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The European Commission’s Policies for Developing SMEs in Europe
Jun 15, 2015



By Mr. Joseph Gerada, Policy Coordinator, Ministry for the Economy, Investment and Small Businesses – Malta

 

There are over 23 million SMEs across Europe representing more than 99% of all European businesses. They provide two out of three of the private sector jobs and contribute to more than half of the total value-added created by businesses in the EU. SMEs are the true back-bone of the European economy being primarily responsible for wealth and economic growth, next to their key role in innovation and R&D. Given that Maltese SMEs account for 73% of value added compared with 58% in the EU, SMEs, especially micro-enterprises play a crucial role in the Maltese economy.

 

Given this background, Malta welcomed the Work Programme of the Juncker Commission as specific focus was given to Internal Market, the Digital Single Market, Trade and Investment, Energy Union and to the revised Inter-Institutional Better Law Making amongst others. The Commission’s Investment Plan for Europe has been a very important signal. Member States do not have to entirely rely on EU-led initiatives but the Investment Plan will leverage also private funding. The Commission should also compliment this Plan with other EU initiatives so as to create additional spill-overs. The REFIT programme is also highly welcomed since burden reduction and the adoption of smart regulation continue to be a priority for the development of SMEs across Europe. 

 

The importance SMEs play within Europe’s economy was acknowledged at the highest political level through the adoption of the Small Business Act (SBA) for Europe, which was adopted in June 2008. The Small Business Act lays down ten guiding principles for policy makers to consider when formulating policy. The spirit behind the principles is in creating an SME friendly environment where entrepreneurship is promoted while simultaneously anchoring the ‘Think Small First’ principle in policy making from regulation to public service and addressing any obstacles hampering SMEs growth. In 2014, the Commission launched a public consultation to enhance the SBA to reflect the latest requirements of the businesses for the period 2015-2020. This should now be reflected in a refreshed version of the SBA (being referred to as SBA 2.0) which would hopefully take into account the urgent needs of SMEs and how these can fully exploit the realities within which they operate. Moreover it is hoped that through the new Commission Work Programme, especially the Digital Single Market and the European Investment Plan, SMEs would concretely benefit from tangible actions which would eventually see them grow in  the coming years. There should be continued support by the Commission towards SMEs and these should also be given continued visibility especially in the new DG GROW structure.

 

Malta considers this to be crucial since SMEs, particularly micro-enterprises, are key drivers for the country’s economic growth and employment. This has been widely acknowledged by the Maltese Government who has not only introduced a myriad of policies in favour of SMEs but has also  made the SME test mandatory since January 2015 through a legal notice under the SBA (Malta) which was enacted in 2011. The Maltese SBA caters for a Consultative Council representing the private enterprise and government agencies that service them, currently chaired by the Minister responsible for the Economy, Investment and Small Business, Dr. Chris Cardona.

 

As part of its drive towards facilitating the business environment for SMEs, the Malta Ministry for the Economy, Investment and Small Business has been also working on the draft of a Family Business Act which Minister Chris Cardona has recently described as an exciting piece of legislation that underlies the importance of Family Businesses for the Maltese economy, often described as ‘its beating heart’. This derives from the fact that about seventy per cent of Maltese businesses are run or controlled by families and they employ about forty thousand people.

 

The Maltese SBA ensures that new legislation is explained in detail and businesses have two months’ time to make adjustments before it comes into force. 

 

Acknowledging their importance for the EU’s economy, the European Commission should therefore continue its work in promoting entrepreneurship to improve the business environment for SMEs across Europe.