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SMEs marginalised from EU policy?

Not so new anymore - but nothing changed! Below you find a slightly edited translation of an article in the German newspaper Frankfurter Allgemeine Zeitung”, published 23. Nov. 2004.


There is much talk about EU Industrial Policy; SMEs however are only mentioned within  non-committal speeches. These contrasts with the strong demand from SMEs:  for a better and simplified framework within the internal market, and EU support for cross-border market entry.


Examples: „We are a German SME and wish to establish e company in Croatia, we heard that EU subsidy would be available for such activities.“ Or: „We are a small Biotech company and we wish to market a newly developed product EU-wide. We heard that support from an EU research program would be available“. These or similar questions are frequently asked from SME representatives to Chambers of Commerce and EU Experts.


The answers to such questions are often disappointing. True, there exists an EU program for the Western Balkan countries – however only political and administrative reform is supported. Companies can only benefit indirectly via the participation in tenders for construction, supply or service contracts. Could the Biotech company then expect any support? Well, the EU operates the 6th Framework Program promoting EU wide research co-operation. However, commercial related activities like facilitating the market entrance for innovative products are not supported, but research activities conducted from at least three partners from different EU countries.


These two examples illustrate that indeed various EU programs subsidise support,  co-operation and consulting projects from which SMEs in principle may benefit. Practically SMEs do rarely successfully participate in EU programs. Significant obstacles for SME participation are the relatively complicated EU application procedures. A change, although a new Commission has just been installed, is not in sight. The new responsible commissioner praises the SMEs as backbone of the EU economy. But such statements are anything but new. For years the EU SMEs have been put off with fair words, symbolic actions and appeals like “Think Small First”. This contrast with the fact that 99,9% of the roughly 20 million EU companies fall within the new SME definition valid from January 2005*.  93% of EU companies are so called Micro Enterprises with less then 10 staff.


Whilst the billions/milliards of EU subsidies in their majority bypass the SME sector, something has been achieved: 260 EU-Info-Centres and 71 Innovation-Relay-Centres are contact points for companies which are interested in partnering with EU counterparts or in cross border activities. The EIC have been installed in 1987 to help SMEs succeed within the internal market, they support interested companies with information about the EU, the internal market and related opportunities, at the same time providing the Commission with feedback related to SME issues. Unfortunately, from our point of view these structures are neither effective nor efficient in helping SMEs to gain access to EU support.


Meanwhile the few remaining support instruments for SMEs have been changed from grant programmes to assistance in form of loans, credits and the provision of risk-capital. These instruments are accessible via national agencies for SME development. As reason for this change unspecified “bad experiences” with program execution are cited. We are inclined to seek the responsibility for failure in poor management of these programs from the Commission Services.


The former EU Commissioner installed the function of an SME-Envoy.  However, this institution did not live up to expectations, because it cannot exert any influence on SME relevant initiatives within the EU administration.


The new commissioner, Mr. Verheugen, could paper his office walls with glossy brochures, numerous studies and papers about support for the EU SMEs. It remains nevertheless doubtful if he will be able to find some resonance within the EU apparatus to put into practice the “Benchmarks” and “Best Practices” recommended within these materials. Further failure in this respect will only confirm the presumptions held from many EU SMEs and their staff: that the EU serves only the large corporations, paving the way to transfer production sites and jobs into countries and regions with higher financial support or lower wages.


Another complaint of SMEs is also bound to persist: only large corporation can afford an own EU expert, providing access to EU financial support or to influence EU policy. Well, there are some hundred thousand Euros available annually for SME representatives, mostly spend for still more studies, conferences and related expenses. More a feeling than assurance to participate in policy development results from the appointment of SME representatives to EU committees. Consequently SMEs will continue to be marginalised within EU policy.




What is to be expected for EU enterprise policy? 


To highlight current issues and perspectives EFEC posted an article describing the EU Enterprise Directorate’s attitude towards SMEs: a lot of nice talk but no relevant actions. 

It is time that EU SMEs start making themselves heard within “Starship Brussels” .  The message is clear: it does not suffice to hover miles above economic realities providing well intended advice. Instead, the Commission Services in order to turn policy objectives into action need to get their fingers dirty with the economic reality: SMEs struggle to survive in the day to day business. Consequently any effective EU policy towards SMEs needs to include support for SMEs’ business affairs, in particular concerning participation in the internal market and business internationalisation.


Make yourself heard: forward your position and/or your ideas for effective EU SME policy and support to info@eufeco.org















* SME Definition: less than 250 staff, maximum 250 million Euro annual turnover, maximum balance sheet total 43 million Euro