Opinion of the European Economic and Social Committee on The different policy measures, other than suitable financing, that would help SMEs to grow and develop
Date: 2008-07-09
Institutions: European Economic and Social Committee
Subjects: ESC opinion, EU Member State, competitiveness, development policy, employment statistics, financing, small and medium-sized enterprises, unemployment

3.2.2009

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Official Journal of the European Union

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Opinion of the European Economic and Social Committee on ‘The different policy measures, other
than suitable financing, that would help SMEs to grow and develop’

(2009/C 27/02)

On 20 September 2007, Mr Andrej Vizjak, Minister for the Economy, asked the European Economic and
Social Committee, on behalf of the forthcoming Slovenian presidency of the Council, to draw up an explora-
tory opinion on

The different policy measures, other than suitable financing, that would help SMEs to grow and develop.

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 11 June 2008. The rapporteur was Mr Cappellini.

At its 446th plenary session, held on 9 and 10 July 2008 (meeting of 9 July), the European Economic and
Social Committee adopted the following opinion by 122 votes to 0, with five abstentions.

1. Conclusions and recommendations

The EESC believes that the Small Business Act for Europe
1.1
(SBAE), which it had called for on numerous occasions, should
make it possible to re-launch the European Charter for Small
Enterprises; furthermore,
it considers that the SBAE not only
represents a remarkable opportunity for developing the poten-
tial of small businesses but will also gauge the extent to which
the EU institutions and Member States wish to launch a genuine
policy of voluntary and lasting support for SMEs and the smal-
lest companies.

1.2
This policy should not be confined to periods of
economic downturn, when politicians have a tendency to redis-
cover the benefits of SMEs and small business, especially their
capacity for plugging employment gaps and reducing unemploy-
ment statistics, but should instead aspire to be a well-structured
policy providing long-term support for small business competi-
tiveness.

1.3
The EESC recommends 10 key measures to support and
re-launch SME development by creating a truly favourable envir-
onment and effective Small Business Act for Europe, which will
be more than just another political declaration:

— to have a good knowledge of the European landscape of the
various types of SMEs, their evolution and their needs at
cross-sectoral and sectoral level in the light of the internal,
external and cross-border aspects of the internal market,
particularly through the publication of annual reports;

— to integrate the SME dimension into all Community policies

and into the legislative process;

— to pursue a strategy of simplified administration at all levels
and to establish a new method of consultation with the
various types of SMEs and the intermediary organisations
representing them;

— to ensure that legislation at all levels takes account of the
situation and needs of the various types of SMEs and applies
the principle of ‘think small first’;

— to ensure that legislation respects the following four funda-
mental principles: 1) effective impact analyses, 2) propor-
tionality, 3) ‘only once,’ and 4) the principle of safeguarding,
with a particular focus on extending the powers of the SME
Envoy (i.e. the SMEs' representative) and creating an SME
ombudsman for the single market;

— support the assistance and advisory activities of intermediary

organisations representing SMEs;

— to relaunch business cooperation and inter-organisational
exchange programmes and to establish a network of related
support services;

— to introduce a more extensive and permanent policy of

innovation focused on small business;

— to simplify and promote SMEs' access to EU programmes;

— to launch a policy for the transfer of business ownership.

the EESC requests the implementation of the SBAE at all

1.4
levels in the form of a legally binding instrument.

Furthermore,

1.5
it calls for the SBAE to encourage social
dialogue between the social partners in SMEs so as to establish
the best possible working environment for the promotion of
including in the area of working
creativity and innovation,
conditions, with a particular emphasis on improving safety and
risk assessment at the workplace.

2. (Background) Presentation of the exploratory opinion

2.1
The crucial role played by small and medium-sized enter-
prises (SMEs) in the EU economy is universally recognised as a
key factor for EU level growth and employment and for addres-
sing the new challenges of globalisation. The results of the SME
policies implemented during the years 2005-2007 show that
significant progress has been made, both at EU and at national
level, thanks to the application of the think small first principle.

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2.2
The European Commission has stressed the need to
unlock SMEs' potential for growth and job creation and to take
full advantage of their capacity for innovation. This approach
found its reflection in the report on the renewed Lisbon Strategy
for growth and employment adopted on 11 December 2007,
and provided the inspiration for the creation of a Small Business
Act for Europe, whose principal objective is to identify concrete
measures and principles for improving the European SME envir-
onment and for reaping the full benefit of their diversity. This
initiative was endorsed by the European Council meeting in
December 2007; the Commission aims to present a proposal by
June 2008.

2.3
It is worth bearing in mind that the EESC has recently
issued, or is currently preparing, a number of other opinions
relating to SME policy, including:

— Developments in the business service sector

in Europe

(INT/412 — rapporteur: Mr Calleja) (in preparation)

— Research and development programme for SMEs (INT/379

— rapporteur: Mr Cappellini)

— A mid-term review of Modern SME policy (INT/392 —

rapporteur: Mr Burns) (in preparation)

— International public procurement (INT/394 — rapporteur:

Mr Malosse)

— Micro-credit
preparation).

particularly satisfied with the approach of the European institu-
tions, which has shown a clear move in favour of small busi-
ness, and hopes that this is not solely due to the current difficult
these
economic and social situation. However,
unquestionable achievements, the policies launched in recent
years are nonetheless beset by a number of weaknesses.

in spite of

that

in particular,

The EESC considers,

3.2
the European
Charter for Small Enterprises has failed to achieve its strategic
objectives because it has no legal standing and has, for the most
part, remained little more than a political declaration. There is a
need to strengthen its implementation in the Member States and
at regional
level and to relaunch the annual evaluations and
recommendations in the Member States.

Furthermore, mention has often been made of the need
3.3
to further improve the dialogue with the various types of SMEs;
the EESC believes that there is a need to introduce a new culture
of dialogue at European, national and regional level making it
possible to strengthen and institutionalise dialogue between the
institutions and intermediary organisations representing SMEs.

4. Specific comments

(INT/423) — rapporteur: Mr Pezzini)

(in

4.1 Create a new environment promoting the development of all SMEs

2.4
The Slovenian presidency of the Council has asked the
EESC for a series of political proposals promoting SME growth.
The aim is not for the EESC to draw up a new list of technical
measures focusing on the individual growth of SMEs but rather
to put forward a more structured political framework and to
innovate in favour of SMEs.

Two priorities in particular have been set out by the

2.5
Slovenian presidency:

a) to enable all SMEs, irrespective of their differences in terms
to
of size, operations, sector or means of production,
respond to the major challenges which they will face in the
future such as industrial, climate and demographic change,
social challenges, as well as the restructuring of markets due
to the effects of globalisation, changes in distribution and the
standardisation and certification of products and services;

b) to enable SMEs to be more closely involved in political deci-
sion-making, operational priorities and legislative decisions
which affect their working environment.

In addition,

2.6
the
opinion of the EESC in connection with the preparation of the
Small Business Act for Europe.

the Slovenian presidency requires

3. General comments

3.1
The EESC has, in its previous opinions, commented on
the significant advances made by SMEs, especially in terms of
access to funding or simplified administrative procedures. It is

In the light of this situation and the significant challenges facing
SMEs in the future, the EESC fully supports the presidency's
initiative to launch an innovative policy for SMEs, the corner-
stone of which will be the SBAE, and endorses the Commis-
sion's initiatives for improving SME competitiveness, in order to
give more weight to the renewed Lisbon Strategy adopted at the
2008 Spring Summit.

4.2 A European project supporting SMEs and micro-enterprises

employment

and regional

The EESC recommends that the European institutions no longer
focus exclusively on high-growth companies, international posi-
tioning or various indicators of excellence as this has led to a
situation where millions of small businesses who generate value,
innovation,
stability are being
deprived of the benefits of EU action. It urges institutions and
public authorities at all levels to adopt an innovative approach
to SME policy by launching a truly European project bringing
together all the economic potential of small, medium-sized and
micro-enterprises to inject the extra growth and employment
which is needed by the EU. This European project must also
promote and develop dialogue with the social and economic
partners and the representative organisations of the different
types of SMEs on the key new EU challenges (climate change,
demographic change and immigration, the environment, energy)
which SMEs will face in the future. Based not only on both high
growth enterprises but perhaps primarily on the local economy
and on so called ‘traditional’ activities, it must allow the EU to
initiate a policy of promoting businesses on a human scale and
to focus on the local economy in order to ensure Member
States' growth by stressing five priority measures.

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4.2.1
To understand and convey the reality of the situa-
tion facing the different types of SMEs. All EU policies must
be based on clear facts providing information on the subject.
The definition of an SME covers a very broad range of business
situations and types or forms of companies (sole traders or
incorporated companies, companies with no workforce or up to
250 employees, companies engaged in craft, commercial or
social activities, companies active in the professional world)
operating in a variety of different sectors, each with their own
very different situations and needs.
the
various types of SMEs is often incomplete or non-existent. The
analyses carried out by the previous Observatory of European
SMEs often provided vital data. The EESC is delighted by
DG Enterprise's decision to re-launch the Observatory and
requests:

Information about

— the launch of a vast programme of economic studies,
including sector specific reports, on the situation and needs
of the various types of SMEs,
including at national and
regional
level, and statistical analyses in consultation with
the representative organisations concerned;

— the promotion and development of business organisations'
own research and study activities at European, national and
regional level, in consultation with research centres, universi-
ties and the Member States.

4.2.2
Include the SME dimension in all Community poli-
cies: The EESC has noted that beyond the political declarations
in favour of small businesses, there is still a strong tendency
among legislators at all levels to apply the large company model
by rote and to follow the bonsai principle which holds that
what is good for a large company is good for small companies
too, either due to their lack of understanding of the real situa-
tion or their desire to keep things simple. This approach, based
on a single economic model,
is particularly ill-suited to the
reality of a plethora of different types of companies and business
cultures, leading to a situation where over 90 % of European
companies feel that EU policy ignores or fails to understand
their needs. The EESC draws the attention of the EU institutions
and the Member States to the fact that while small and micro-
enterprises represent the life blood of the EU economy and
employment, they risk becoming its downfall, not through their
own fault, but as a result of the insufficient attention paid to
them by public authorities at all levels. The EESC requests that
the SBAE finally provide an opportunity to put matters into
practice and hopes that the needs and specific characteristics of
the various types of SMEs be taken into account in all policies,
programmes and negotiations,
including social dialogue and
international relations, at EU as well as national and regional
level.

— to simplify, but not to diminish responsibility: the EESC has
certain doubts concerning the validity and efficiency of
systematic exemptions for small businesses and would prefer
a degree of proportionality in the area of implementation as
well as direct consultation with the SME organisations
concerned;

— to systematically involve the representative organisations of
the various types of SMEs in the EU, national and regional
legislative process, as well as in social dialogue at various
levels, and increase cooperation with the EESC and the
Committee of the Regions;

— to systematically apply the only once principle at all levels;

— to draft practical guides and explanatory documents on all
adopted legislation to make them more comprehensible and
easier to transpose.

Intermediary

organisations:

Support the assistance and advisory activities of
4.2.4
intermediary
organisations
representing the various types of SMEs are a key element in the
success of EU policies through the technical assistance services
which they can provide to all SMEs requiring specific skills that
cannot be ensured under
the new EEN (Enterprise Europe
Network) network. They play a vital role in providing companies
with both information and support, in particular by tailoring
legislation to the specific needs of each company on a
case-by-case basis and transposing legislation to the micro-
economic and local level, including as close as possible to the
smallest companies. On the one hand, the EESC considers it
vital that public authorities at all levels engage in a voluntary
policy of
supporting their activity and that Community
programmes which cover SMEs expressly provide for support
measures for such organisations. On the other hand, it calls on
the Commission, the Member States and the regions to put into
practice the conclusions of the 4th European conference of craft
industries and small businesses in Stuttgart on this issue.

4.2.5
Relaunch business cooperation programmes and
inter-organisational exchange programmes: The EESC urges
the Commission to relaunch the inter-regional business coopera-
tion programmes which have proved to be effective in the past;
furthermore, support must be given to action taken by inter-
mediary organisations or the creation of bodies which promote
such cooperation should be made possible.

4.3 Adopt a genuinely effective European Small Business Act

Pursue a policy of simplified administration: the
4.2.3
EESC urges the Commission to increase its efforts to simplify
EU legislation; however, above all it calls on the EU institutions
and the Member States to engage in a more effective policy of
simplification, based on the following five points:

The EESC expresses its delight at the positive opinions
4.3.1
of the Council and the Commission supporting the creation of
a Small Business Act at European level, especially as the
the SBAE on
Committee has advocated the introduction of
numerous occasions (1).
the
It believes that,
SBAE must fulfil the following conditions:

to be effective,

— to put in place a genuine think small first policy;

(1) See EESC opinion on Business potential, especially of SMEs (Lisbon Strategy)

(OJ C 256 of 27.10.2007, p. 8).

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its aim must be to create the best possible envir-
4.3.1.1
onment for SMEs and micro-enterprises at all
levels and to
provide a concrete response to the various challenges that SMEs
in particular, the
must face during their life cycle including,
transfer or take-up of business ownership; in the light of the
above, the SBAE must not lead to a deterioration in the working
conditions of SME employees; the initiatives launched should,
on the contrary, make it possible to take better account of their
situation;

4.3.1.2
it must bring real added value and not simply limit
itself to combining existing programmes or coordinating the
various measures currently underway;

4.3.1.3
it must not just constitute another declaration of
intent, as was unfortunately the case for the European Charter
for Small Enterprises and not be restricted to a simple political
declaration on the part of the EU institutions and the Member
States; European SMEs and micro enterprises deserve better and
the EESC believes that giving the SBAE real legal standing
will demonstrate and prove the EU's commitment to taking
effective action in respect of SMEs and micro-enterprises;

4.3.1.4
it must be binding in its entirety and apply to all
levels of European, national and regional decision-making by
focusing on public authorities at all
levels, whilst leaving the
responsibility for its implementation to the Member States (2);

ensuring that the legislative measures and programmes managed
by the DG take sufficient account of the priorities and expecta-
tions of SMEs and micro-enterprises.

4.3.2.2
Ensure that legislation complies with the funda-
mental principles. For the EESC, the effectiveness of legislation
at all
levels and of joint or individual SME programmes or
measures is dependent on the inclusion of the following four
principles in the SBAE and on their systematic application at
regional, national and European level:

— systematic impact analyses for SMEs: no legislative text
should be adopted unless it has first been subject
to a
systematic impact analysis covering the various types of
SMEs involved,
in order to gauge the direct and indirect
social and economic effects, the administrative burden and
the information and investment costs that this will entail, as
well as the advantages they can gain;

— the principle of proportionality: legislation must not impose
unnecessary measures on SMEs and must be limited to the
strict minimum necessary; the conditions for the application
of legislation must be adapted to the different circumstances
of the enterprises concerned and their capacity for imple-
menting legislation;

4.3.1.5
it must be applied to all EU policies by including
SMEs in all these policies and by developing a holistic approach
which takes proper account of all aspects of the policies and the
impact of the new rules on the various types of SMEs.

4.3.2
The EESC requests that the SBAE include five key
policy measures to ensure that the legislation does not restrict
the development and competitiveness of the various types of
SMEs;

— the only once principle: the role of SMEs is to produce, not
to act as administrative departments;
they may not be
subject more than once to declarations and administrative
procedures regarding the same issue and it is up to the
administrative authorities concerned to pass this information
on to one another; the ‘only once’ principle may not be
honoured by government offices which apply the ‘one busi-
ness-one contact person’ principle based on the fact that
intermediary organisations already carry out this function at
national level;

Ensure that

legislative texts at all

levels of the decision-making process:

4.3.2.1
levels are
drawn up by taking into account the specific needs and
the
situation of the various types of SME. To this end,
following basic rule should be established which will apply to
all
legislative proposals
must be formulated taking account of the needs and expecta-
tions of SMEs, especially the smallest businesses, and by
applying the think small first principle, with a particular focus on
the self-employed, who account for over half of all European
businesses. This approach envisages in particular the systematic
consultation of SME representative organisations, and the invol-
vement, at an appropriate level, of experts from these organisa-
tions in the work of those advisory committees which deal with
issues at regional, national or European level which could have
an impact on SMEs. This was in line with the request made by
the Competitiveness Council of 13 March 2006.

— the safeguard principle: legislation may not be adopted if it
impedes the development of SMEs or risks hindering their
competitiveness. It should be possible to block new legisla-
tive proposals which have not been subject to a full impact
analysis or where it is apparent that the proposed measures
could impede the socio-economic development of SMEs;

Furthermore, the EESC emphasises the need to put in place and
to ensure complete transparency in administrative procedures
by allowing SMEs to have access to all administrative data
concerning them and to correct it, where appropriate.

In this vein, the EESC calls for the appointment of an SME
envoy at each Commission DG who will be responsible for

(2) See EESC opinion on International Public Procurement

(OJ C 224,
30.8.2008, p. 32) in which the EESC voices its opposition to ‘the intro-
duction of a quota system for SMEs like that applied under the US Small
Business Act’.

4.3.2.3
Put in place a broader and consistent policy of
innovation. The EESC asks that the Commission, the Member
States and the regional authorities do not restrict themselves to
supporting innovation in high technologies only and that they
adopt a more proactive policy by including in their programmes
specific measures to support the innovation of low and medium
technology and non-technical innovation in SMEs, especially in
the smallest businesses.

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4.3.2.5
Simplifying and encouraging the transfer of busi-
ness ownership. The EESC particularly stresses the importance
of
the transfer of business ownership, especially for small
production and service-based businesses in urban and rural
areas: their anticipated disappearance — which is, however, by
no means inevitable — will have a huge negative impact on
retaining businesses and jobs in these areas. On the one hand,
the creation of systems for bringing together buyers and sellers,
and the introduction of financial or tax indicators should be
promoted, on the other, entrepreneurs should be encouraged to
improve their capitalisation in order to maintain the value of
their assets.

The specific situation of entrepreneurs in, for example, rural
areas requires the development of innovative structures such as
public-private partnerships.

4.4 A legally binding instrument should be at the core of the SBAE

4.4.1
In order to ensure that the SBAE is truly effective, the
EESC asks that these measures be adopted by the Council and
by the Parliament in the form of a legally binding act which will
be applied at European, national and regional decision-making
levels.

4.4.2
In this context, the EESC asks for an annual evaluation
of the implementation of the SBAE and of all SME policies at
EU and national level and that the Committee be kept informed
of the progress made: this annual report must be covered by a
separate specific chapter as part of the implementation of the
Lisbon strategy.

4.4.3
Following these reports, the Commission must be able
to issues its recommendations for implementation, both to the
Member States and the regions, on which it plans to issue an
opinion.

4.4.4
The EESC requests that these annual assessments lead
to the modification or revision of the SBAE or SME policies,
where appropriate.

The EESC strongly urges the Commission and the
4.4.5
Council
the
to involve the representative organisations of
various types of SMEs closely in the formulation and implemen-
tation of the SBAE.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS

The new EBN advisory network will never, by itself, be able to
intervene effectively on behalf of all those companies with a
potential for innovation. The EESC therefore requests that the
SBAE identify the following priorities:

— encourage the social partners in the SME sector to engage in
dialogue with the aim of creating a good working environ-
ment which is conducive to creativity and innovation;

— support the appointment of advisors at intermediary organi-
sations for SMEs and small and micro-enterprises, as close
as possible to business, as well as custom-made training
courses for entrepreneurs and employees on how to inno-
vate more effectively by capitalising on the new opportu-
nities provided by markets in transition;

— create financial

instruments tailored to the needs of
that

the
also support

ensuring

they

smallest businesses,
measures targeting employees;

— encourage both Member States and the regions to launch a
campaign in cooperation with SME organisations to identify
technological and non-technological
innovations within
SMEs and, in particular, micro-enterprises.

Broaden access to Community programmes. The
4.3.2.4
EESC believes that the complexity of administrative procedures
and the existence of divergent requirements are making it
increasingly difficult, if not impossible, for small companies to
take part in EU programmes, prompting the paradoxical situa-
tion where intermediary organisations are showing less and less
interest in such programmes. To take but one example, current
legal constraints do not allow innovative action such as support
for experimental pilot projects, thereby depriving the EU of a
whole raft of innovative proposals. The EESC believes there is a
need for a review of the related rules and regulations: given the
importance of this work, it is not the role of this opinion to
identify the changes that need to be made; nevertheless, the
EESC asks the Commission to launch a consultation with the
SME representative organisations within the framework of the
SBAE in order to lay down new conditions for organising and
participating in programmes at various regional levels.

this background, structural

Against
funds must be able to
promote SME participation in public contracts, especially in the
most disadvantaged regions (3).

Brussels, 9 July 2008.

(3) See EESC opinion 979/2008 on International Public Procurement (not yet

published in the Official Journal).