The EESC calls for financial ombudsmen for SMEs and a small-business-first approach to AI in Europe

The EESC is urging the creation of a European network of special ombudsmen to help SMEs cope with the financial and funding issues they are experiencing, particularly as a result of the COVID crisis. The Committee also stresses that for SMEs to take up AI there needs to be the political will to support them in the process.

The European Economic and Social Committee (EESC) at its January plenary session adopted two reports dealing with some of the most pressing issues impacting SMEs: recovery from the COVID-19 crisis, facing up to the digital and green revolutions and taking the exponential development of AI in their stride.

In the report Next Generation SME Strategy – Enhancing Effective and Swift Delivery, the EESC stresses that while SMEs are pivotal to the EU economy,  accounting for 53% of the value added and 65% of jobs generated by all businesses in 2020,  they need special support given the dire circumstances of the COVID-crisis.

SMEs have kept the highest level of employment over the past two years across most of Europe. They have outdone all other sectors despite the huge blow dealt to the restaurant and tourism industries by the pandemic. This is all to their credit and they deserve all the help they can get to weather the storm, says opinion rapporteur Milena Angelova.

In stark contrast to these strengths is the financial vulnerability of SMEs: access to credit, liquidity, cashflow and payments are all critical stumbling blocks for them. This is why the EESC is proposing the creation of a network of financial and funding ombudsmen in the Member States, to be coordinated by the EU. Their role would be to:

  • promote SME access to funds;
  • collect and analyse qualitative data to learn if and how intermediary banks use financial instruments to reach the SMEs most in need of financial resources and why credit is not granted to them;
  • mediate disputes between SMEs and financing and funding providers.

It is sad to have to call for a financial ombudsman, but there truly is a need for an authority to supervise the implementation of the recovery measures. Somebody to turn to, when your business is not getting proper or fair treatment for the finance support, says opinion co-rapporteur Panagiotis Gkofas.

The EESC has also proposed setting up an SME liquidity task force to monitor the implementation of the new measures put forward by the European Commission to improve the short-term liquidity of micro-SMEs both at EU and Member State level.

Because the  difficulties of SMEs extend beyond access to credit to cover financing, the EESC has also suggested introducing a one-sheet application form for SMEs applying for EU funds so as to simplify the process for companies with limited human resources and small legal teams.

Another way SMEs can be helped is for Member States to provide opportunities for SMEs to bid for and win public contracts and speed up public investments in general, suggests the EESC, saying countries should make special efforts in this area. Additionally, the Committee urges Member States to enforce the provisions of the Late Payment Directive on payments by public administrations and find new ways to speed up transactions between businesses.

AI policies for businesses should put MSMEs first

In parallel to financial and funding issues, SMEs are also having to cope with the twin transition to digital and green production models. While generally speaking they seem to be making more headway towards digitalisation than greening, this is not true when it comes to AI.

In a report on Developing artificial intelligence in European micro, small and medium-sized enterprises (MSMEs), the EESC stresses that for MSMEs not to miss out on the AI revolution, there needs to be strong political will at all levels to overcome the external barriers (human resources, costs, access to quality data) and the internal ones (access to broadband infrastructure, finance, information, training) which stand in the way of MSMEs embracing AI.

Political will is needed to build MSMEs' trust in AI. Civil society organisations, social partners, chambers of commerce and professional associations need to work together to dispel the concerns that are holding MSMEs back. Because employers and workers know them and recognise them, these organisations are best placed to inform them about the risks and challenges of AI for their sectors of activity.

The EESC has developed a toolbox to dispel any anxieties about this technology and change perceptions in this area. Conceived as an educational tool describing the different stages in the use of AI by MSMEs, it is contained in a recent study by the EESC Employers' Group entitled “Boosting the use of artificial intelligence in Europe's micro, small and medium-sized enterprises.”

Based on this study, which looks into the use of AI across five Member States (Italy, France, Ireland, Romania and Sweden) and sectors (agriculture, construction, healthcare, liberal professions and legal advice/accounting), the EESC suggests a set of measures that also require sustained political will, first and foremost:

  • using education and vocational training to promote a general mastery of AI;
  • ensuring that MSMEs have easy access to both public and private funding for AI;
  • guaranteeing the necessary infrastructure and connections everywhere, including rural areas;
  • promoting awareness of cybersecurity issues and of the economic and societal damage caused by  biased data and other potential emerging risks;
  • disseminating best practices and success stories as widely as possible on the ground.

If I were to sum up our message, I would say, let's start small first: start from policies that are suitable for MSMEs – after all they account for 99% of all EU businesses – even if this means adapting them for larger companies at a later stage, says opinion rapporteur Marie-Françoise Gondard-Argenti.

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