Source: EURLEX
Language: en
Format: md

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| 27.10.2007 | EN | Official Journal of the European Union | C 256/8 |

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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

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| 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. |

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| 1.2 | Furthermore the European Council proposed specific 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 momentum under all pillars of the Partnership for growth and employment (…). | |

2.   Summary and recommendations

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| 2.1 | Although the Lisbon Strategy has produced positive 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. |

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| 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 particular, have difficulties in overcoming these obstacles. |

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| 2.3 | Other challenges to overcome are the lack of entrepreneurship, the ageing of the population and its effect on entrepreneurship, labour supply and a greater need to focus on transfer of business, access to finance in the start-up and growth phase, access to research results and thus of innovation opportunities. |

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| 2.4 | Small and Medium-Sized Enterprises play a key role in attaining the Lisbon goals. Nevertheless, their necessary contribution 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 deemed crucial in order to develop the business potential of SMEs. |

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

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| 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. |

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| 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 Development 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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| 2.4.4 | The most valuable asset of a company is 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 entrepreneurs by further investing in continuous training. |

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

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| 2.4.6 | Public procurement is an important instrument 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. |

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

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

3.   General

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

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| 3.2 | The Committee recalls that from the outset, the Lisbon 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, social cohesion and environmental sustainability, by stimulating European competitiveness and job creation whilst at the same time building on appropriate environmental policies. | |

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| 3.3 | At the Spring European Council in March 2005, the 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)](#ntr1-C_2007256EN.01000801-E0001) which should foster coherence of reform measures and provide a roadmap for the design of national reform programmes. |

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| 3.4 | In the evolution of the Lisbon Strategy, the search for competitiveness and growth is a critical feature in generating improved economic well being, creating employment, protecting the quality of lifestyles as well as improving them. In turn, 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 Lisbon process, the EU has been through a major enlargement from 15 to 25 and then 27 Member States. |

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| 3.5 | The Committee would firstly note that the Lisbon Strategy has already enabled a number of positive developments including:   |  |  | | --- | --- | | — | an awareness of the need for reform that goes beyond traditional divisions; |  |  |  | | --- | --- | | — | accelerated expansion of information technologies and innovation 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. | |

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| 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 competitive 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; |  |  |  | | --- | --- | | — | globalisation that is leading to the integration of new countries into the international economic system; |  |  |  | | --- | --- | | — | the failure to achieve employment targets; |  |  |  | | --- | --- | | — | continuing public deficits in several Member States, albeit not always the same; |  |  |  | | --- | --- | | — | widely disparate taxation rules and tax rates for businesses; |  |  |  | | --- | --- | | — | remaining administrative burden for business and slow implementation of directives in Member States; |  |  |  | | --- | --- | | — | 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 labour mobility which is essential for realising the internal market; |  |  |  | | --- | --- | | — | shift of companies in Europe to emerging and fast growing markets; |  |  |  | | --- | --- | | — | the declining interest of European citizens in the European Union. | |

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| 3.7 | At the same time, the Lisbon Strategy reforms are lagging behind: |

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

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| 3.7.1.1 | At European level, since the 1990s the Commission has undertaken a wealth of initiatives in order firstly to better understand the needs and functioning of SMEs and secondly to support their development and help to better exploit 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). |

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| 3.7.2 | At national level, results vary, with shortcomings concerning mostly:   |  |  | | --- | --- | | — | the structural complexity of regulations and administrative procedures; |  |  |  | | --- | --- | | — | high rates of unemployment, especially for some target groups; |  |  |  | | --- | --- | | — | high rate of early retirement, in spite of commitments; |  |  |  | | --- | --- | | — | non-adapted education and training systems, especially concerning entrepreneurial and ICT skills; |  |  |  | | --- | --- | | — | insufficient provision of lifelong learning possibilities; |  |  |  | | --- | --- | | — | research spending that has generally diminished further, rather than increasing to the Lisbon target of 3 % of GDP; |  |  |  | | --- | --- | | — | 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 countries. | |

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| 3.7.3 | The new Member States must often overcome additional 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. |

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| 3.8 | Reference is made to the report drawn up by the European Economic and Social Committee (EESC) at the request of the European Council of March 2005, setting out the results of the EESC's consultation of its partners, throughout the Member States and at the European level, on the implementation of the Lisbon Strategy and the role of the social partners and other components of organised civil society[(2)](#ntr2-C_2007256EN.01000801-E0002). Several reports on the Lisbon Strategy and specific aspects of it have been published by the Committee in recent years[(3)](#ntr3-C_2007256EN.01000801-E0003). |

4.   Improving business potential, especially SMEs

4.1   Importance of SMEs in the European economy

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| 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 they also account for a significant amount of European work experience (two thirds of employment in the private sector) and economic activity (57 % of the GNP)[(4)](#ntr4-C_2007256EN.01000801-E0004). |

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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 Commission for relaunching the activities of the European Observatory for SMEs. |

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| 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

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| 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 effective vocational training, ensuring employees are well qualified and improving productivity. The concept of quality (quality of goods, services, regulation, governance, employment, social relations and the environment) is central to the strategy. |

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| 4.2.2 | To secure economic stability, Member States should 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 competitiveness and also contribute to their correction via fiscal policies. These measures are a minimum because of the ageing of the European population. |

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| 4.2.3 | The EESC thinks that only by changing the basic thrust of economic policies and, in particular, macroeconomic policies will it be possible to eliminate within Europe the obstacles which are thwarting a sustained and more 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. |

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| 4.2.4 | The EESC recalls that the aim of monetary policy 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 but also stability in terms of growth, full employment and social cohesion[(5)](#ntr5-C_2007256EN.01000801-E0005). To achieve results it is important to have the national budgets in line with the ECB policies and to respect the Pact for Stability and Growth. |

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| 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)](#ntr6-C_2007256EN.01000801-E0006), the EESC underlines the necessity to create a regulatory environment in which the concerned SMEs are able to fulfil the societal demands they are confronted with. |

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| 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 coordination with the Member States.[(7)](#ntr7-C_2007256EN.01000801-E0007) |

4.3   Better regulation[(8)](#ntr8-C_2007256EN.01000801-E0008)

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| 4.3.1 | The EESC fully supports the recent proposal of the European Commission to cut the administrative burden for companies by 25 % by 2012[(9)](#ntr9-C_2007256EN.01000801-E0009). 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 regulatory environment in full in order to avoid failure to deliver[(10)](#ntr10-C_2007256EN.01000801-E0010). |

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| 4.3.2 | A lighter administrative burden can fuel economic dynamism. Curbing the weight of legal and regulatory obligations 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. |

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| 4.3.3 | The creation of the (Business) Impact Assessment Board, announced by the Commission in its strategic overview on ‘Better Legislation’[(11)](#ntr11-C_2007256EN.01000801-E0011) 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. |

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| 4.3.4 | The economic, social and environmental impacts of new or revised regulations have to be carefully assessed to identify the potential trade-offs and synergies between different policy objectives. Moreover, existing regulation is screened for simplification potential and its impact on competitiveness is assessed. Special attention should be paid to independent business 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 legislation 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. |

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

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| 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. |

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| 4.3.7 | Most of policy actors at regional, national and European levels do not know enough about the reality in small enterprises and their real needs. Better involvement of representative SME associations[(12)](#ntr12-C_2007256EN.01000801-E0012) 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). Representative SME associations should be involved as important stakeholders in the decision-making process at all levels. |

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| 4.3.8 | CESE is strongly supporting the European Charter for Small Enterprises which proved to be a useful tool for monitoring progress and for identifying SMEs problems, as well as for determining member states to act aiming at improving coordination of entrepreneurial policies within the entire Europe. It is important to maintain a sustained rhythm in the process of integrating Charter implementation reports 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. |

4.4   Entrepreneurial culture and Business Start-ups[(13)](#ntr13-C_2007256EN.01000801-E0013)

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

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| 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)](#ntr14-C_2007256EN.01000801-E0014). On the contrary, eight Member States figure among the 10 lowest levels of participation[(15)](#ntr15-C_2007256EN.01000801-E0015). |

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| 4.4.3 | Entrepreneurship is important to society as a whole. To promote and raise the awareness of the culture of entrepreneurial 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 entrepreneurship need to be established. The Year would also provide an opportunity to consolidate and reinforce existing exchanges of best practice. |

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| 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 entrepreneurship education, the strategic value of 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 well as an involvement from business organisations. Media activities and the image they convey of business are important. |

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| 4.4.5 | Policies to assist businesses to start up and develop 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. |

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| 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. |

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

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| 4.4.8 | Fear of 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)](#ntr16-C_2007256EN.01000801-E0016)

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| 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 standardisation 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 intellectual property rights; |  |  |  | | --- | --- | | — | distortions are caused by forms of fiscal differences. | |

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| 4.5.2 | The attractiveness of the European Union as an investment 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. |

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| 4.5.3 | The ability of European producers to compete and survive in the internal market is key to their competitive 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 impediments to worker mobility would also bring important efficiency gains. Finally, the full integration of financial markets would raise output and employment by allowing more efficient allocation of capital and creating better conditions for business finance. |

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| 4.5.4 | For SMEs, especially in the service sector, the internal 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. |

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| 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)](#ntr17-C_2007256EN.01000801-E0017), 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 simplification of certification systems. |

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| 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. |

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| 4.5.7 | SMEs in Europe have to face 27 different taxation 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)](#ntr18-C_2007256EN.01000801-E0018). Simplification in favour of SMEs in particular is awaited. |

4.6   Human capital, development of competences and social dialogue

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| 4.6.1 | In a context of a globalised and knowledge-based 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 competition and to be able to win the innovation race. Moreover technological 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)](#ntr19-C_2007256EN.01000801-E0019). |

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| 4.6.2 | Since 2000, with the Lisbon Strategy, training objectives 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 ‘Integrated 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’. |

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| 4.6.3 | As the EESC rightly pointed out[(20)](#ntr20-C_2007256EN.01000801-E0020), ‘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 participation 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 understanding 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. |

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| 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 procedures in order to make their participation in the 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 initiatives should be designed to help them to invest in continuous training such as tailor-made training offers, financial support, tax incentives. |

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| 4.6.5 | Social dialogue is an important tool 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 particular situation in which craft and small enterprises are working and developing. |

4.7   Innovation

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| 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 %. Unfortunately 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. |

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| 4.7.2 | The future European Institute of Technology (EIT), whose aim it is to reach the highest possible of integration of education, research and innovation at the excellence level, should strongly recognise and valorise the SMEs potential. Cooperation between universities and research centres and businesses, in particular small businesses, should be strengthened. Researchers should be encouraged to have contacts with businesses. The importance of promoting technology transfers via technology centres and incubators cannot be underestimated. Measures to sustain innovation support service providers, clusters and networks should also be foreseen in the new State Aid Framework for Research, Development and Innovation (R&D&I). European researchers should be given more opportunities 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. |

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

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

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| 4.7.5 | It is essential for SMEs to upgrade their existing human capital and to introduce an academic work force into production 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. |

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| 4.7.6 | The necessary resources at EU level are to come from 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 from the structural funds to co-finance programmes for innovative SMEs, start-ups and business transfers (i.e. via the European Investment Funds — JEREMIE), appropriate measures must be adopted at Member State level and their effectiveness and accessibility should be closely monitored. |

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| 4.7.7 | The introduction of advanced new production methods 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. |

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| 4.7.8 | SMEs have to be guided more to ICT applications, which can lower their costs, increase their productivity and enhance their competitiveness. |

4.8   Business Transfer[(21)](#ntr21-C_2007256EN.01000801-E0021)

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

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| 4.8.2 | In contrast to the past, more and more business transfers 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. |

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| 4.8.3 | So the first challenge is to set up a platform and to facilitate the matching of potential buyers and sellers of businesses. This marketplace should be transparent in order to 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)](#ntr22-C_2007256EN.01000801-E0022). These initiatives should be developed in all EU Member States. |

4.9   Access to finance

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| 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. |

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

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

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| 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. |

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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) that they accord to companies. Companies subscribe to its capital and guarantee fund. This system allows reducing the private 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. |

4.10   Internationalisation

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| 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. |

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| 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)](#ntr23-C_2007256EN.01000801-E0023). Access to public procurement for SMEs should also be encouraged. |

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

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| 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

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