Ensuring Europe’s SMEs recover from the Coronavirus crisis

EU legislation must be workable and fit for purpose, if Europe’s SMEs are to thrive post-COVID-19, argues Ville Niinistö.
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By Ville Niinistö

Ville Niinistö (FI, Greens/EFA) is co-vice chair of the European Parliament’s Intergroup on Small and medium-sized enterprises

04 Nov 2020

Keeping the current heath situation in control and being prepared for the second Coronavirus wave is on everyone’s mind these days. While we’ve been looking back to determine the causes of the pandemic, we also need to start looking forward. Since the launch of the Next Generation EU package, Europe’s economic recovery has become a major discussion point in Brussels.

However, the COVID-19 pandemic is not the only crisis at the moment; we are also experiencing a climate crisis and a biodiversity crisis. These are all linked and we need to act across all fronts to ensure equal opportunities for the generations to come.

SMEs have been particularly hard hit by the COVID-19 crisis, especially the hospitality sector, which is dominated by SMEs and strongly influenced by the rules aimed at curbing the spread of the virus. Support measures are being developed at different policy levels to tackle the imminent threats, with the support of EU institutions such as the EIB, with its Pan-European Guarantee Fund.

“It’s essential that SMEs recover from the crisis as they account for two thirds of our private sector jobs”

The European Commission’s approach to recovery, however, is more forward-looking, at least on a communication level, focusing on green and digital transitions, but the details don’t quite live up to expectations.

In the European Parliament’s Industry, Research and Energy Committee, we have tried to ensure that these transitions are indeed at the heart of the Recovery and Resilience Facility; improving the EU, taking us closer to our climate targets, and making us more digital.

My focus is on ensuring that we invest according to our Green Deal objectives, tackling the climate and COVID-19 crises while ensuring that we don’t act counter and respect the “do no significant harm” principle. As Greens, we also want to support smaller companies within the recovery programmes, as they have it harder, with more difficulties in accessing finance during these troubled times.

It’s essential that SMEs recover from the crisis as they account for two thirds of our private sector jobs. Many of our Green demands benefit smaller companies. We are asking for higher energy efficiency, which means more renovations of buildings, a sector dominated by SMEs.

We are asking for more and better distributed renewables, essentially lowering the dominance of a few electricity providers and allowing citizens, cooperatives and companies of varying size to produce their own clean energy.

We are also asking for a more competitive digital space, where small companies can innovate and thrive. Therefore, we welcomed the European Commission’s recent proposal on the so-called ‘Renovation Wave’, as increasing energy efficiency through building renovation provides an excellent opportunity to meet our Green Deal objectives.

The initiative outlines concrete policy actions to come and highlights that 160,000 new jobs can be created - in the SME dominated renovation sector - by doubling the renovation rate. The Greens/EFA group wanted a three percent renovation rate as well as a focus on deeper renovations, which would have increased employment opportunities.

As usual, we will need to step up the initiative’s ambition in the Parliament when we get our hands on the relevant legislative acts detailing these targets. We need to embrace change. We make regulations to ensure that future generations have a healthy planet, and a healthy business climate.

This is why we have tools such as SME impact assessment tests, ensuring that EU regulations are not overly burdensome. We also need to offer small businesses ‘one-stop-shops’ in Member States, where they can receive support when tackling the legislative jungle.

 “It is clear we need to go the extra mile, to ensure that legislation is fit for purpose and workable, especially for SMEs”

We have a competition policy that keeps companies innovative and competing, and avoids locking-in consumers to a single provider. We also provide an early market for clean technological solutions as we increase our climate ambition, meaning we also need new solutions to meet the targets. We provide our companies with a market where they can grow, and the readiness to also supply internationally.

I acknowledge that our SMEs have difficulties in growing, but this is something that can be overcome. In Helsinki we have a very concrete SME accelerator, the Aalto Hybrid accelerator, that offers information and coaching to SMEs to help them grow and become more successful. It is linked to Aalto University and its predecessors started operating in the 1990’s.

So far, over 900 companies have gone through the SME accelerator; companies ranging from restaurant management to online gaming and tech consultancies. The programme also helps in identifying possible EU level funding. SMEs are often structurally disadvantaged, but the policies that we are working towards will benefit them; we just need to ensure that the rules we make are workable, reasonable and that there is sufficient help available to understand them.

We cannot rely on simple one-in-one-out ideas, but rather have a healthy check of what legislation is needed to reach our objectives. But it is clear we need to go the extra mile, to ensure that legislation is fit for purpose and workable, especially for SMEs.