SMEs & the Recovery: From slogans to action

EU and national policymakers need to combine their economic recovery strategies with policies tackling the historical challenges facing SMEs, explains Josianne Cutajar.
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By Josianne Cutajar

Josianne Cutajar (MT, S&D) is a member of Parliament’s Industry, Research and Energy Committee

11 Aug 2021

European small- and medium-sized enterprises (SMEs), including micro-businesses, reflect many positive values of our society: tenacity, risk taking and collaboration. The struggle they face to survive amid this unprecedented crisis requires swift, effective and concrete policy answers.

These are particularly urgent, as our SMEs had already been coping with historical challenges well before the pandemic broke out. Access to finance, excessive administrative burdens and a lack of skills to adapt to the Green and Digital twin transition: who among us has never heard an entrepreneur’s concerns on these key issues?

The report on the new strategy for European SMEs addresses the both the short- and long-term challenges of small businesses. In the short-term, it is crucial to provide ‘first aid’ support that will help them keep their operations running while also retaining workers.

This ‘rescue operation’ implies strong support from both the EU and national governments, and therefore State Aid rules should be kept flexible until the economic situation stabilises.

“Equipping SMEs with the right skills to navigate the opportunities of the environmental and the digital transition is paramount if we want them to bring innovation to their business models, operations and products”

In the long term, we need to combine economic recovery actions with policies tackling the historical challenges of SMEs while also enhancing the inclusiveness of entrepreneurship, for example, to self-employed women.

To achieve this, the EU and the national governments have two powerful tools at their disposal: the recovery plans and the programmes under the next Multiannual Financial Framework 2021-2027. 

The key issues for the next decade are skills, innovation and resilience. Equipping SMEs with the right skills to navigate the opportunities of the environmental and the digital transition is paramount if we want them to bring innovation to their business models, operations and products.

It will then be up to them to decide which strategy they wish to pursue. However, we need to bridge the knowledge gap these businesses face, both in terms of the funding opportunities and the specific skills needed in order to keep up with the dynamics of global markets and to adapt to new legislation. 

I particularly value the role the Digital Europe Programme and its European Digital Innovation Hubs will have in bringing together the international dimension with the local one, particularly for SMEs.

This is proof of concrete action by the EU to boost SME digitalisation in line with the ambitious goals and targets the European Commission has set for 2030. 

Horizon Europe is another example of how we can support innovation among small businesses, putting excellence first and enhancing collaboration between the different actors within the industrial ecosystems, focusing on the needs of SMEs.

This programme has a strong environmental focus; involving small businesses in green technologies research and its applications is an effective tool to ‘democratise’ the positive benefits of innovation. It makes it affordable for a wide range of industrial players, not just the big ones.

Investing in skills and innovation will contribute to enhancing the resilience of those businesses that are central for Europe’s recovery.

Yet, it would not be enough if we didn’t try to reduce the administrative and compliance burdens for SMEs; these should remain proportionate to their size. We should definitely move beyond the idea that, “SMEs are the backbone of the European economy”.

They are indeed, yet I feel that this statement has become just a slogan to flatter entrepreneurs, who would much prefer to see swift and incisive actions that support their daily efforts. 

This article was originally published on 11 June 2021.

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