Should policymakers single out SMEs?
The Commission’s new industrial policy strategy is right to consider SMEs as a core part of EU industry, says Othmar Karas.
Othmar Karas | Photo credit: European Parliament audiovisual
The Commission’s new industrial communication differs from those it published in 2010 and early 2014 in one very central way. It doesn’t just claim to be ‘holistic’ - it actually kind of is.
The 2010 industrial communication was all about innovation, and the 2014 iteration had a clear, strong sectorial focus, with more specific enumerations of economic fields that should be targeted.
This new industrial communication, ‘Investing in a smart, innovative and sustainable industry - A renewed EU industrial policy strategy’ puts stronger emphasis on the changes of the economy’s realities and what needs to be done. This does not imply that the most recent industrial communication reinvented the wheel.
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Certain general targets, such as improved conditions for enterprises to make use of the internal market, better access to finance or support for research and innovation, continue to be part of the European Commission’s overall recurrent theme, reiterating the need for a strong industrial base in Europe.
However, this ‘holistic’ approach entails another important consequence when taking a look at how the topic of small and medium-sized enterprises is dealt with.
They are barely mentioned, and when they are, it tends to be in a rather negative or almost gloomy way. “SMEs remain particularly vulnerable”, “the uptake of digital technology by SMEs is low”, or “more than 90 per cent of SMEs are lagging behind in digital innovation.” This is perhaps not the most flattering way of describing the current state of a¬ airs of SMEs.
And it clearly differs from the 2014 industrial communication which had a more positive view and almost pampering approach, as if SMEs needed particular care and protection in the rough realities of competition.
Don’t get me wrong. The needs of SMEs clearly do need to be taken into account when creating and drafting legislation that sets the framework for their economic activity. Even though many have already voiced criticism of the European Commission’s new industrial communication regarding the supposed lack of attention to SMEs, I prefer to take a more positive outlook on this matter.
Small and medium sized enterprises and their business owners have always had to face the realities of the business environment - from the sometimes quite cumbersome foundation of an enterprise to the often-harsh journey of sustaining a successful and flourishing business.
SMEs do not require sugar-coating. They just need the right framework that allows them to do business and thus contribute to economic growth, and in our case, to Europe’s overall economic wealth.
The European Commission’s industrial communication precisely puts the focus on those fields that require adaptations in order for Europe’s businesses to remain competitive.
Hence, when the European Commission assesses the need for Europe’s industrial base to become fundamentally more digital and better prepared for technological changes, there is no need to paint a colourful bright picture.
We simply need to assess the expected changes and prepare the necessary legislation to tackle these challenges that are bound to come. The same can be said for constraints as well as targets for environmentally sustainable business, more strategic investments or better targeted support for innovation to scale-up our industrial landscape.
Of course, one could always argue that a focused SME approach has its benefits and future industrial communications yet to come in an even further altered economic setting might go back to this approach, and it might suit future circumstances.
However, the Commission’s current ‘holistic’ approach implies one important thing - the acknowledgement that SMEs are a fundamental part of Europe’s industrial base, precisely by not singling them out.
This ‘holistic’ approach is in fact very much a horizontal approach and therefore does not contemplate SMEs as separate parts of each and single European sector but simply as their essence, their foundation, their core.
Admittedly, the timing for a key document such as the industrial communication might be better placed within the first year of a new legislative period.
Nevertheless, the industrial communication itself lines up very well with the earlier, more focused and targeted European Commission communications such as ‘A digital single market strategy for Europe’ and ‘Closing the loop - An EU action plan for the circular economy’ as a supposedly final document for what remains to be done within this legislative period.
And as earlier legislative proposals by the Commission have proven - special provisions, exemptions or conditions for SMEs usually have been included. And if they had not been, the European Parliament and its SME intergroup is here to ensure they are.
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