Small enterprises, big importance

Written by Pietro Francesco De Lotto on 7 May 2019 in Opinion
Opinion

Europe’s SME sector is the engine of the economy; the incoming Commission and Parliament must provide it with the support it needs, argues Pietro Francesco De Lotto.

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There are over 24 million SMEs in the EU, employing around 33 million people; this is a constituency that no European politicians can afford to ignore.

Therefore how SMEs are addressed is an important part of European policy-making.

This is why, just ahead of the European elections, it is worth expressing their needs and expectations to the new European Commission and Parliament.


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We need more effective framework conditions for SMEs via a long-term EU policy strategy with a clear vision for 2030, accompanied by a specification plan with concrete measures and a timetable for implementation and monitoring mechanisms.

The issue of future SME policy was discussed recently at the European Entrepreneurship Forum, which took place on 10 April in Bucharest.

The event was organised by the Employers’ Group of the European Economic and Social Committee, together with SMEunited and the Romanian National Council of SMEs (CNIPMMR).

During the Forum, the Presidents of the organisations signed the Bucharest Declaration in the presence of the President of Romania.

“To flourish, companies also need employees with a spirit of initiative and civil servants who understand the nature of entrepreneurship”

The declaration calls for a new and decisive stage in providing political recognition for SMEs, shifting from “Think Small First” to “Act Small First”.

The EU needs enabling and encouraging policies to stimulate SMEs as well as creativity, innovation, ongoing learning, agility and entrepreneurial spirit throughout society.

It contains a set of proposals for policy-makers to boost entrepreneurship in the EU and to allow SMEs to flourish.

First, we need to acknowledge the contribution of entrepreneurs to both the economy and society. Second, we need to instil an entrepreneurial mindset, starting at an early age.

This will create the next generation of entrepreneurs, creating and rising to the top of enterprises. To flourish, companies also need employees with the spirit of initiative and civil servants who understand the nature of entrepreneurship.

The incoming Parliament and the Commission must ensure that education policies are focused more on workplace learning, supporting Vocational Education and Training (VET), Science, Technology, Engineering, and Mathematics (STEM) areas, digital skills and apprenticeships.

All of this is required to deliver skills that more closely fit the demands of the labour markets; SMEs need to have access to a skilled and competent workforce.

“A crucial source of entrepreneurship and innovation, SMEs provide two-thirds of private sector jobs and over half of the total added value for the European economy”

In addition, entrepreneurs themselves need coaching opportunities and advice. Here, business organisations play a role in encouraging exchange of best practices.

The current megatrends (such as digitisation, AI and the circular economy) will fundamentally transform societies and consequently, the way we do business.

To grasp the opportunities offered by this transformation, SMEs must develop new products, services and business models.

This requires an environment that offers financial support and futureproof infrastructure, as well as access to data, proper investments in cyber security, to name a few.

Access to finance remains one of the greatest challenges facing SMEs in the EU. They are looking into alternative forms of finance, such as lending platforms and crowd investment, while calling for improved access to bank lending.

New financial instruments within the next European Multiannual Financial Framework will also play a role. These should focus on innovation, allowing SMEs to pursue more risky projects.

Moreover, we need to foster public investment at the European level. Unequal implementation and enforcement of EU legislation in Member States is something that SMEs have to take account of in their daily operations.

This is another area where much remains to be done. This should be timely and complete in all Member States. Governments must, at all cost, avoid gold-plating; it only creates additional burdens, barriers and inconsistencies.

The internationalisation of SMEs - both within the EU Single Market and beyond – create issues that needs to be addressed.

SMEs need a level playing field with other stakeholders, one that respects the freedom to conduct business and tackles unfair trading practices in B2B relationships.

We need a balance between access to markets and fair competition. A crucial source of entrepreneurship and innovation, SMEs provide two-thirds of private sector jobs and over half of the total added value for the European economy.

This deserves proper recognition. European SME policy must be more efficient and must be suitable for different types of enterprises.

I believe that the upcoming new term of the European Commission and the Parliament is a unique opportunity to put the needs of SMEs sufficiently high on the European policy agenda.

About the author

Pietro Francesco De Lotto is spokesperson for the EESC Employers’ Group on SMEs and Family Businesses

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