Opinion of the European Economic and Social Committee on Business potential, especially of SMEs (Lisbon Strategy)
Date: 2007-07-12
Institutions: European Economic and Social Committee
Subjects: competitiveness, domestic market, economic growth, economic policy, entrepreneurship, innovation, market access, simplification of legislation, small and medium-sized enterprises

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Opinion of the European Economic and Social Committee on ‘Business potential, especially of SMEs
(Lisbon Strategy)’

(2007/C 256/03)

On 14 September 2006, the European Economic and Social Committee, acting under Rule 31 of its Rules
of Procedures, decided to instruct the Section for the Single Market, Production and Consumption to draw
up an information report on Business potential, especially of SMEs (Lisbon Strategy).

At the plenary session of 14 and 15 March 2007, it was decided to transform the information report into
an own-initiative opinion (Rule 29(2) of the Rules of Procedure).

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 3 May 2007. The rapporteur was Ms Faes.

At its 437th plenary session, held on 11 and 12 July 2007 (meeting of 12 July 2007), the European
Economic and Social Committee adopted the following opinion by 123 votes to one with three abstentions.

1. Preface

1.1
The Presidency conclusions of the European Council of
23-24 March 2006 ask for summary reports by the European
Economic and Social Committee in support of the Partnership
for Growth and Employment in early 2008.

Furthermore the European Council proposed specific

1.2
areas for priority actions for the period 2005-2008:

i.

investment in knowledge and innovation

ii. business potential, especially of SMEs

iii. employment of priority categories (…)

iv. the definition of an Energy Policy for Europe (…)

v. measures to be taken across the board in order to maintain
the Partnership for

the momentum under all pillars of
growth and employment (…).

2. Summary and recommendations

Although the Lisbon Strategy has produced positive
2.1
results, it has not fully delivered so far in particular in the areas
of economic and industrial growth and the creation of more
and better jobs. In terms of global competition, Europe is facing
challenges from traditional and more recent competitors it
cannot adequately deal with.

2.2
Europe's businesses face an incomplete single market to
operate in, especially regarding harmonisation of tax rules, too
slow implementation of directives by Member States, remaining
administrative burdens, lack of labour mobility. SMEs, in par-
ticular, have difficulties in overcoming these obstacles.

2.3
Other challenges to overcome are the lack of entrepre-
neurship, the ageing of the population and its effect on entre-
labour supply and a greater need to focus on
preneurship,

transfer of business, access to finance in the start-up and growth
phase, access to research results and thus of innovation oppor-
tunities.

Small and Medium-Sized Enterprises play a key role in
2.4
attaining the Lisbon goals. Nevertheless, their necessary contri-
bution has been neglected in the first years of implementation.
Especially the involvement of
the SME-organisations in the
assessment of the progress should be better developed as well as
their role in promoting the SME's on all policy levels. At the
occasion of the next revision of the integrated guidelines for
growth and jobs for the years 2008-2010, the EESC calls for
better targeted and streamlined integrated guidelines on SMEs,
especially for the chapter on micro-economic reforms. In order
to implement them at large in the process, the EESC urges the
Council to give the Charter for Small Enterprises a legal basis —
as requested by the Parliament — in order to strengthen the
base for more action. The following policy lines and actions are
in order to develop the business potential of
deemed crucial
SMEs.

2.4.1
to make
The EESC urges Commission and Council
every effort to contribute to making the ‘think small first’ prin-
ciple a guiding principle in all relevant legislation.

2.4.2
The EESC calls for a ‘Year of the Entrepreneur’ in 2009
to emphasise the key role entrepreneurs play for growth and
welfare and to stimulate young people and others to consider
entrepreneurship as a career.

2.4.3
The EESC calls for endeavours to assure an effective
Competitiveness and Innovation Programme, providing efficient
support and easy access to SMEs, and a 7th Research and Devel-
opment Framework Programme and Structural Funds facilitating
access to SMEs. The effectiveness and accessibility of
these
programmes as well as JEREMIE should be closely monitored.

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asset of

The most valuable

2.4.4
its
human capital. Adequate support structures, tailor-made training
offers and well designed financial incentives should help SMEs
to up-grade competences and skills of workers as well as entre-
preneurs by further investing in continuous training.

company

is

a

The EESC calls for the Commission to make an analysis
2.4.5
of SME involvement in community programmes. If the partici-
pation is not deemed sufficient, a minimum percentage should
be obligatory.

is an important

Public procurement

2.4.6
in
helping SMEs to develop their activities. SME involvement
should be closely monitored, and measures to facilitate their
access to P.P. should be developed. Exchange of best practices
should be encouraged.

instrument

2.4.7
On the level of the Commission a coordinating struc-
ture should be created for a real, efficient and effective SME
policy in all programmes, actions and legislative measures.

2.4.8
It is necessary to design special actions to promote and
use best practices in the SMEs field and regarding the competi-
tivity growth, especially in those regions with a low degree of
European development. This type of actions should be imple-
mented through SMEs organisations.

3. General

The Lisbon Strategy is best known,

3.1
in a reductive
manner, as a commitment to make Europe into the world's
most dynamic competitive, knowledge-based, economy by the
In addition to the general outline the Council
year 2010.
adopted the Charter of Small Enterprises in June 2000 in Santa
Maria da Feira.

The Committee recalls that from the outset, the Lisbon

3.2
mandate of 24 March 2000:

— emphasised the need to actively involve the social partners
and civil society with the strategy, using variable forms of
partnership;

— specified that its success depends primarily on private sector
and public-private partnerships and on the involvement of
both Member States and the Union;

— aimed at a balanced development of its three strands,

i.e.
economic growth,
cohesion and environmental
sustainability, by stimulating European competitiveness and
job creation whilst at the same time building on appropriate
environmental policies.

social

in March 2005, the
At the Spring European Council
3.3
Council proceeded to the mid-term review of
the Lisbon
Strategy and decided to relaunch the process by refocusing on
growth and employment as Europe's political top priorities. An

agreement was reached on the integrated guidelines for growth
and jobs (1) which should foster coherence of reform measures
and provide a roadmap for the design of national reform
programmes.

In the evolution of the Lisbon Strategy, the search for
3.4
competitiveness and growth is a critical feature in generating
improved economic well being, creating employment, protecting
lifestyles as well as improving them. In turn,
the quality of
better quality of life, social
improvements and environmental
sustainability may also create growth. Where the Lisbon strategy
has not delivered so far is particularly in the areas of economic
and industrial growth and the creation of more and better jobs.
In terms of global competition, Europe is facing difficulties.
Since the take-off of
the EU has been
from 15 to 25 and then
through a major enlargement
27 Member States.

the Lisbon process,

The Committee would firstly note that

3.5
the Lisbon
Strategy has already enabled a number of positive developments
including:

— an awareness of the need for reform that goes beyond tradi-

tional divisions;

— accelerated expansion of information technologies and inno-

vation processes;

— increased support for starting up businesses and financing

SMEs;

— greater concern for sustainable development designed to
lower public deficits, restore stability to the social protection
budget and protect the environment;

— initiatives on the part of social partners in social reform;

— measures to simplify legal and administrative procedures,

albeit of limited impact until now.

3.6
Despite these positive points, the main observation is
that Europe, caught between its great industrialised competitors
and emerging low production cost economies that are making
greater use of new technologies, is facing ever increasing compe-
titive challenges. Several indicators give cause for concern, such
as:

— weaker domestic demand,

lower investment, productivity
and growth rates in the European Union, that make it lose
out compared to its main competitors and upcoming
markets;

(1) Council Decision of 12 July 2005 on Guidelines for the employment
policies of the Member States (2005/600/EC), OJ L 205, 6.8.2005,
p. 21.

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— globalisation that is leading to the integration of new coun-

— high rates of unemployment, especially for some target

tries into the international economic system;

groups;

— the failure to achieve employment targets;

— high rate of early retirement, in spite of commitments;

— continuing public deficits in several Member States, albeit

not always the same;

— non-adapted education and training systems, especially

concerning entrepreneurial and ICT skills;

— widely disparate taxation rules and tax rates for businesses;

— insufficient provision of lifelong learning possibilities;

— remaining administrative burden for business and slow

implementation of directives in Member States;

— research spending that has generally diminished further,
rather than increasing to the Lisbon target of 3 % of GDP;

— the ageing of Europe's population that will put an enormous

strain on public finances and the labour supply;

— the threat of increasing resource scarcity or price volatility,

climate change and loss of biodiversity;

— lack of

innovation, although the most recent innovation

scoreboard report shows better results;

— lack of access to finance for SMEs, combined with a lack of
knowledge about the possibilities, as well as on the EU level;

— continuing budget deficits albeit not always in the same

— lack of labour mobility which is essential for realising the

countries.

internal market;

— shift of companies in Europe to emerging and fast growing

markets;

— the declining interest of European citizens in the European

Union.

3.7
At
lagging behind:

the same time,

the Lisbon Strategy reforms are

3.7.1
At European level, the Member States undertook to
complete the single market in several areas (energy, services,
trans-European networks, adaptation of
public procurement,
implementing the necessary
public services), but balk at
measures within the timeframe.

their development and help to better exploit

At European level, since the 1990s the Commission
3.7.1.1
has undertaken a wealth of initiatives in order firstly to better
understand the needs and functioning of SMEs and secondly to
support
their
potential of job creation. These actions have been reinforced in
the past few years with the nomination of the SME envoy, the
action plan for entrepreneurship adopted in 2004, and the
efforts for a better legislation, better access to finance (EIF and
EIB), the Competitiveness and Innovation Programme (CIP).

3.7.2
concerning mostly:

At national

level,

results vary, with shortcomings

— the structural complexity of regulations and administrative

procedures;

3.7.3
The new Member States must often overcome addi-
tional handicaps due to a development gap, for example in
employment, technologies or the environment, although these
handicaps are sometimes also offset by renewal measures which
are more radical than in the EU-15.

the EESC's consultation of

Reference is made to the report drawn up by the
3.8
European Economic and Social Committee (EESC) at the request
of the European Council of March 2005, setting out the results
of
the
Member States and at the European level, on the implementa-
tion of the Lisbon Strategy and the role of the social partners
and other components of organised civil society (2). Several
reports on the Lisbon Strategy and specific aspects of it have
been published by the Committee in recent years (3).

its partners,

throughout

4. Improving business potential, especially SMEs

4.1 Importance of SMEs in the European economy

4.1.1
The vast majority of enterprises (99,8 %) in Europe are
SMEs. The typical European firm is a micro firm (91 %); 7 % are
small enterprises. Not only are most enterprises in Europe
small, but
for a significant amount of
European work experience (two thirds of employment in the
private sector) and economic activity (57 % of the GNP) (4).

they also account

(2) Implementation of
European Council.

the Lisbon Strategy. Summary report for the

(3) OJ C 185, 8.8.2006 + CCMI/032.
(4) Data available for 2003. Eurostat's Pocket book 2006.

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4.1.2
In order to improve the monitoring of the economic
performances of SME's the EESC calls on the European Commis-
sion for relaunching the activities of the European Observatory
for SMEs.

but also stability in terms of growth, full employment and social
cohesion (5). To achieve results it
to have the
national budgets in line with the ECB policies and to respect the
Pact for Stability and Growth.

is important

4.1.3
SMEs are the main generators of jobs, representing one
of the main sources for the state budget incomes (taxes, VAT,
etc.), offering the chance of professional and social achievement
for a large part of the population, especially of the most active
and innovative segment, which pushes the economy forward.
Furthermore they ensure the main component of an economic
background favourable to the market economy, characterized by
flexibility,
innovativity and dynamism, and representing the
seeds of the future large companies, especially in the new fields
of economy, based on complex technologies.

4.2 Competitiveness

4.2.5 Moreover, the EESC points out the special relevance of
business related services as part of SMEs for the success of the
Lisbon process and the competitiveness of the EU. Following up
the accordant communication of the Commission (6), the EESC
underlines the necessity to create a regulatory environment in
the societal
which the concerned SMEs are able to fulfil
demands they are confronted with.

4.2.6
The EESC supports also the wide analysis of necessary
support measures in 27 sectors of manufacturing industry in
the Commission document on an integrated industrial policy
but insists on the real implementation of the policy in coordina-
tion with the Member States. (7)

4.2.1
The emphasis on competitiveness acknowledges the
need to achieve sustainable competitiveness in an open and
global economy by enhancing our use of new technologies,
identifying more
ensuring
employees are well qualified and improving productivity. The
concept of quality (quality of goods, services, regulation, govern-
is
ance, employment, social relations and the environment)
central to the strategy.

vocational

training,

effective

To secure economic stability, Member States should
4.2.2
maintain their medium-term budgetary objectives over
the
economic cycle or take all the necessary corrective measures.
Subject to this, Member States should avoid pro-cyclical fiscal
policies. Member States posting current account deficits that
risk being unsustainable should work towards correcting them
by implementing structural reforms to boost external competi-
tiveness and also contribute to their correction via fiscal policies.
These measures are a minimum because of the ageing of the
European population.

thwarting a

sustained and more

4.2.3
The EESC thinks that only by changing the basic thrust
of economic policies and, in particular, macroeconomic policies
it be possible to eliminate within Europe the obstacles
will
which are
far-reaching
economic recovery. The EU has to act from within if it is to
steer the European economy back on the road to growth and
full employment. This will require a balanced macroeconomic
policy with the declared aim of: achieving the objectives of the
Lisbon Strategy,
in particular full employment; strengthening
competitiveness; and giving real consideration to the obligation
to pursue sustainable development, in line with the conclusions
of the Gothenburg Summit.

The EESC recalls that

the aim of monetary policy
4.2.4
should be to strike a balance between price stability, economic
growth and employment. It would make sense to urge the ECB
to target stability in the wider sense, i.e. not only price stability

4.3 Better regulation (8)

The EESC fully supports the recent proposal of the
4.3.1
European Commission to cut
the administrative burden for
companies by 25 % by 2012 (9). This can lead to an increase in
the GDP of the EU of 1,5 %. The EESC urges the Commission
to put forward a clear Strategy for the simplification of the regu-
latory environment
to avoid failure to
deliver (10).

in order

in full

4.3.2
A lighter administrative burden can fuel economic
dynamism. Curbing the weight of legal and regulatory obliga-
tions requires a global approach from the local, regional and
national authorities as well as from the European Union. It is
essential that regulations are well designed and proportionate.

(5) The EESC has itself demanded on several occasions that monetary
policy should also strive to achieve the goals of full employment and
growth.

(6) ‘The competitiveness of business-related services and their contribution
to the performance of the European enterprises’ [COM(2003) 747
final] of 4 December 2003.

(7) Communication from the Commission — Implementing the Com-
munity Lisbon Programme: A policy framework to strengthen EU
manufacturing — towards a more integrated approach for industrial
policy COM(2005) 474 final; Modern Industrial Policy.

(8) The EESC has recently published several opinions on Simplification,

Better Lawmaking:
OJ C 24, 31.1.2006, Better Lawmaking, exploratory opinion on the
request of the UK Presidency, rapporteur Mr Retureau.
OJ C 24, 31.1.2006, How to improve the implementation and enfor-
cement of EU legislation, own initiative opinion,
rapporteur
Mr van Iersel.
OJ C 112, 30.4.2004, Opinion on Updating and simplifying the
acquis
rapporteur
[COM(2003)
Mr Retureau.

communautaire

final],

71

(9) COM(2006)689, 690 and 691 of 14 November 2006.
(10) Action Programme for Reducing Administrative Burdens in the

European Union. COM(2007) 23 final of 24.1.2007.

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the (Business)

The creation of

4.3.3
Impact Assessment
Board, announced by the Commission in its strategic overview
on ‘Better Legislation’ (11) and aimed at strengthening the quality
and efficiency of impact analyses, gets the support of the EESC.
Nevertheless, its scope of action must not be limited to simple
coordination, but also take in consideration the quality of work
considering SMEs and the analysis of the economic and social
consequences of
regulatory proposals. New regulations at
national and Community level should be screened to assess
their impact on SMEs.

The economic, social and environmental

4.3.4
impacts of
new or revised regulations have to be carefully assessed to iden-
trade-offs and synergies between different
tify the potential
policy objectives. Moreover, existing regulation is screened for
simplification potential and its impact on competitiveness is
assessed. Special attention should be paid to independent busi-
ness impact assessments,
including a specific target towards
small enterprises, of all legislative and regulative proposals from
the European Commission. Finally, a common approach to
measuring the administrative costs of new and existing legisla-
tion is being developed. The ‘think small first’ principle should
be the guiding principle when reviewing the existing legislation
and conceiving new one. This means that legislation should take
into account the particularities of SMEs.

for

The EESC points out that improvements are especially
4.3.5
important
(SMEs),
small and medium-sized enterprises
which usually have only limited resources to deal with the
administration imposed by both Community and national legis-
lation.

4.3.6
The necessary steps should be taken to ensure that all
Member States implement all directives in time and with a high
level of quality, and to convince the national and regional
governments and legislators to start their own simplification
project targeting regulation, where ‘gold-plating’ has happened
by implementing European law.

at

regional, national

4.3.7 Most of policy actors
and
European levels do not know enough about the reality in small
enterprises and their real needs. Better involvement of represen-
tative SME associations (12) at all
levels is a precondition to
improve the quality of SME policy in Europe. Strengthening
associations of small enterprises is also one of the key elements
of the European Charter for Small Enterprises (2000). Represen-
tative SME associations should be involved as important stake-
holders in the decision-making process at all levels.

(11) Communication of European Commission of 14 November 2006.
(12) With SME-organisation we refer to organisations representing SME's
(European definition) in different fields of actions: crafts, industry,
services, trade, liberal professions. Multisector as well as more sector
related organisations are referred to.

4.3.8
CESE is strongly supporting the European Charter for
Small Enterprises which proved to be a useful tool for moni-
toring progress and for identifying SMEs problems, as well as
for determining member states to act aiming at improving coor-
dination of entrepreneurial policies within the entire Europe. It
is important to maintain a sustained rhythm in the process of
integrating Charter
in the annual
reports of the Lisbon Agenda. It is imperative to continuously
bring it up to date and to complete it in respect of the revised
Lisbon strategy and the EU major enlargement process.

implementation reports

4.4 Entrepreneurial culture and Business Start-ups (13)

4.4.1
Entrepreneurship is a complex phenomenon that
comprises elements of a sense of initiative, risk-taking and inno-
fill
vation. Small and new companies generate innovations,
market niches, create employment and increase competition
thereby promoting economic efficiency.

4.4.2
The European Union as a whole is suffering from low
early stage entrepreneurial activity. The latest GEM (Global
Entrepreneurship Monitor) report ranks no European Member
State on the top 10 countries (14). On the contrary, eight
Member States figure among the 10 lowest levels of participa-
tion (15).

4.4.3
Entrepreneurship is important to society as a whole. To
promote and raise the awareness of the culture of entrepre-
neurial thinking as well as an understanding of the importance
of entrepreneurship for a country's overall development, the
Committee proposes that 2009 be declared European Year of
Entrepreneurship. In this context the Committee notes that the
mid-term review of several relevant Community programmes
will take place in 2010. Positive public attitudes on entrepre-
neurship need to be established. The Year would also provide an
opportunity to consolidate and reinforce existing exchanges of
best practice.

4.4.4 Much need exists within the EU for changes in the
education and training curricula — in particular in the higher
education level — to place more emphasis on advanced entre-
preneurship education,
information
management and ICT and networking. The role of schools and
universities is an essential factor in fostering an entrepreneurial
mindset among young people. Active participation of company
representatives in education, for example,
is recommended as
from business organisations. Media
well as an involvement
activities and the image they convey of business are important.

the strategic value of

(13) OJ C 309, 12.12.2006, Opinion of the European Economic and Social
Committee on the Communication from the Commission: Imple-
menting the Community Lisbon Programme: Fostering entrepre-
neurial mindsets through education and learning COM(2006) 33 final.

(14) Ireland ranks 11th.
(15) Hungary, Belgium, Sweden, Slovenia, the Netherlands, Denmark, Italy

and Finland.

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Policies to assist businesses to start up and develop
4.4.5
should be intensified including quicker,
lower-cost start-ups,
measures to improve access to risk capital, more entrepreneurial
training programmes, measures to improve access to public
networks and utility services and a denser network of support
services for small enterprises. Moreover, political decisions in
view of reforming tax systems, regulation, market access, rescue
and restructuring proceedings as well as inheritance law are
needed. A cultural change regarding the attitude on bankruptcy
is needed.

4.4.6
The availability of early-stage financing is a crucial
issue. In Belgium, initiatives have been taken by the government
aiming at bridging the equity gap. An example is the ARkimedes
fund that has raised EUR 110 million in the form of shares or
bonds, guaranteed by the regional government of Flanders.

Equally essential is providing information and business
4.4.7
support services, notably for young entrepreneurs. Mentorship
programmes in Flanders (Belgium) have proved their worth.

Fear of

4.4.8
failure has a powerful negative impact on
potential start-ups. An adequate social framework has to be
adopted for self-employed persons. The self-employed should
also be given a second chance more easily.

4.5 Internal market (16)

4.5.1
The potential of the Single Market should be unleashed.
The European Union should now have the advantages of a
market that is bigger than that of the USA or China but

— too many directives have not been fully transposed into

national legislation;

— inadequate progress has been made in securing standardisa-
tion and mutual recognition for the supply of services;

— delays have taken place in liberalising markets,

including

those in the public sector;

— difficulties have arisen in agreeing workable European intel-

lectual property rights;

— distortions are caused by forms of fiscal differences.

4.5.2
The attractiveness of the European Union as an invest-
ment location depends on the size and openness of its markets,
its regulatory environment and the quality of its infrastructure.
Increased investment will make Europe more productive as
labour productivity levels depend on investment in physical and
human capital as well as in knowledge and infrastructure.

4.5.3
The ability of European producers to compete and
is key to their competitive
survive in the internal market
strength in world markets. Whilst the internal market for goods
is relatively well integrated, services markets remain, legally or
de facto, rather fragmented. In order to promote growth and
employment and to strengthen competitiveness,
the internal
market of services has to be fully operational while preserving
the European social model. The elimination of tax obstacles to
cross-border activities and the removal of remaining impedi-
ments to worker mobility would also bring important efficiency
integration of financial markets would
gains. Finally, the full
raise output and employment by allowing more efficient alloca-
tion of capital and creating better conditions for business
finance.

For SMEs, especially in the service sector, the internal
4.5.4
market is still not fully realised. High administrative burdens for
cross-border operations and non adapted European standards
hinder small enterprises to profit from a larger market.

4.5.5
Standards play a major role in the access to markets.
Current standardisation processes do not take sufficiently into
account the specificities of craft and SMEs. Small businesses
have to be better involved in the elaboration of European and
international standards. Despite strong support given by the
Commission to structures like NORMAPME (17), further efforts
in favour of SMEs are needed, in particular for small series and
tailored made production, for lower standards costs, for a more
balanced representation in technical committees, for the simpli-
fication of certification systems.

4.5.6
There is considerable scope for further improvements
in public procurement practices. Such improvements would be
reflected in an increase in the share of public procurement
publicly advertised. Focus should be put on the possibilities for
SMEs to participate in public procurement procedures. The
EESC supports the composition by the Commission of a
compendium of good practices in this field recorded by EU
member states, and by the USA and Japan, which have resulted
in the growth of SMEs' access to public procurement.

(16) OJ C 93, 27.4.2007, exploratory opinion on the Review of the Single

Market.

(17) NORMAPME: European Office for Crafts, Trades and SMEs for Stan-

dardisation —
www.normapme.com.

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4.5.7
taxation
SMEs in Europe have to face 27 different
systems, which cause prohibitive compliance costs and create
serious barriers to the internal market. Compliance costs for
small companies are much higher than for large enterprises (18).
Simplification in favour of SMEs in particular is awaited.

4.6 Human capital, development of competences and social dialogue

In a context of a globalised and knowledge-based
4.6.1
economy, companies have to constantly adapt
to change.
Successful entrepreneurs need more than ever a solid basis of
knowledge and qualifications in order to face increased competi-
tion and to be able to win the innovation race. Moreover tech-
nological developments require the constant development of
new competencies, especially in the field of ICT and acquisition
of updated skills for entrepreneurs and workers alike (19).

4.6.2
Since 2000, with the Lisbon Strategy, training objec-
tives and lifelong learning strategies have clearly been reinforced
in Europe, but they still need further improvements as stated in
the evaluation report 2006 of the ‘Framework of actions for the
lifelong development of competencies and qualifications’ agreed
by the European social partners (ETUC, BusinessEurope, CEEP,
UEAPME) in 2002. In this context, the new Community ‘Inte-
grated action programme in lifelong learning’ should also fully
participate in this effort as its official aim is to contribute to the
realisation of Lisbon goals namely ‘the development of
the
European Union as an advanced knowledge society, with
sustainable economic development, more and better jobs and
greater social cohesion’.

As the EESC rightly pointed out (20),

4.6.3
‘the Union's
educational programmes are among the very few Community
actions addressed directly to its citizens. The new programme
should therefore aim to promote democracy based on participa-
tion and active citizenship’, and ‘to promote employment and a
versatile labour market’. Since it also integrates the main
European mobility programmes, namely Leonardo da Vinci for
apprentices and young people in initial vocational training and
young workers, as well as Erasmus for students, they should be
more easily accessible to individual mobility. Learning and
working abroad for a certain time not only enriches skills and
the know-how of an individual, but also increases the under-
standing of Europe and European citizenship. Additionally,
it
helps the individual to be pro-active and more open to take on
responsibility for his or her own employability in the working
life.

4.6.4 Moreover, the EESC stressed the ‘particular importance
to the possibility of SMEs having access to the programme’ and
‘proposes a special approach for SMEs, simplifying the relevant

(18) Refers to compliance costs on taxation in cross border activities.
(19) Even traditional professions like plumbers and carpenters have to take

into account energy saving techniques.

(20) OJ C 221, 8.9.2005.

in order

to make

their participation in the
procedures
programmes both feasible and effective’.
In a services-driven
economy, the most valuable asset of a company is its human
capital. In order that enterprises, particularly SMEs, can pursue a
strategy for competence development, customised support initia-
tives should be designed to help them to invest in continuous
training such as tailor-made training offers, financial support,
tax incentives.

tool

Social dialogue is an important

4.6.5
to overcome
economic and social challenges. One of its main achievements is
the improvement of
the labour market functioning and the
anticipation of change. Furthermore, social dialogue contributes
to creating a climate of confidence in companies. It can also
provide tailor-made answers for small enterprises as far as it
takes into account the specificity and quality of the working
environment and of the working relations as well as the particu-
lar situation in which craft and small enterprises are working
and developing.

4.7 Innovation

4.7.1
The Lisbon Agenda aimed at a 3 % target for R&D as
related to the GDP of which two thirds must come from the
private sector. Currently it is contributing just 56 %. Unfortu-
nately we have to note that Europe devotes a much lower share
of its GDP to R&D than the US and Japan (1,93 % as compared
to 2,59 % in the US and 3,15 % in Japan). Furthermore, China
is on track to match the research intensity of the EU by 2010.
Research and development:
in 2002, the private sector spent
EUR 100 billion more on research and development in the
United States than it did in Europe.

research and innovation at

4.7.2
The future European Institute of Technology (EIT),
whose aim it is to reach the highest possible of integration of
education,
the excellence level,
should strongly recognise and valorise the SMEs potential.
Cooperation between universities and research centres and busi-
nesses, in particular small businesses, should be strengthened.
Researchers should be encouraged to have contacts with busi-
nesses. The importance of promoting technology transfers via
technology centres and incubators cannot be underestimated.
Measures to sustain innovation support service providers, clus-
ters and networks should also be foreseen in the new State Aid
Framework
Innovation
(R&D&I). European researchers should be given more opportu-
nities in each of the 27 EU Member Sates. A better promotion
and dissemination of research results is imperative in order to
improve access to these results for business and the economic
impact of it.

for Research, Development

and

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Official Journal of the European Union

C 256/15

4.7.3
Europe should provide a harmonised regulatory envir-
onment across the EU favourable to innovation. New initiatives
for a European Community Patent are needed to protect innova-
tion and address the needs of European businesses. Such a
system should foresee reduced fees for SMEs and a proper
patent litigation insurance structure.

4.7.4
The European Commission has recognised in its latest
communications the need to expand the definition of innova-
tion to focus on SMEs and take account of non-technical inno-
vation in all economic sectors. This new approach must now be
implemented in all policy areas to become of use for small busi-
nesses.

4.7.5
It is essential for SMEs to upgrade their existing human
capital and to introduce an academic work force into produc-
tion and innovation. The 7th Framework Programme should
give support to SMEs for introducing advanced technological
research and production techniques, but also to other forms of
innovation important in an SME structure.

690 000 enterprises, providing 2.8 million jobs. Transfers
should be promoted as valuable alternatives to starting up a
business.

4.8.2
In contrast to the past, more and more business trans-
fers take place outside the family, to third parties. Also there is a
growing interest in taking over an established firm, rather than
starting a business from scratch. Research showed that 96 % of
business transfers survive the first five years in comparison with
75 % of start-ups.

4.8.3
So the first challenge is to set up a platform and to
facilitate the matching of potential buyers and sellers of busi-
in order to
nesses. This marketplace should be transparent
increase the possibility of making contacts and ensuring the
continuity of existing viable enterprises. High quality of services
including matchmaking, consultancy and confidentiality are
essential. In most of European countries there are governmental
or government supported business transfer markets (22). These
initiatives should be developed in all EU Member States.

The necessary resources at EU level are to come from
4.7.6
the CIP programme, the Framework programme on research,
the Structural Funds, and the education programmes,
to
mention the most important. Coordinating policies,
including
resources, will be a difficult and delicate task, particularly since
the available European financial resources are relatively limited
in relation to the needs and demands. To ensure the use of
financial means
to co-finance
programmes for innovative SMEs, start-ups and business trans-
fers (i.e. via the European Investment Funds — JEREMIE), appro-
priate measures must be adopted at Member State level and
their effectiveness and accessibility should be closely monitored.

from the

structural

funds

4.9 Access to finance

4.9.1
SMEs and especially start-ups, business transfers and
innovative companies should get better access to finance to fully
realise their potential and create economic growth and more
employment in Europe. Risk-sharing models such as mutual and
public guarantee schemes have proven to be very effective
instruments and must be further promoted both at EU and
Member State level.

The introduction of advanced new production methods
4.7.7
and machines, particularly in SMEs, will
require credit on
favourable terms. The EIB and the EIF should be involved
closely in the work of the sectoral and inter-sectoral planning
groups.

4.9.2
The availability of capital at a reasonable cost for new
business, SMEs and fast-growing enterprises: this requires main-
taining interest rates and risk premiums at reasonable levels as
well as a rationalisation of government aid schemes.

4.7.8
which can lower their costs,
enhance their competitiveness.

SMEs have to be guided more to ICT applications,
increase their productivity and

4.8 Business Transfer (21)

4.8.1
European studies show that about one third of Europe's
entrepreneurs, mainly family business owners, will depart within
the next 10 years. It is estimated that this will affect some

Consultancy to SMEs by SME organisations should be
4.9.3
strengthened and supported. It is also necessary to install finan-
cial instruments adapted to the needs and means of small busi-
nesses. The EESC invites the Commission and the EIB/EIF to
finance innovation in small business in the form of risk capital
and guarantee schemes.

4.9.4
Venture capitalists and business angels are important
ways of access to finance for SMEs. Stimulating the networking
between venture capitalists and business angels on the one hand
and (starting) entrepreneurs on the other hand is important to
lower the small equity gap.

(21) Implementing the Lisbon Community Programme for Growth and
Jobs. Transfer of Businesses — Continuity through a new beginning.
COM(2006) 117 final, 14/03/06.

(22) France,

Italy, Luxembourg, the Netherlands, Austria, Finland and
Belgium (which has a separate database for each region). The success
rate for these countries is around 25 %, i.e. one in four businesses in
the database has found a successor.

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4.9.5
Guarantee systems prove to be a very effective and
resources efficient way to support small business. The Caisse
Mutuelle de Garantie de la Mécanique (CMGM) in France has
over 45 years' experience in this field. This Caisse offers banks
guarantees over the near totality of credits (investment credits,
transfer of business, bank warrants, cash credits)
they
accord to companies. Companies subscribe to its capital and
guarantee fund. This
reducing the private
system allows
warrants asked from the entrepreneurs, makes available larger
credits and offers a safety net for the entrepreneur toward its
banker. Exchanges of good practices among EU Member States,
regarding access to finance and guarantee funds for SMEs,
should be encouraged.

that

4.10 Internationalisation

4.10.1
The EU must seize the opportunities provided by the
opening up of rapidly growing markets in Asia, such as China
and India. At the same time, the EU must deal with the resulting
new international division of
labour, particularly as China
begins to specialise more in high value-added goods and as

India develops as a global hub for outsourcing. The EESC
stresses that a common approach in dealing with third countries
is essential so as to improve market access conditions for EU
companies.

4.10.2
Even though the single market has been in place for
over 14 years, a lot of firms still operate solely in their own
country. Language barriers, remaining legislative and regulatory
differences, and a lack of knowledge of other markets are the
main obstacles. The EESC welcomes the creation of support
services close to the entrepreneurs, comparable to the Passport
to export in the UK (23). Access to public procurement for SMEs
should also be encouraged.

4.10.3
Adequate support systems should be developed to
stimulate cross-border activities as well within the European
Union and on other markets.

4.10.4
The EESC stresses that a special focus should be given
to SMEs in the Commission documents on Trade Policy (Access
Strategy, Defence Instruments, Global Europe).

Brussels, 12 July 2007.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS

(23) For details about the single market see Flash Barometer 180 — TNS
Internal Market Opinions and

Sofres/EOS Gallup Group Europe,
Experiences of Businesses in EU-15, published June 2006.
For details on Passport to Export, a programme by UK Trade and
Investment to support British exporters to overcome their weaknesses
in international trade, see Charter of Small Business, Selection of good
practices 2006, p. 9.