EESC debate hails priority given to SMEs in forthcoming EU measures

A debate on challenges and prospects for small and medium-sized enterprises (SMEs) in the EU hosted by the European Economic and Social Committee (EESC) welcomed the measures for SMEs announced in the State of the Union address and discussed EESC proposals to make business transfers easier amid concern over their growing number.

The EESC plenary on 22 September held a debate on the topic "SMEs in Europe – challenges and perspectives". Feauring David Clarinval, Belgian Deputy Prime Minister and Minister for SMEs, Isabelle Schömann, Confederal Secretary of the European Trade Union Confederation, and Véronique Willems, Secretary-General of SMEunited, the debate also presented two new EESC reports on business transfers in the EU and the role of SMEs, social economy enterprises, crafts and liberal professions in the "Fit for 55" plan.

EESC President Christa Schweng opened the debate with a stark reminder that the EU owes 50% of its GDP and 65% of all employment to its SMEs. Hit by a fresh wave of disruption following Russia's aggression against Ukraine while still reeling from the COVID-19 crisis, SMEs needed strong support to weather the storm. "SMEs lead the EU's economy and are crucial for the stability of our societies", Ms Schweng said, "We must actively support our industries and SMEs to remain competitive given the many challenges they face today."

David Clarinval painted a mixed picture of the situation faced by Belgian SMEs, with their strengths – digitalisation, innovation, access to finance – and weaknesses – shortage of skilled labour, automatic salary indexation, late payments.  "The single market is fundamental for these enterprises ", he said. "It's not always perfect, however, and even now responses to energy issues could remain national in many cases." He then described the measures put in place by the Belgian national and regional governments to help companies face the energy crisis, with an emphasis on payment flexibility schemes.

It is all well and good to support SMEs through these harsh times, revising state aid rules and competition policy. It is fine to invest in education, upskilling and reskilling to help companies face the green and digital transitions, conceded Isabelle Schömann, but it would be wrong for businesses and SMEs to look at the social dimension of the twin transition only through the lens of skills. Likewise with the recent crises, "It is not acceptable for businesses, be they big or small, to have access to public money without any conditionality. There needs to be a social conditionality to maintain employment - quality employment," she argued. "Quality employment also includes the effective exercise of democracy in the workplace through worker information and consultation. Anticipating change is not an issue for business alone. Companies need to tackle this together with workers if everyone is to buy into the measures that are put in place."

Véronique Willems hailed the new measures announced in the Commission President's State of the Union address, particularly revenue caps for electricity producers and the relief package for SMEs in need, above all the late payment directive, for "it is simply not fair that one in four bankruptcies are due to invoices not being paid on time".

"The Commission launched many initiatives in this mandate which will impact SMEs. However, we wouldn’t call it an enabling legal framework just yet", she said, pointing to what her organisation sees as the missing elements, particularly the need to make the SME test more effective and ease the regulatory burden: "the one-in, one-out approach doesn't cut it. We have to work with a "one-in, more-out approach", she underlined.

Business transfers: a risk and an opportunity

EESC member Mira-Maria Kontkanen presented the findings and proposals of her new report "Business transfers as promoters of sustainable recovery growth in the SME sector". Business transfers are on the rise among Europe's ageing population. In her native Finland, 74,000 entrepreneurs are over 55 and half of them are planning to hand over their business by 2024. For very small businesses, changing hands can be especially risky and endanger many jobs. Yet studies show that companies which are transferred successfully tend to develop and grow more quickly than start-ups. Younger new owners are also more likely to opt for greener and digital business models.

"A common goal for Europe should be to ensure that, one day, acquiring an existing business is just as attractive and recognised an opportunity as starting a new company", said Ms Kontkanen.

The EESC has put forward a number of measures to help and promote business transfers across the EU: they include organising awareness-raising activities such as a Business Transfer Promotion Week, developing an EU-wide business transfer barometer, teaching know-how on buying a company and succession in business classes and ensuring that there are financial institutions available to support business transfers in SMEs, assisting with bank loan collaterals, for instance.

Milena Angelova, rapporteur for the EESC opinion "SMEs, social economy enterprises, crafts and liberal professions Fit for 55" said: "Micro, small and medium-sized enterprises generate a positive impact by improving their own environmental performance. They lack knowledge and understanding of the constantly evolving legislation and have difficulties in identifying the unique potential business benefits and opportunities of the green transition. One tangible measure would be to launch a wide-ranging and targeted awareness raising campaign. Another one, and most important, is to have a comprehensive programme to support SMEs through all their business operations and activities in going green."