The SME Performance Review is one of the main tools the European Commission uses to monitor and assess countries' progress in implementing the Small Business Act (SBA) on a yearly basis. With an emphasis on the measures from the SBA Action Plan, the review brings comprehensive information on the performance of SMEs in EU Member States and other 9 partner countries. It consists of two parts – Annual Report on European SMEs and SBA country fact sheets.
Brussels, 26 November 2013 - The European Commission published today the 2012/2013 Annual Report on European SMEs. The Report on European SMEs is prepared on a yearly basis. It provides an overview of the size, structure and importance of SMEs to the European economy and their contribution to growth and jobs, as emphasised in the Small Business Act and Europe 2020 strategy. Comparisons with important partner countries outside the EU and with the large enterprise sector are also included.
Annual Report on European SMEs
2013 is likely to mark a turning point for the EU SMEs. After five years of an uncertain economic environment, 2013 is expected to be the first year since 2008 with a combined increase in aggregated employment and value-added of EU’s SMEs. The total employment in the EU SMEs is expected to increase by 0.3% and value-added by 1% as compared to 2011. Preliminary forecasts expect the positive developments further accelerating in 2014. These promising projections are backed up by other positive signals. Over the last three years, an increasing number of Member States have seen their small business sectors returning to an expansion of employment and value-added, or at least a petering out of the decline. If the macroeconomic conditions hold, this development would mark the end of the most challenging crisis the European SMEs have experienced in the recent history.
The SBA fact sheets assess progress in implementation of the Small Business Act at national level. The country sheets focus on indicators and national policy developments equivalent to the 10 SBA's policy dimensions in the 28 EU Member States, Albania, FYROM, Iceland, Israel, Liechtenstein, Norway, Montenegro, Serbia and Turkey.
Please note that the SBA fact sheets:
do not constitute a comprehensive assessment of Member States' policies but only one input for it
should be regarded as a supplement to, and not a substitute for, any other relevant in-depth studies of SME policies
Albania maintained its macroeconomic stability and a positive outlook during a difficult economic period. In fact, during 2012, the country experienced economic growth of approximately 1,6% of GDP. The private sector, heavily dominated by SMEs, contributes more than 80% of GDP and about 82% of total employment. Hence, SBA implementation can contribute to create a high and sustained economic growth path. However, Albania should redouble its efforts in terms of taking the necessary steps to pass the Law no. 49/2012 on the organization and functioning of Administrative Courts and Administrative Disputes Judgment as well as nominating a SME envoy. Moreover, concerning its future strategy for Business and Investment Development 2013-2020, two priorities stand out: attracting investment from domestic and international sources is a critical factor as well as solving the administrative constraints which hamper business investment in Albania, in particular the uncertainty with property rights, weak enforcement of the rule of law, and inadequate physical infrastructure.
Austrian SMEs are doing well. Austria is one of the few countries in the EU whose SME sector managed to expand throughout the crisis. Among other things, between 2008 and 2012 it is estimated that Austrian SMEs created a net 39.000 of additional jobs or a plus of 2.2%. This growth is a remarkable achievement against the background of the most serious economic crisis in decades. Austrian SMEs as a whole managed to withstand the crisis through a mix of innovation and international exposure, most notably within the single market. Austria as a whole provides one of the most favourable business environments for SMEs with particular strengths in the SBA areas of think small first, public procurement & state aid, innovation & skills and environment. The areas that saw most progress in 2012 and the first quarter of 2013 were in the field of entrepreneurship, skills & innovation, responsive administration and access to finance. There are, however, also policy domains where further improvements are due. Notwithstanding the recent actions in the area of responsive administration, more efforts in this domain to facilitate, for instance, the setting up of a new businesses would be desirable. There is also an emerging issue in relation to shortage of skill personnel in some industries which needs to be tackled. Also, despite the relative good performance in the area of access to finance, further measures need to be taken to improve the access to capital for SMEs, including in the areas of venture capital and crowdfunding.
Belgium´s SME sector has weathered the crisis much better than those of most other Member States. Employment in Belgium SMEs actually increased by 2% between 2008 and 2013, while in many other Member States this period was associated with considerable job losses in SMEs. While the outlook for 2013 and beyond still looks moderately optimistic, there are some risks building up, including through the recent string of closures of large industrial plants. Hence, SME-oriented policies become more important than ever. Belgium´s SBA policy profile in this respect is mixed. Belgium features in about as many policy areas above the EU average as it does below. Innovation is strength of Belgian SMEs, while the lack of dynamism as regards entrepreneurship is a weakness. The conditions in all SBA areas have remained unchanged, notwithstanding the initiation of a number of interesting policy measures over the past years, most notably in the areas of Entrepreneurship, Access to Finance, Internationalisation, Environment and Innovation. However, this might not be sufficient, as in many areas other EU Member States are closing in faster. In some SBA areas, including Public Administration and Internationalisation elevated costs of doing business were identified as a problem. The measures in selected SBA areas implemented over the past 12 months are laudable. However, Belgium has to continue forcing decisive reforms on all policy fronts so as to avoid stagnation.
Bulgarian SMEs are suffering from the consequences of the crisis. As of November 2012, 45% of people who lost their job came from the private sector, where three quarters of it is concentrated in SMEs. Moreover, among sectors, constructions and real estate were hit hard, because of a deflated speculative bubble, with worrying trends in the retail wholesale and trade sector, where the majority of Bulgarian SMEs are concentrated. Bulgaria made some general progress improving the business environment in areas such as Entrepreneurship, Public procurement and Skills and Innovation, where some broad initiatives were taken such as amendment of the procedures for the award of public contracts and addressing the innovation gap of the SME sector. In spite of this progress, Bulgarian SMEs are still suffering from limited Access to finance and Internationalisation, which hamper the perspectives for growth and recovery from the economic crisis. The main policy challenges for the country have remained broadly unchanged. SMEs would benefit from improvements in tax administration, the streamlining of insolvency procedures and contract enforcement, as well as from full implementation of the Point of Single Contact and e-government solutions.
Croatia is still suffering the effects of the economic crisis, which provoked a slump both in employment and added value for the SME sector, as the government tried to take measures for an effective economic recovery while moving towards EU membership. In previous years, Croatia has performed above regional levels as measured against the European Charter for Small Enterprises by the SME Policy Index. However, the accession of Croatia to the EU means also that the government needs to upgrade its SME policy further, taking EU levels as its benchmark rather than regional performances, and to monitor the lower-than-EU-average productivity in tourism and construction sectors. Its main priority should be the improvement of the business environment in respect of administrative and judicial weaknesses. In this respect, the principal difficulties lie in weak framework conditions for entrepreneurial activity, cumbersome administration with excessive regulation and costs of registration, as well as weak support for second chance. In particular, the government should resume the programme of regulatory simplification which it started with well-targeted measures in 2007, but which has stagnated since 2009. In this area, the predictability of the business environment could be improved by better enforcing the regulatory impact assessment, and increasing transparency of decision making, particularly at local level. In fact, regional disparities in terms of entrepreneurial activity and entrepreneurship rates are still underlying trends behind the expansion of the SME sector.
The crisis plunged Cyprus into a deep and prolonged recession, accompanied by a real estate bubble, which culminated in a liquidity crisis of its banking system. As a result, all Cypriot companies have already experienced negative growth across the board in the period 2008-2012. In the foreseeable future, after the international bailout agreed by the Cypriot government, access to finance for SMEs will be the single most important SBA policy area to monitor and to act upon, for the Cypriot government, in order to avoid a retrenchment of the SME sector and of its potential for economic recovery. Among sectors, construction SMEs were hit the most with a 20% drop of added value, but more generally the SME sector saw its value added shrank about 9% and its number of employees decrease about 2%, between 2008 and 2012. In the face of such negative trends, the Government is struggling to take the necessary steps to create a competitive business environment for SMEs. Already announced measures in 2011 and 2012 were further delayed and problematic policy areas for Cypriot SMEs, such as Environment and State aid and Public procurement, were relatively neglected. Withstanding these economic and policy trends, Cypriot SMEs are facing dire conditions to recover to the pre-crisis levels, especially considering the worrying trends in terms of increased bankruptcies and insolvencies for all companies. The most important progresses in 2012 were registered in creating a more Responsive administration and in promoting the upgrading of skills in SMEs and all forms of innovation. Relative neglect was applied to problematic policy areas for SMEs.
There are reasons to believe that the Czech Republic needs a new momentum in implementing new measures in favour of SMEs, in order to support their competitiveness and performance. A worrying symptom is that, in 2012, 50% of businesses with more than 15 years of existence disappeared in the Czech Republic. This negative signal is compounded by declining trend in SME imports and exports within the Single Market, which is of far more significance for the Czech Republic than trade with third countries. In addition, the World Competitiveness Scoreboard 2013 highlighted a loss of competitiveness of the Czech Republic as a place where to do business and to attract foreign investment, in spite of its good SBA performance in terms of Skills and Innovation. All these different trends require a new momentum in the Czech SBA implementation. The overarching strategy of the Czech Republic is the Czech Competitiveness Strategy. In December 2012, an SME support strategy for the period 2014-2020 was also launched. However, policy measures were concentrated in a few areas, such as Access to finance and Skills and Innovation. In order to achieve progress for the Czech Republic in an effort to catch up with the EU average SME performance, the outlined Competitiveness Strategy and the Concept Support for SMEs 2014-2020 should be consistently acted upon and comprehensively implemented, putting into practice the overall strategy.
Denmark offers a business environment favourable for small firms, which are largely seen as the main generators of future wealth and employment. The SBA profile for Denmark clearly exceeds the EU average in all but three areas. Denmark’s performance is close to par in Environment and Access to finance, and lags behind in Entrepreneurship. However, Denmark tops the other EU countries in fields such as skills and innovation, internationalisation, responsive administration and second chance. The 2008/2009 crisis has hit hard Denmark’s SME sector, resulting in a significant slump in employment, and less so in value added and numbers of firms. After 2009, Danish firms experienced a modest recovery which lost momentum in 2012. SMEs were more affected than large companies, losing about 2.3% p.a., while the value added of larger firms remained stable over the same time (2008-2012).The forecast for 2013 and 2014 gives reasons for optimism. The reforms implemented by Denmark have already been successful in halting the negative trends experienced since the beginning of the crisis, and more sustained growth is expected in 2013 and 2014. However, a full recovery to pre-crisis levels is not yet within sight, especially when considering employment.
The 2008/2009 crisis has had a significant impact on the development of the Estonian business economy with all companies – big and small – experiencing slumps in terms of both employment and turnover or value added. SMEs seem to have been hit much harder than larger firms, their value added having plummeted by about a fifth. Benefitting from a friendly business environment and a strong and responsive administration, the SMEs have quickly started to recover, experiencing constantly positive growth rates after 2009. In fact, a full recovery to pre-crisis level is in foreseen in 2014. Estonia has a sophisticated business culture with good framework conditions for innovation and internationalisation. The statistics on SMEs present an SBA profile which clearly exceeds the EU average in six out of ten areas. Estonia is lagging behind in entrepreneurship and offers less positive conditions for entrepreneurs having gone through bankruptcy. In addition, the generally recognized weaknesses of Estonian SMEs are the lack of qualified staff and engineers, as well as the limited access to venture capital and other less traditional sources of financing. However, Estonia tops a majority of EU countries in internationalisation and in offering an administration responsive to the needs of small businesses.
The performance of Finnish SMEs since 2008 has been resilient. After an initial downturn with a substantial loss in the number of SMEs, employment and value-added, the majority of SMEs recovered very swiftly to pre-crisis levels. Since two years, however, the Finnish SME sector is stagnating at this level. Notable growth has only occurred in the ICT sector where Finland boasts a vibrant start-up culture. Preliminary estimates forecast a re-ignition of growth in 2013 and, even more so, in 2014. However, there are a number of risks. Principally, they relate to recovery in the EU. Policy-wise, Finland remains the benchmark for SBA policy implementation in the EU. The policy record reveals no serious weaknesses or impediments for SMEs. In most SBA areas, it scores well above the EU-average. The ageing population poses, as in many other European countries, a strategic long-term challenge to the current levels of entrepreneurship. There is also room for the further facilitation of SMEs access to public procurement. Lately, due to the stagnation in home and EU-markets policy makers have put a particular emphasis on measures promoting internationalisation such as the Team Finland initiative.
The SME sector in France has been hit hard by the global recession of 2008/2009 and subsequently experienced a brief period of recovery which lost momentum in 2012. Employment in French SMEs grew less rapidly between 2008 and 2012 than that of large companies, while the value added was more or less stable in both groups. French SMEs continues to benefit from good framework conditions for trade, an administration fairly responsive to the needs of the small businesses, and a comparatively fast transposition of EU law and access to state aid and public procurement opportunities Nevertheless, the country’s overall performance on the SBA grid continues to be hampered by below-average results in the exploitation of the opportunities offered by new green markets and a somewhat lower intensity of entrepreneurial activity.
The SME sector in the Former Yugoslavian Republic of Macedonia did not resent much from the crisis, actually experiencing positive growth in terms of number of enterprises, employees and added value, with the exception of the manufacturing sector, in which anyway employment remained stable. However, expectations about the business climate for start-ups as well as for existing businesses are less optimistic against the background of the on-going crisis. In this context, the new government should continue the previous efforts in the last years in harmonising its SME policy with the Small Business Act (SBA) principles, especially in the policy areas of Internationalisation, Environment and Skills & Innovation, in view of aligning with the EU standards.
Overall, Germany offers a very conducive business and political environment for SMEs. As a consequence, the German SME sector had shown great resilience throughout the crisis that started in 2008. In fact, it even grew through the crisis by, among other things, creating an additional net of almost, 1,390,000 jobs. This performance made Germany stand out from all other Member States during the crisis. German SMEs continue to be more innovative and internationalised than most of their EU counterparts. Over the past years, the policy framework has been contriburing to this success. If there are areas of concern there are more long- rather than short term. These are, nonetheless, critical. Germany´s ageing demographics already takes their toll on the economy. One obvious effect is the increasing shortage of a young and qualified professionels, already felt in some sectors and regions of the economy especially by SMEs. Another maybe the gradual decrease in the numbers of young entrepreneurs which has yet to set in in full. As a consequence, Germany might have to work harder in the future stem the effects of an ageing society. More intensified and coordinated efforts on all political levels, national, but in particular also regional, to better exploit the untapped potential for entrepreneurship in society are required.
Greece is in the fifth year of deep recession since 2008, in a context where 85% of private employment is concentrated in the SME sector and more than 50% in micro-enterprises (0-9 employees). The prolonged recession, aggravated by austerity measures and the delay of much needed structural reforms, has deeply affected the Greek SME sector, disproportionately more than Large Enterprises, as shown by the only available data in the Construction and Manufacturing sectors. The effects of the crisis have led the government to further fine-tune the National Plan for Supporting Small and Medium-Sized Enterprises (2010-2013) as well as to reinforce already existing self-employment support programmes. On the one hand, actions aimed at micro-enterprises were diversified from those aimed at Medium-sized Enterprises, with the creation of a more flexible form for private limited companies (IKE). On the other hand, specific groups like young people, the unemployed or women (for instance through Women Entrepreneurship) were targeted to promote self-employment. Finally, during the 2012-2013 period, the Greek government launched a number of specialised and targeted initiatives for SMEs in line with basic SBA principles, notably in the field of internationalisation and innovation.
Hungary´s SMEs sector continues to be affected by the crisis. While this is also true for other Member States, the origins of the stagnation of the Hungarian SME sector predates the outbreak of the financial crisis and goes at least 2-3 years further back. From 2008 onwards, however, the loss in numbers for SMEs, employees and the reduction in value-added accelerated. Only after 2011, the downturn seemed to start bottoming-out and give way to a very modest recovery. As a result, It is estimated that by the end of 2013 Hungary’s SME sector will employ 82,000 less than in 2008. There is a silver lining at the horizon, though, as the forecast for 2014 point to a more robust upswing in the trends for the number of SMEs, employment and value-added. For this to turn into a real SME recovery, however, decisive policy action to improve the business environment is needed. Some progress has already been made, especially in the area of entrepreneurship and to a lesser extent in access to finance. Policy measures have also helped to reduce administrative red tape. However, in practically all 10 SBA areas, Hungary still has to step up its implementation activities so as to continue its catching-up process. Areas with a particular need for action are Skills & Innovation as well as internationalisation. As far as responsive administration and think small first is concerned, more needs to be done to create a stable regulatory framework, including by steadying the frequency of regulatory changes. In both, Hungary trails its EU peers by the biggest margin. That there is potential is evidenced by Hungary´s nascent IT sector which has in recent years generated a number of internationally successful businesses. This suggests that broader based reforms could well trigger more such success stories in other sectors, too.
Icelandic economy is still reeling back from the consequences of the 2008 financial crisis, culminating in a liquidity crisis of its entire commercial banking system, which tipped its important SME sector into a recession, from which it still did not recover, at the opposite of Large Enterprises, which have reached their pre-level crisis. This difference is particularly pronounced as employment growth rates are concerned, with a gap of 20 percentage points and more in favour of LEs. Among sectors, construction was hit the most, experiencing the greatest drop in employment of more than 50% for both SMEs and LEs. Furthermore, between 2008 and 2011, the labour force of SMEs active in manufacturing as well as in the wholesale and retail trade decreased considerably by about 15% and 12%, respectively. In the face of such negative trends, the Government is also facing budgetary problems, which delayed the implementation of SME-relevant measures, announced in 2011 and 2012. Withstanding these problems, the Government took the road of long-term economic and fiscal planning with his ‘Iceland2020’ strategy, which announced measurable policy initiatives, to be monitored and evaluated, having a clear impact on the SME sector. For instance, legislation on “New Investment” and Labour Market Reform are expected to be implemented in 2013, with important effects on tax breaks and financial aid as well as general employment conditions for Icelandic SMEs.
The Irish SME sector has started to recover after the 2008 crisis which was prompted by the bursting of the housing bubble, followed by the crashing of banking sector, and the subsequent spending cuts and tax increases necessary for the fiscal consolidation. Affected more than the large enterprises, the SMEs lost one-fifth of the economic value added and 17% of their workforces from 2008 to 2012. In 2013 and 2014, the SME sector is foreseen to grow by 2.6% in 2013 and a further 3.7% in 2014, but a full recovery to pre-crisis levels is still not in sight. Ireland offers a friendly business environment, backed up by an efficient administration, responsive to the needs of businesses, and an innovative and entrepreneurial business culture. Notwhistanding these, further enhancing Ireland’s SBA profile will require improvements in access to finance for SMEs, streamlining the “think small first” principle in policy making, and providing more support for businesses to export within the single market and to third countries.
Israeli SMEs were much less affected by the financial crisis which started in 2008 than their counterparts in the EU. Essentially, the number of SMEs and the employment in SME expanded between 2008 and 2011 without any significant interruption of that trend. The number of SMEs increased by some 32,000 during that time. This went along with the creation of a net total of almost 80,000 additional jobs. Israel´s SBA profile feature is particularly strong on Entrepreneurship. Think Small First and responsive administration are areas where there is still room for improvement. This refers in particular to simplification of procedures and burden reduction for SMEs outside the country´s world-class hi-tech clusters, most notably in ICT, which appear to benefit from a much more conducive administrative framework. The number of implemented policy measures in 2012 was relatively limited and focused on the areas of promoting Entrepreneurship, Think Small First and Responsive Administration.
The SME sector in Italy has been hit hard by the global recession of 2008/2009 and subsequently experienced a brief period of recovery which lost momentum in 2012. Micro-enterprises, which constitute the vast majority of Italian companies, had comparatively more difficulties to adjust than other size classes. With a view on these underlying structural trends, the Italian Government took action to improve general framework conditions for Italian SMEs, especially an administration more responsive to the needs of the small companies and a comparatively more favourable environment for aggregation and internationalisation of companies. Nevertheless, the country’s overall performance on the SBA grid continues to be hampered by below-average results in the exploitation of the opportunities offered by Internationalisation and Single Market and by the possibility of stalled implementation of SBA-related initiatives announced in 2011 and 2012. A timely implementation of announced measures is the single most important issue to be monitored for the Italy’s SBA performance.
SMEs are of notable importance for the business economy in Latvia, hiring about 79% of all private sector employees, and creating about 69% of the overall value added. Both SMEs and large enterprises were hard hit by the 2008/2009 economic crisis, with SMEs suffering more as their value added decreased more rapidly (~29%) between 2008 and 2012 than that by LEs (~17%). This difference was mainly driven by the poor performance of small enterprises as their value added shrank about 34%. The underlying reason for the underperformance of SMEs is of general nature, SMEs being more vulnerable toward the impacts of crisis. However, both small and large firms started to recover and showed positive growth between 2009 and 2012. The value added created by SMEs increased by about 10% between 2009 and 2012, while the growth of value added by LEs was only 4%. That illustrates an interesting fact: Although the drop during the crisis was larger for SMEs, they also recovered faster after the crisis. The Latvian SBA profile does not present a clear-cut picture. Latvia clearly beats the EU average in five areas (Access to finance, the Single market, State aid and public procurement, entrepreneurship and Responsive administration), lags behind in two (Skills and innovation, Environment), and performs in line with the average in the remaining ones. However, it improved in almost all areas in the past five years.
In Liechtenstein, Large Enterprises (LEs) were much more negatively affected by the crisis than SMEs, as LEs are more sensitive to development in export markets, especially in the manufacturing sector. In fact, during the 2008 to 2010 period, exports decreased from 77% of the GDP to 63%. Hence, in the 2008-2011 period, SMEs in Liechtenstein managed to increase their employment, while LEs shrank their workforce. At the same time, the country’s SME policy is focused on providing favourable framework conditions for the export-oriented SMEs and LEs. As a consequence, only some SBA policy areas are tackled through its policy making, without always proceeding to systematic consultation with SME stakeholders. On the other hand, a large number of EU-inspired SME policies are considered as not compatible and rather inhibiting for the local SMEs. That is why the government is currently trying to adopt in 2013 a national law that states that the implementation of each EU Directive has to be preceded with an impact assessment for the local SMEs. Moreover, against the background of tighter public finances, Liechtenstein announced a careful review of recently introduced and new measures, in order to assess their suitability and impact on the economic development of the SME sector.
The small and medium sized enterprises are major players in the Lithuanian economy, owing to their significant contribution to the total added value (63.5%) and employment (75%) in the business economy. The 2008/2009 crisis has hit Lithuania’s SMEs hard, resulting in significant slumps in employment, and even more so in value added. SMEs were affected more than large companies, having experienced a one-third contraction in the economic activity, while large companies only reduced their activity by a fifth. This can be explained by the fact that SMEs activate particularly in sectors which are not export-oriented and thereby excessively dependent on domestic demand, which fell heavily when the crisis hit and government spending was reduced due to lower tax income and rising debt. However, the Lithuanian economy has proved to be very resilient, and both SMEs and larger firms have since recovered every year, albeit the growth flattened shortly in 2012. Full recovery to pre-crisis level will be achieved only after 2014. Lithuania has a positive SBA profile. The country does well on a number of areas, led by state aid & public procurement, responsive administration, second chance, and even access to finance. In general, it offers a business-friendly environment, backed up by an efficient administration responsive to the needs of businesses. Notwithstanding these positive elements, further enhancing Lithuania’s profile will require significant improvements in research and innovation, as well as skills, where it still faces some challenges.
Luxembourg´s SME sector has escaped the crisis so far largely unscathed. In fact, the number of SME has increased significantly, i.e. by 12% since 2008. Also, the number of employees has grown since the onset of the crisis and after a brief dip in 2009. At the same time, the total production as expressed by the aggregated value-added of Luxembourg´s SMEs remained more or less stagnant during the last 3-4 years. The only sector which struggled was manufacturing were the number of SMEs and of employees dropped. However, gains in the service sector and in particular knowledge-intensive ones in ICT, finance and real-estate more than compensated those losses. This remarkably positive trend over the past years suggests that the overall business climate is SME friendly. There are no serious deficiencies in the country´s SME policy. The Government has pro-actively pursued the implementation of the SBA on all fronts. If there are weaknesses, they are rather minor. Still, there are a number of things the country needs to work on to remain a competitive business location. One such issue is entrepreneurship. The significant increase of new business was largely due to an influx of external professionals into mainly the service industries. The resident society is open to entrepreneurship but generally lacks a dynamic start-up culture. This is understandable in light of the favourable economic situation, which provide locals with many interesting career options outside self-employment. However, from a long-term perspective, it seems indispensable to ensure that the entrepreneurial spirit is spread more widely among the population. In the area of think small first the most important structure and elements such as the SME test appear to be in place. However, reactions from the private sector suggest that some additional fine-tuning, especially as regards a more active involvement of private sector stakeholders in the SME test would be desirable. The significant efforts to establish Luxembourg as a centre of learning and research need to be continued, especially with a view to the declining trends in manufacturing.
More than any other Member State, Malta´s economy depends on its SMEs and in particular the micro-firms of less than 10 employees. So far they have weathered the crisis very well. The performance of Maltese SMEs since 2008 has been extraordinarily robust. The number of SMEs increased by almost 1,000 and the employment grew by 2,320 or 2.5% over the period 2008-2012. Those increases are in and by themselves rather modest, but they have to be put in context of the most serious economic crisis in decades. Against this backdrop and the fact that in the vast majority of Member States the SME sectors suffered heavy losses this performance is quite remarkable. To some extent Maltese SME lack of export exposure, which is on a more general level one of the weaknesses identified in Malta´s SBA profile, helped many businesses by insulating them to a certain extent from the initial effects of the crisis. However, with the domestic market limited in size and markets in Europe stagnating, the capacity of a larger number of firms to also serve extra-EU markets needs to be further developed in the interest of long-term competitiveness. Other changes which are in need of further policy responses are the promotion of entrepreneurship and innovation. The important reforms which had started in the areas of think small first and responsive administration, such as the SME test and “business first” need to be continued and implemented more vigorously. The close coordination and consultation with business stakeholders which had been initiated in those areas need to be continued in a regular and systematic fashion allowing also for more initiative for the private sector parties. Overall, the weaknesses in and by themselves have, up to know, not been a fundamental impediment for Malta´s SMEs as the recent performance has proven. Yet, for Malta´s longer-term competitiveness the cited challenges need to be confronted more forcefully.
The country fact sheet for Montenegro is less complete than those of the other 36 countries due to a substantial lack of statistical data and other information. Consequently there is no complete SBA profile for Montenegro. However, where there is sufficient data, Montenegro performs within or close to the respective EU averages, with the exception of Environment, where it lags behind by a larger margin. Montenegro´s best performance is in Second Chance where it scores slightly above the EU average. On the policy side, in general some notable progress has been achieved in a limited number of SBA policy areas, i.e. Think Small First and Responsive Administration. This progress was achieved by focusing on a relatively small number of new measures. Those measures are, nonetheless, expected to have a relatively large impact on improving the respective policies. The catching-up progress in terms of SME policy needs to be pursued vigorously and broadened to include more policy areas such as internationalisation and environment. There is -as pointed out last year- still a need for a dedicated and coherent SME strategy to improve the administrative environment for SMEs. As for individual SBA policy area, in 2012, Montenegro has addressed seven of the 10 SBA principles. Most notable examples were the introduction of the mandatory Impact Assessment (RIA) for all new legislation since January 2012 and a fully functional RIA unit within the Ministry of Finance (Think Small First principle).
The Dutch SME sector has been stagnating for the past three years. SME employment and value-added have yet to climb back to the levels attained before 2010. The development in terms of the number of SMEs has been even more alarming, with an estimated net loss of SMEs between 2010 and 2012 of some 120,000 firms. Due to the very small-size of the overwhelming majority of those exits, the employment and output effects on the economy have been limited so far. Also, preliminary forecasts for Dutch SMEs point to a very moderate recovery in 2013 and 2014. Nonetheless, the risk factors which caused the stagnation in the first place, are still looming large. Stagnating aggregate demand, high levels of private indebtedness in combination with a difficult real estate market and a financial sector dragged down by balance sheet problems and reluctant to lend to SMEs provide for a difficult environment for a SME recovery. The good news is that none of these problems have their roots in failed SME policies. On the contrary, the policy environment for SMEs in the Netherlands is very conducive to small firms. In terms of the implementation of the SBA, and SME policies in general, there is not a single policy area where the Netherlands would present their SMEs with particularly restrictive policies. Think small first and responsive administration are traditional strengths of the Dutch SME policy portfolio. Also, internationalisation support policies are very effective. An increasing concern for a growing number of SMEs is access to finance, mainly due to the increasingly restrictive lending policies of private banks. While policy action has been taken to alleviate this problem, more efforts to develop alternative channels of finance, such as venture capital, business angels and crowd-funding to respond to this problem are required.
Norway’s business sector counts more than 267 000 active enterprises, of which a large majority (99.8%) are SMEs. In 2012, they employed more than one million private sector workers and produced about 127 billion euros in economic value added. Norwegian SMEs contribute significantly more to GDP, as compared to their EU peers (71.9% vs. 58.4%) and have a significantly higher labour productivity. Norway displays a very positive SBA profile, with above-average results in almost all areas for which a score could be calculated. The country offers a very favourable business environment for small firms, with good framework conditions for starting up a business and internationalization. The SBA strategy “Small Businesses – Large Values” adopted in March 2012 has been successful in putting SMEs at the centre of the policy agenda. The strategy is wide-ranging, including measures on bureaucratic simplification, access to finance, innovation/R&D, skills development, internationalization, public procurement and industrial rights.
Poland offers a mixed picture in terms of favourable framework conditions for SMEs creation and growth. As Polish economy is still reeling from the consequences of the 2008-2009 crisis, Polish SMEs should be able recover at pre-crisis levels in the foreseeable future. The outlook for 2013 is positive in terms of dynamic business demography with high numbers of exits but also of new companies. This is partly due to substantial progress achieved in SBA policy areas such as Entrepreneurship and Responsive Administration, with the removal of many administrative burdens for start-ups, with a sharp decrease in registration costs for businesses. In spite of these focused efforts, also recognized in the World Bank report ‘Doing Business 2013’ ranking Poland as the top improver for 2012, some crucial areas for Polish SMEs remain chronically underperforming such as skills and innovation and exploiting potential foreign markets (Single Market and third countries) suffering from a lack of recent policy initiatives to address the weaknesses of the Polish SME sector, which is still struggling to take up loan and credit financing.
The crisis plunged Portugal into a deep and prolonged recession between 2008 and 2012, with both large and small enterprises facing negative growth across the board. Among sectors, construction and real estate were hit the most. The forecast for the future leaves room for cautious optimism. By end 2013 the reforms implemented by Portugal are expected to halt the negative trends experienced in recent years and start deploying positive effects on growth and employment. Modest growth is foreseen for 2014, but a full recovery to pre-crisis levels is not yet within sight. Although faced with significant economic difficulties in recent years, the SMEs in Portugal have also benefited from a number of positive policy changes, such as better framework conditions and support programs for entrepreneurship, financial support for entrepreneurs, and improvements to the insolvency proceeding for firms in distress. Equally, the transposition and application of EU law is comparatively faster in Portugal than elsewhere in the EU. Notwithstanding these positive policy developments, further enhancing Portugal’s SBA performance will require significant improvements in access to credit and state aid and public procurement for SMEs, areas which still trail the European averages by considerable margins.
The Romanian SME sector has been hit hard by the global recession of 2008/2009 and subsequently experienced a brief period of recovery which lost momentum in 2012. However, for 2013 and 2014, steady growth is forecasted, so that SMEs are expected to recover to pre-crisis levels in what concerns number of enterprises and employment, but not yet value added. Romania’s SME sector is characterised by a greater importance of small and medium sized-enterprises, in the detriment of micro firms. Overall, the statistics on SMEs reflect a below-average and somewhat stagnating SBA profile for Romania. The country delivers a below par performance in seven out of nine SBA principles and is above average only in 'Entrepreneurship', although by a large margin. One of the important measures announced for 2013 is a new law for SMEs integrating fully the European SBA initiative. In 2012, only few new measures have been effectively launched in the areas of single market, state aid & public procurement, environment and internationalisation. Overall, it is acknowledged that in 2012, the economic crisis and general instability have severely hampered a significant progress on SME policies.
Serbia’s business sector counts more than 84 000 active enterprises, of which a large majority (99.4%) are SMEs. In 2011, they employed more than 614 000 workers and produced about 7.2 billion euros in economic value added. In addition, Serbia is host to some 215 000 unincorporated enterprises (sole traders), which brings the total SME count to 300 000 units. The Serbian business economy was hit hard by the macroeconomic shock at the end of 2008 and in 2009. The crisis has left its marks on the employment and value-added produced by firms, much more than on the number of enterprises, which managed to keep operating despite a reduction in business activity. Between 2008 and 2011, the Serbian SME sector registered a loss of about 7% in employment and 10% in value added. The sectors which were hardest hit were manufacturing, wholesale and retail trade, and constructions. Serbia´s SBA profile is incomplete due to insufficient data. On four of the five areas for which an average could be Serbia trails the EU-average. On the fifth (environment) Serbia performs on par. As for policies, in 2012 and the beginning 2013, Serbia has implemented 12 new policy measures addressing seven out of the ten policy areas under the Small Business Act.
Slovakia’s SME sector is characterised by a significantly higher concentration of small and medium-sized businesses, in respect of the EU average, in the manufacturing sectors and integrated into Europe-wide supply chains. The rest of the SME sector however is much less competitive and in much more need of support measures to modernise. In spite of selective intervention, most notably in Environment and Entrepreneurship, 2012 marked a pause in the SBA implementation catch-up trajectory of Slovakia. Pending a new SBA implementation strategy, currently in preparation, the implementation of measures supporting the SMEs was delayed. SMEs would benefit from improvements in adopting the principle of Think small first in its decision-making and by the streamlining of insolvency procedures and contract enforcement, as well as from full implementation of the programme of 41 measures announced by the government.
Slovenia’s SMEs are still suffering from the consequences of the crisis, at different degrees according to their sector of activity. Whereas manufacturing recovered better from the 2008-2009 slump, without yet recovering to pre-crisis level, the construction sector is still caught up in a deep economic restructuring triggered by the shortcoming of the bank sector, which in turn affected the overall financial standing of the country. As a consequence, during 2012, Slovenia’s economy experienced a strong austerity correction. The government launched broad-based austerity measures in a bid to trim spending and avoid financial crunch. The outlook for 2013 is more positive and should provide a more favourable context to revise the next SBA action plan in order to meet the needs of the Slovenian business sector, and especially of SMEs. The next action plan should therefore reflect the actual situation and possibilities and pave the way for a more structured and monitored SBA implementation in the future. Also, the role of the SME Envoy should be reinforced to allow for more executive and coordination powers, according to SME stakeholders consulted for this exercise, in order to tackle over-bureaucratisation of public administration and establishing communication channels with the business community.
The crisis plunged Spain into a deep and prolonged recession between 2008 and 2012, with both large and small enterprises facing negative growth across the board. Among sectors, constructions and manufacturing were hit the most. The reforms currently implemented by Spain should have a positive effect on growth and employment, but their effect will not become evident until 2014. Export performance by SMEs and large companies will be the main envisioned source of growth on the short and medium term. Although faced with significant economic difficulties in recent years, Spanish SMEs have also benefited from a number of positive policy changes, such as better framework conditions and financial support for entrepreneurs, and improvements to the bankruptcy framework providing alternatives to insolvency proceeding for firms in distress. Equally, the transposition and application of EU law is comparatively faster in Spain than in the EU on average. Notwithstanding this positive policy developments, further enhancing Spain’s SBA performance will require significant improvements in access to credit, state aid and public procurement for SMEs, areas which still trail the European averages by considerable margins.
During the last two decades in Sweden, the SMEs have played an increasingly important economic role. They now account for 65% of private sector jobs and 57% of value added. However, SMEs suffered more from the economic crisis because they had tighter margins with regards to liquidity, and were are also more dependent and thereby directly affected by changes in the pattern of everyday consumption. Thus, from 2008 to 2012, the large companies (LEs) slightly outperformed SMEs with respect to both value added and workforce. More specifically, while employment and value added in SME decreased by about 1%, LEs increased value added by more than 3% and employment in LEs grew almost 1%. Sweden’s SBA profile shows a country with an above-average performance and stable development over recent years. Sweden has very good results in most SBA areas, with seven of the ten principles being above the EU average. It does particularly well in Access to finance, Internationalisation and State aid and public procurement, where it ranks among the top EU performers.
Turkey is host to 2.3 million small and medium sized enterprises, of which a majority are micro firms, employing up to 20 people. In recent years, Turkey has experienced stable and high growth rates, despite the ongoing crisis worldwide and in Europe, which is an important trading partner. Both SMEs and large enterprises enjoyed the political and economic stability during this period. However, access to finance for SMEs needs further development. Although recent governmental support programs favor SMEs, banks and other financial institutions are still less sensitive to the needs of SMEs. Overall, the statistics on SMEs show that there is still a gap with the European Union. The SBA radar chart reflects a ‘below-average and somewhat stagnating SBA profile' for Turkey. The country delivers a below par performance in five out of seven SBA principles for which an average could be calculated. Turkey scores above average only in 'Entrepreneurship', although by a large margin, and is on par on Environment. When comparing Turkey’s performance to the country’s own past results, the picture that emerges reveals a relatively stagnating profile, with five SBA dimensions registering limited progress, and another two with positive growth rates since 2008.
The United Kingdom boasts of a very competitive environment for SMEs as compared to other EU Member States. This has enabled UK SMEs to actually increase employment, while the number of SMEs and value-added slightly decreased since the onset of the crisis in 2008. The outlook for 2013 is also positive with increases expected for the number of SMEs, employment and value-added and with the ICT sector (information and communication) being a major driver. In many SBA policy areas such as second chance, the environment, public procurement & state aid as well as internationalisation the United Kingdom scores well above the EU average. The United Kingdom is traditionally an EU-frontrunner in terms of the business environment and had put many measures in place to improve it for SMEs long before other Member States. Therefore, it can afford a more pinpointed approach in recent years with policy measures being concentrated in a selected number of SBA areas. This refers especially to access to finance. Despite the United Kingdom´s well developed financial industry, SME in the UK continue to struggle to get proper access to loan and credit financing. The measures announced in 2012 in particular the new “business bank” aim at addressing this problem head on.
1. Flash Eurobarometer on SMEs, Resource Efficiency and Green Markets (27/03/2012)
In March 2012, the European Commission published the first Flash Eurobarometer analyzing the role SMEs play in resources efficiency and green markets.
As the study reveals, green jobs are mostly created in SMEs compared to large companies as 37% of EU SMEs have at least one full or part-time green employee. However, there is still a lot of untapped potential to be used by SMEs when it comes to the single market for green products and services, and a room for improvement when cross-border administrative and legal procedures are concerned.
2. Study on the SMEs' impact on the EU labour market (16/01/2012)
What role SMEs play in creating more and better jobs? The answer to this question was the main objective of the Study on the SME's impact on the EU labour market published by the European Commission in January 2012.
According to the analysis, 85% of net new jobs created in the EU between 2002 and 2010 were in fact created by SMEs. This figure is considerably higher than the 67%-share of SMEs in total employment.
The study has also shown that new companies (younger than five years) are responsible for an overwhelming majority of the new jobs created in the EU.