Small and medium-sized enterprises can drive Europe's growth if they are backed by solid legislation
After decades of being sidelined, Europe's small and medium-sized enterprises have now taken centre stage in the European Union policymaking process. This is a necessary development, as Europe's 23 million SMEs represent 99 per cent of all companies and provide around 75 million jobs, more than two-thirds of the private sector workforce. In 2000, with the adoption of the European Charter for Small Enterprises, EU member states committed themselves to improving the business environment for small enterprises, recognising that they are the "main driver for innovation, employment as well as social and local integration in Europe".
There was another significant step forward in 2007 as the European Commission announced its intentions to issue a Small Business Act for Europe, which was subsequently published in June 2008 and adopted by heads of state and government in December of the same year. The Think Small First principle was at the heart of the text, stating that all legislative initiatives must be designed starting with the needs and characteristics of small businesses at the very early stages of policymaking, in order to make legislation more SME friendly. The Think Small First principle can lead to a leaner, simpler regulatory environment. In an ideal world, necessary regulations should be designed in a way that allows small enterprises to implement them easily and efficiently without any competitive disadvantage.
The principle should be used consistently and with more ambition throughout the whole regulatory and implementation process – its application will reduce the need for exemptions for SMEs and will dramatically ease administrative burdens. Unfortunately, more than two years after the adoption of the SBA, progress has been quite patchy both on the principles and on the concrete actions linked to the text, as measured by the Think Small Test and SBA Scoreboard surveys published by European Association of Craft, Small and Medium-Sized Enterprises, UEAPME, study unit.
Some months ago, the commission published a review of the Small Business Act, stressing the importance of improving the governance of the SBA process. It is fundamental to secure the full implementation of the many actions and principles of the SBA at national, regional and local level. Nevertheless, success is also clearly linked to the availability of adequate funds. The debate on Europe's post-2013 budget, or multiannual financial framework, will be fundamental in this respect. Between 2008 and 2010, the commission and EU member states set out a wide range of measures for SMEs in the framework of the SBA. For instance, they acted to curb late payments, ease the administrative burden on small businesses, facilitate access for SMEs to funding and support their access to global markets. Although most actions foreseen by the SBA have been initiated, the recent review revealed that much remains to be done. One of the missing links has certainly been a lack of coordination and collaboration between the different actors at European and national level.
The commission has grasped the importance of small businesses and their fundamental role in the EU, though to varying degrees: the Directorate-General for Enterprise and Industry is fully aware of the significance of SMEs, but this is not always the case with other DGs. Small businesses are not only affected by enterprise policy – they are concerned with a much wider range of decisions on issues such as social policy, taxation, environmental rules, consumer protection and trade policy, to name but a few. In 2001, following the adoption of the Charter, the commission created the post of SME envoy, a deputy director general who acts as the interface between the commission and the SME community and "listens to SME's concerns and represents their interests in the EU's law-making process". This process should take place in all policy areas and from the earliest stages; the European SME envoy will be fundamental in this respect and should increasingly take on a leading role.
At a national level, the record of progress for member states has been quite mixed so far, although we have recently witnessed some encouraging signs, such as the appointment of national SME envoys, which are now in place in all 27 EU countries. These new actors must be the guardians of the implementation of the Think Small First principle at their level by closely monitoring their government's initiatives. They should not replace, but complement the work of business organisations in this respect. Of course, these daunting tasks can only be performed if the appointed envoys enjoy a high-level, executive political position: in other words, national SME Envoys must be capable of pushing through the SBA in their country. If all actors rise to the task and work in close collaboration with each other, Europe will be able to build what we call "a smart grid for a smart regulation", which will ensure that words become deeds when it comes to SME policy.
In the past two years, UEAPME has repeatedly stressed that financial resources must be secured for the many important actions contained in the SBA, including standardisation, risk capital, guarantees, the comparison of existing best practices, statistics and research on the implementation of the act, and many others. The commission addressed this issue when presenting its plans for the EU 2014-2020 budget on June 29 2011. The proposed budget is balanced and realistic, and manages to secure resources for many fundamental headers while keeping the overall spending footprint under control.
In particular, the multiannual financial framework foresees a dedicated programme to promote the competitiveness of SMEs, with an increased budget envelope. The competitiveness and innovation of SMEs also features prominently among the priorities for cohesion policy and structural funds. The Connecting Europe programme to promote better infrastructures is also an excellent development, as the lack of proper facilities and connections often holds back small companies. However, while the new Horizon 2020 programme on research and innovation ticks the right boxes when it comes to its overall structure, it is still too early to comment on the financial aspects, since the details – such as the specific volumes for SME support – are not yet available.
The post-2013 budget will be now discussed among the EU institutions. We believe that there is merit in the commission's proposals, which certainly merit the approval of member states and of the European Parliament, and hope that the budget will be approved without changes and cuts. If the EU manages to get its budget right and if the new programme on research and innovation turns out to be as promising as it could be, we may well witness the completion of the change of season for SMEs that started more than 10 years ago.Andrea Benassi is secretary-general of the European Association of Craft, Small and Medium-Sized Enterprises, UEAPME. This article first appeared in PublicServiceEurope.com's sister publication Public Service Review: European Science and Technology