensure
an ordered flow from agriculture and industry to services
without generating increasing regional disparities in the coun-
tries themselves (3).

(1) Presidency Conclusions – Lisbon European Council, 23 and 24

March 2000, point 14.

(2) The European Charter for Small Enterprises, Luxembourg Office for
the Official Publication of the European Communities 2002. The
Commission states that the Charter was endorsed at Maribor on 23
April 2002 (see http://europa.eu.int/comm/enterprise/enterprise_po-
licy/sme-package/index.htm). The Committee joins the European
Parliament
the Charter should
acquire legal value and that it be formally included in the industry
chapter of the European Convention.

in strongly recommending that

(3) A strategy for full employment and better jobs for all COM(2003)

006 final.

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SMEs, a term, which also includes micro-enterprises
1.5
with their special
features, are enterprises corresponding to
precise numerical criteria defined by the European Commission
as follows (1).

Category of
enterprise

Number of
workers

Turnover

or

Medium-sized

< 250

Small

< 50

Micro

< 10

≤ EUR 50
million

≤ EUR 10
million

≤ EUR 2
million

Balance-sheet
total

≤ EUR 43
million

≤ EUR 10
million

≤ EUR 2
million

— improve the financial atmosphere for business;

— give business easier access to Community support, services

programmes and networks.

On 21 January 2003,

the Communication from the
1.9
Commission COM(2003) 26 final summarised five reports: two
reports on the implementation of the European Charter on
Small Enterprises in the EU and in the accession countries; a
report on EU activities for SMEs; a report by the SME Envoy;
and the Green Paper on entrepreneurship. Amongst the chal-
lenges it refers to, the report on EU activities demonstrates the
EU's commitment, particularly in terms of Structural Funds,
and the multiannual programme already mentioned in the
Sixth Framework Programme. Finally, a Community action
that promotes entrepreneurial spirit and
plan (2006-2010)
competitiveness was drafted on the basis of the Green Paper.

1.6
SEEs fall into four categories: cooperatives, mutual socie-
ties, associations and foundations. They are characterised by
the primacy of their social objectives, rather than the need for
maximum returns - this often gives rise to a link with their
local area and local development. Their basic values are: soli-
darity,
responsibility, democratic
social
cohesion,
management, participation and autonomy (2).

social

1.7 Most SEEs are included in the EU's standard definition of
SMEs (3). Those which do not match that definition, because of
their size, generally have certain characteristics in common
with SMEs, such as a low level of external investment, no stock
exchange listing, proximity of owner-shareholders, and a close
link with the local social fabric.

1.8
The European institutions have established a regulatory
framework for SMEs. Until 2005, one main binding measure
will apply to SMEs, namely Council Decision 2000/819/EC on
a multiannual programme for enterprise and entrepreneurship,
and in particular
for small and medium-sized enterprises
(SMEs) 2001-2005. This programme, which is also used to
advance the implementation of the European Charter for Small
Enterprises, seeks to:

— enhance the growth and competitiveness of business;

— promote a spirit of enterprise;

— simplify the administrative and regulatory framework;

(1) Recommendation

2003/361/EC,

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

replacing

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

(3) McIntyre et al.: Small and medium enterprises in transitional econo-

mies, Houndmills: Macmillan, p. 10.

1.10
The European Commission also put forward a regula-
tory framework for social economy enterprises. Cooperatives,
the most significant of social economy enterprises, were the
subject of the Communication on the promotion of cooperative socie-
in Europe of 23 February 2004. The Communication
ties
proposes to raise the profile and improve understanding of this
type of enterprise, and to facilitate consistency between
national laws in EU countries (4). It includes the fundamental
characteristics of this type of enterprise as defined by the ILO's
Recommendations for the promotion of cooperatives, adopted in
June 2002 at international level, and in particular, by the repre-
sentatives of the 25 EU Member States and the majority of
national employer and employee associations. This recommen-
dation also makes reference to the main international labour
laws, specifying that they apply fully to the employees of coop-
eratives. Furthermore,
the European Commission recently
published a consultation document on Mutual societies in an
enlarged Europe on 3 October 2003, defining the fundamental
characteristics of this type of SEE (5).

2. Socio-economic framework

2.1
The Commission has acknowledged that SMEs are the
bedrock of the European economy, providing 66 % of all jobs
and 60 % of the EU's total added value, excluding the agri-
cultural sector. Regions with a high concentration of SMEs,
such as Emilia Romagna, Baden-Württemberg and Jutland are
amongst those regions with the highest employment and per
capita GDP rates (6).

(4) Particularly within the framework of application of the Resolution
on a European Cooperative Society. See Council Regulation EC/
1435/2003 of 22 July 2003 on the Statute for a European Coopera-
tive Society (SCE).

(5) European Commission Consultation Document – Mutual Societies

in an Enlarged Europe, 3.10.2003, p. 5.

(6) European Commission 2004: A new partnership for cohesion
cooperation - Third report on

convergence
competitiveness,
economic and social cohesion, pp. 5 and 8.

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2.2
In its opinion on the Social Economy and the Single
Market (1), the EESC underlines the socio-economic importance
of SEEs, stating that the latter are fundamental to entrepre-
neurial plurality and economic diversity (2). The Commission
also recognised this point in its Communication on the promotion
of cooperative societies in Europe and in its consultation document,
Mutual societies in an enlarged Europe, referred to in point 1.10
(above).
In the EU, the social and economic importance of
social economy enterprises and organisations is growing. With
about 9 million direct workers (full-time equivalent),
they
account for 7,9 % of civilian waged employment (3). Moreover,
they involve a considerable proportion of civil
society.
According to the European Commission, cooperatives have
140 million members and mutual societies 120 million. It is
estimated that more than 25 % of EU citizens are members of
SEEs as producers, consumers, savers, householders, policy-
holders, students, volunteers etc. SEEs are developing in all
sectors and particularly in a number of public utility or public
interest sectors (4) such as health,
the environment, social
services and education (5). Thus they play an essential role in
the creation of social capital, the capacity to employ disadvan-
taged people, social welfare, revitalising local economies, and
modernising local management models. Some of them have
perfected social and environmental impact assessment systems.

In the context of ongoing industrial change, SMEs and
2.3
SEEs play an important part in employment and re-employ-
ment in all sectors, from declining sectors and sectors that are
cutting down on their workforce in traditional sectors (crafts
and trades), and in others which are expanding, such as services
to enterprises, the new information and communication tech-
nologies, high-technology sectors, construction and public
works, proximity services (including health) and tourism.

Nevertheless, SMEs and SEEs are faced with specific
2.4
challenges. The European Charter
for Small Enterprises
acknowledges that the latter are more sensitive to change in
the business environment. The European Commission's Green
Paper on Entrepreneurship states that SEEs, because they have
to apply ‘business principles and efficiency to achieving social and
societal objectives, … face particular challenges in accessing finance,
management training and advice.’ (6)

(1) EESC opinion CES 242/2000, OJ C 117 of 26.4.2000.
(2) In a recent report the OECD stated that the ‘social economy is a
broader concept than the non-profit sector because it is less strictly
bound to non-distribution constraints, according to which, organisa-
tions may not legally redistribute their surplus to their owner-
s’(OECD 2003, The non-profit sector in a changing economy, Paris p
299).

(3) This does not include indirect employment, such as casual agri-
cultural workers, or SMEs that are members of cooperatives. CIRIEC
2000: The enterprises and organisations of the third system: stra-
tegic challenge for employment, University of Liège.

(4) Tang et al. 2002, p 44.
(5) See the Charter of the CEP-CMAF (European Standing Conference of

cooperatives, mutual societies, associations and foundations).

(6) European Commission: Green Paper – Entrepreneurship in Europe,

COM(2003) 27 final, point III.C.ii.

2.5
There are various ways in which SMEs and SEEs can
play an important role in the process of socio-economic
change. There are many examples of good practice: through
the employment of people who have just entered the labour
market; by supporting the innovative capacity of micro-enter-
prises and small enterprises; by reemploying people made
redundant by businesses that had to cut down on staff or shut
down; by setting up social welfare mutual societies; by creating
new businesses in the growing sectors; by developing services
and sub-contracting; by transferring enterprises in crisis to their
workers; by supporting new micro-enterprises and self-employ-
ment; and through qualitative transformation within the same
sector. In addition, SEEs can make certain specific contributions
to this process of change both through their capacity to train
entrepreneurs, which has already been demonstrated, and
through the values they promote, such as socially responsible
entrepreneurship, democracy and citizen participation, involve-
ment (including financial) of workers in the enterprise, social
inclusion, and interest in local and sustainable development.

There is a considerable degree of interaction between
2.6
for
conventional SMEs and SEEs, which has the potential
further development. Interaction takes place in the following
three ways.

a) SMEs make extensive use of external SEE services. Thus
cooperative banks often support the start-up or develop-
ment projects of conventional SMEs.

b) SMEs sometimes share SEE structures amongst themselves
in order to set up business systems (networks, groups,
common support structures), or to achieve economies of
scale (SME purchasing and marketing cooperatives), as well
as to set up mutual guarantee schemes for bank loans, etc.
Such structures enable them to substantially enhance their
competitive edge.

c) SEE models (mutual funds, public interest service providers,
fair trade networks etc.) could be a source of inspiration for
the development of SMEs.

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3. Useful forms of good practice to inspire public policies,

and which require deeper analysis

3.1 General Comments

3.1.1
The Commission has published examples of good
practice in various documents relating to Best projects within
the framework of the multiannual programme ‘that is, practice
that appears to illustrate an approach to a current development in
business support that deserves the attention and interest of practi-
tioners’ (1). This does not necessarily imply ‘best practice’ but
seeks to inspire change and ‘better practice’ that will result in
guidelines for EU policies.

3.1.2
The EESC is aware that, in recent years, considerable
work has already been undertaken towards the development of
good practice models for SMEs (c.f. above-mentioned Best
projects). The good practice models below concern existing or
potential interaction between SMEs and SEEs, exclusively. They
are illustrated in the appended documents by concrete exam-
ples that also demonstrate the adaptability of these models and
the way they can change to cope with economic growth in the
context of the single market and globalisation.

3.1.3
It is useful to extrapolate according to type in order to
develop public policy proposals that could strengthen SME and
SEE growth, in the light of the Lisbon Strategy. Examples are
given of good practice amongst SEEs that could be adopted by
SMEs, and interaction between SMEs and SEEs, where SEEs are
used directly by SMEs, and could be even more so.

The working hypothesis, which has already been
3.1.4
partially demonstrated in some cases,
is that each of these
models offers substantial opportunity cost (2), or even net gains
for medium-term public expenditure.

that
for
finance systems, combined with adequate support
redundant workers who wish to take over their failing enter-
prise or create a new one, can not only create or save jobs and
help create or sustain economic activity, but can also enable
the State or other investors to recover funding within a rela-
tively short period, and possibly, make a profit (3).

3.2.2
Systems and business clusters for development, innovation
and competitiveness. Some SEEs, notably in northern Italy and
the Spanish Basque Country, formed regional clusters, which
then went on to become horizontal or joint systems or groups,
thus transforming these enterprises (small or medium-sized, for
the most part) into leading economic operators in their own
regions, and creating state-of-the-art technological and manage-
rial innovation centres.

(such as retailers

3.2.3
Pooling resources to achieve economies of scale. In several
European countries, a considerable percentage of conventional
including micro-enterprises and the
SMEs in certain sectors,
self-employed,
in Italy, hairdressers and
butchers in France, bakers in Germany) form groupings, usually
cooperatives, to bulk buy and pool their efforts in marketing
and services. Each SME remains completely independent, whilst
retaining the ability to boost its competitiveness, maintain and
extend its market, avoid sub-contracting and middlemen, and
achieve economies of scale. This system provides the com-
munity with sustained employment and local development (4).

3.2 Types of good practice

3.2.1
Creating or saving jobs by starting up or restructuring busi-
nesses. SEE experience in various EU countries tends to show

(1) DG Enterprise (2002): Helping business grow – A ‘good practice

guide’ for business support organisations, p 11.

(2) Opportunity cost is ‘the income or benefit foregone as the result of
carrying out a particular decision, when resources are limited or
when mutually exclusive projects are involved. For example, the
opportunity cost of building a factory on a piece of land is the
income foregone by not constructing an office block on this par-
ticular site. Similarly, the income foregone by not constructing a
factory if an office block is constructed represents the opportunity
cost of an office block. Opportunity cost is an important factor in
decision making, although it represents costs that are not recorded
in the accounts of the relevant organization’ (Oxford Dictionary of
Finance and Banking ; Oxford : Oxford University Press, 1997, p.
252).

and the

Access to finance and risk reduction. Mutual guarantees
3.2.4
enable
self-
SMEs,
including micro-enterprises
employed, that lack sufficient guarantees to access credit. The
mutual guarantee society (which often takes the form of a
mutual society) undertakes to act as guarantor to the exclusive
benefit of the lender. In case of non-repayment, the society will
assume ultimate responsibility by drawing on the guarantee
fund made up of associate SME contributions. The joint funds
of SEEs have been used to leverage bank loans by fostering the
banks' trust (5) for the purposes of business creation, reconver-
sion, and development projects.

(3) For example, the Spanish ‘single payment’ system, whereby 2 years'
unemployment benefit can be paid in one lump sum to workers
who decide to set up a cooperative or workers-owned company
(sociedad laboral) or who decide to be worker-members in these
firms, as long as they have worked there for at least 12 months.
(4) See the website of the French Federation of Cooperatives and Crafts-
men's Groupings http://www.ffcga.coop, and the Italian National
Association of Retailer Cooperatives, http://www.ancd.it/.

(5) For example, the SOCODEN funds of French production coopera-

tives, see http://www.scop-entreprises.com/outils.htm.

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3.2.5
Services provided to the community. SEEs have proved to
be important operators in the social, health, educational and
cultural sectors, particularly in the context of privatisation, by
combining an entrepreneurial spirit with respect for the public
interest, which is at the heart of such services. These enterprises
have often been known to provide better quality services at a
lower cost than the State. In some cases, these services are local
public-private partnerships between SEEs and local govern-
ments for public utility services such as employment agencies,
healthcare centres, home-helps, etc.

3.2.6
Ethical and quality production and marketing. Some SEEs
have specialised in marketing quality assured products that also
comply with ethical production principles (non-exploitation,
compliance with labour laws, fair remuneration, etc.).

4. Recommendations for an action-research programme
defining long-term policies for the promotion of SMEs
and SEEs through their reciprocal interaction

4.1 General comments

4.1.1
The combined importance of SMEs and SEEs for the
European economy, the implementation of the Lisbon Strategy,
and the potential for positive interaction between these two
types of operators through the application of SEE models and
structures, argue in favour of renewing combined efforts to
support them at EU level.

4.2 Specific recommendations

4.2.1 Cr e a ti ng a E u r op e a n O b se r v a tor y for

soc i a l
e conomy e nte r p r i se s a nd la u n ch i ng a mu lti -
a n n u a l
r e s e a r c h p r og r a m me on S E E - S M E a n d
SM E-S EE i nt e r ac ti on

4.2.1.1
The EESC recommends the establishment of a Euro-
pean Observatory of social economy enterprises to carry out
research not only into SEEs themselves but also into existing
and potential
interaction between SMEs and SEEs, and how
such interaction could be fundamental to the economic devel-
opment of SMEs and SEEs, and the promotion of corporate
social responsibility and the fight against exclusion.

This Observatory will be supported by the European
4.2.1.2
Commission and the governments of the 25 EU Member States.
It will involve SEEs and university-level SEE research centres.
They will coordinate closely with the Observatory and SMEs.

The EESC also suggests launching,

4.2.1.3
through this
Observatory, a three-year multidisciplinary and inter-European
research project, in order to identify good practice involving
SEE systems that directly develop SMEs or with the potential to
develop SMEs, particularly in the areas mentioned in section 3.

4.2.1.4
nity cost by concentrating on the following calculations:

Such research will aim to demonstrate the opportu-

— direct micro-economic cost-benefits;

— upstream and downstream cost-benefits along the economic

chain;

4.1.2
The EESC takes note of existing support programmes
for SMEs in particular, but also notes that existing support
structures
for
promoting initiatives fostering interaction between SMEs and
SEEs.

for SEEs are inadequate, as are structures

— the value of intangible goods;

— social cost-benefits, by means of a social audit;

— multiplier effects;

4.1.3
It further notes the lack of concrete, exhaustive, trans-
european and multidisciplinary studies estimating the opportu-
nity cost of good practice that strengthen SMEs and SEEs and
their reciprocal interaction.

— the cost differential

in the hypothetical event

the
in question did not exist. For instance, the ‘non-
model
that would be
is the additional cost
cooperative cost’
incurred by the State and the community in the event that
cooperatives suddenly ceased to exist.

that

Such a deficiency seriously limits the development of
4.1.4
public policies to promote the reciprocal interaction of SMEs
and SEEs. In order to define policies, continued assessment and
cost-benefit analysis are essential.

The European SEE Observatory's research results
4.2.1.5
should be made public through the intensive communication
efforts of
the European institutions, Member State govern-
ments, and the general public.

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The EESC will ensure the good progress of

4.2.1.6
the
research carried out by the Observatory for social economy
enterprises, and will assess the Observatory's conclusions at the
end of the three-year period by studying the possible impact of
these conclusions on the European Commission's policies for
SMEs and SEEs.

— to improve access to finance for SMEs and SEEs at a time
when the Basle criteria for bank loans are about to become
more stringent for under-capitalised or risk ventures;

— to promote partnerships and cluster networks between

SMEs and SEEs;

— to update and continually integrate empirical data on the

situation of SMEs and SEEs;

4.2.2 F u ll p a r ti ci p a ti on of S M E s a nd S E Es i n E u r o-

pea n bu si ness support prog ra mmes

— to reduce world trade barriers for SMEs and SEEs, especially

excessive administrative burdens and legal obstacles;

4.2.2.1
The EESC calls on the Commission to ensure that
SEEs are able to participate, on equal terms, in the Multiannual
Programme for Enterprise and Entrepreneurship (2006-2010),
and to promote initiatives that encourage interaction between
SMEs and SEEs, particularly the involvement of SEEs in coop-
eration between SMEs.

The EESC further calls for the level of participation
4.2.2.2
of SMEs and SEEs in EU programmes for access to research,
innovation, and world markets to be made a top priority for
European policies.

4.2.2.3
The EESC considers that the number of Structural
Fund projects for SMEs should be maintained, and that the
number of projects for SEEs and interaction between SEEs and
SMEs should be increased, especially when they are likely to
create jobs and enhance rural development. Access to the
Structural Funds must not be made dependent upon the sector
in which the enterprise concerned operates.

4.2.3 Inte g r a ti ng th e

c onclu si ons of

Ista n bu l
OE CD Confe r e nc e of mi ni ste r s r e sponsi ble for
small
and
e x te n di ng th e m t o SE E s

a nd me di u m-si z e d

e nt e r p r i se s,

th e

4.2.3.1
The EESC further recommends that the Commission
extend application of the policy conclusions reached at the
OECD Conference of ministers in Istanbul to SEEs. It therefore
calls for an approach that is better suited to the needs and char-
acteristics of SMEs and SEEs. In particular the aim should be:

— to prevent business crises and bankruptcies, and to rescue

businesses in crisis;

— to promote the education and development of human

resources;

— to promote information and communication technolo-

gies (1).

4.2.4 E nh a nc i ng

soci a l
nati ona l and Communi ty le ve ls

di a log u e

a t

su b-na ti ona l,

In several EU countries, and especially in some new
4.2.4.1
Member States, SMEs are not adequately represented in national
social dialogue forums. The EESC believes that SME representa-
tion should be increased, if only to enhance the effectiveness of
public policies for the promotion and regulation of these enter-
prises. Large enterprises and SMEs should also be able to set
out their views on an equal footing.

4.2.4.2
SEEs are not included in social dialogue in most
Member States or at European level. The EESC recommends
that the organisations that represent SEEs at EU or national
level should be more structured and further strengthened. They
should be included in social dialogue at Community and
national
should be granted greater
consideration when regulations that affect enterprises are being
drawn up (2).

levels. Their opinions

(1) See Cordis Focus No 247, 14 June 2004 p. 14
(2) Legal norms, accounting standards etc.

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thematic seminars that it organises, this specific form of asso-
ciation from the following angles:

— opportunity cost,

to establish the extent and forms in
which it might be useful and applicable to conventional
SMEs;

— the legal and regulatory framework.

5. Conclusions

5.1
SMEs are the backbone of the economy and employ-
ment in Europe, and consequently offer the primary tools for
the implementation of
the Lisbon objectives. SEEs play an
increasingly important role in social cohesion and local devel-
opment. The scope for interaction between SMEs and SEEs,
particularly with regard to SMEs making extensive use of SEEs
in the interest of both types of enterprise, has thus far been
greatly under-exploited.

As a consequence,

the EESC recommends that

5.2
the
Commission should re-examine existing and potential interac-
tion between SMEs and SEEs, and help demonstrate that this
interaction is beneficial to the development of both types of
enterprise, within the context of the profound changes brought
on by economic growth, and particularly, in regional develop-
ment, social cohesion and innovation policies.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND

4.2.5 R e se a r c h i nt o me t h ods for p r omot i ng w or ke r
p a r t i c i p a ti o n i n th e de c i si on- ma ki ng p r oc e sse s
a n d ca p i t a l of e nt e r p r i s e s

4.2.5.1
SEEs have developed know-how that is specific to
worker participation in their own enterprise's decision-making
process and capital. More specifically, some cooperatives have
developed cooperative worker ownership (1), according to
which all or the majority of the members are workers and vice
versa. All members have a voice in the decision-making
process, irrespective of their financial stake in the enterprise.
Financial stakes are nominal and non-transferable. This form of
association is one of the main factors underlying the success of
many of the examples of best practice. It encourages direct
worker responsibility for the enterprise's future and enables
workers to participate on an equal footing in the enterprise's
development strategy. In seeking to attain the objectives of the
knowledge-based economy proposed by the Lisbon Strategy,
we are growing increasingly aware that an enterprise's most
fundamental resource is its human resources, and therefore this
type of association is gradually revealing itself to be modern
and innovative.

4.2.5.2
examine,

The EESC recommends
the Commission
in the above-mentioned Observatory and in the

that

Brussels, 27 October 2004.

(1) The basic principles of the system of Cooperative worker ownership
are laid down in the World Declaration of Cooperative Worker
Ownership (February 2004) of the International Organisation of
Industrial, Artisan, Service and Social Producers' Cooperatives –
CICOPA. It is the fruit of 18 months of consultation amongst its
members worldwide. These principles are specific to worker coop-
eratives and complement CICOPA's Statement on the Cooperative
Identity and the International Labour Organisation's Recommenda-
tion 193/2002 on the Promotion of Cooperatives.