Momentum growing in EU SME policy

Europe’s 21 million SMEs are crucial to boosting growth and tackling unemployment, explains Othmar Karas.

By Othmar Karas

Othmar Karas (AT, EPP) is First Vice-President of the European Parliament

23 Sep 2014

What can we do, on a European level, to promote the success of SMEs? How can we boost entrepreneurship and thus kick-start growth and employment within the European Union and its member states? These questions are not new, but quite a few of the people dealing with them will be. The European parliament and the commission plunge into a new legislative term and will, in addition to facing ongoing challenges, be setting new priorities and finding fresh solutions.

The new president of the commission Jean-Claude Juncker has promised an ambitious new investment package containing €300bn. While I acknowledge this as a necessary and timely step, it is critical to know where this money will come from. In my view, we do not only need more money but better coordinated policies and investments for growth and social progress. Structural reforms in the member states need to be followed through, with public spending being carefully targeted, but, above all, policymakers should actively pursue the exchange of best practices.

“The best response to current and future challenges in a post-crisis environment is a truly integrated single market”

The ceremony for giving away the European enterprise promotion awards, which take place as a highlight in between the many informative workshops and discussion panels of the yearly SME assembly, serve exactly that purpose. It calls the most successful initiatives before the curtain which spurs entrepreneurship and improves the overall business environment, or, for example, encourages the internationalisation of SMEs and helps develop green markets. The winning projects are, within their respective category, the most original and realisable, having the most tangible impacts on their local business environment and the best chances of being successfully duplicated in other countries and regions. First and foremost, these initiatives unite different stakeholder groups in their efforts to strengthen local SMEs. All enterprises along the supply chain, such as local consumers, schools and universities, public authorities, thus profit from raised awareness about possible cooperation, from local hidden champions, job offers, training opportunities, school information sessions, purchasing pools and, eventually, a striving local economy.

Such an exchange of best practices has already been defined as crucial in the last small business act, which is currently being reviewed to obtain a strong policy instrument for promoting SMEs and entrepreneurship. In addition, key areas include facilitating SME access to finance and reducing administrative burdens – both of which remain on top of the political agenda. Besides mainstreaming SMEs into legislative proposals, we need a sound SME impact assessment of all legislation to base our decisions on. Another remaining challenge is overcoming the shortage of skilled personnel and the mismatch of available skills and sector specific competences needed.

Imagine that of the roughly 21 million SMEs in Europe, everyone was able to add one person to their workforce – we could tackle unemployment in the EU – 24.8 million are currently without a job according to Eurostat estimates. This is a very simplistic view, of course, but you can see where I am coming from.

Summing up, the best response to current and future challenges in a post-crisis environment is a truly integrated single market which is smartly regulated and enables SMEs to reap their full potential by moving, learning, working and trading without barriers. The European parliament is eager to deliver in this regard.