MEPs to endorse new SME strategy

Date: 17/04/1997

By Rory Watson

A WIDE-ranging strategy to encourage the creation and survival of small businesses will be endorsed by the European Parliament later this month.

Despite the ritual references made by EU institutions and governments to the importance of such companies to the Union's economy, MEPs are expected to accuse both of failing to match their words with deeds.

A critical report prepared by Portuguese Socialist member Helena Torres Marques points to “a clear incoherence when it comes to the concrete implementation of policies, actions and programmes”.

Small and medium-sized enterprises (SMEs) are seen as a key element in the Union's wider attempts to tackle unemployment. They are estimated to have been responsible for between 60 and 80&percent; of the new jobs created over the past five years.

But despite that success, many of the EU's 18 million SMEs have a precarious financial existence and half of them close within five years of starting up, largely because their financial foundations are undermined by customers paying their bills late.

Torres Marques is now pressing for draft legislation to prevent such financial foot-dragging in future.

When the full Parliament examines the SME report during its plenary session in Brussels next Wednesday (23 April), MEPs are likely to endorse the Portuguese member's view that special attention should be paid to reducing the administrative burdens and bureaucratic costs involved in starting up a small business.

Torres Marques is also keen to encourage changes in training and education programmes so that European universities and colleges foster a greater spirit of enterprise among their students.

“We found in our hearings that entrepreneurs tended not to have high qualifications. People with good qualifications prefer not to take risks and would rather be employees than entrepreneurs. That must change. We need to encourage a spirit of initiative, responsibility and entrepreneurship,” she insisted.

The Portuguese MEP is also calling on the European Commission to identify the extent to which SMEs participate in various Union-funded programmes and is pressing for guarantees that small firms will receive as much assistance as possible from them, as well as cooperation in putting forward their applications.

“It is so much easier to give a lot of money to one large company than to give smaller grants to a larger number of firms. I want to make sure that SMEs are not losing out because of that,” said Torres Marques.

MEPs will also be asked next week to consider ways of increasing SME involvement in the Union's decision-making procedures and to consider whether they should enjoy special treatment under EU competition rules.

Torres Marques believes that a better balance needs to be struck between the local market in which SMEs and craft industries tend to operate and the increased competition they now face from companies throughout the Union because of the abolition of internal trade barriers.

She is seeking a specific commitment from the Commission and member states “to leave sufficient room in their competition policies for forms of cooperation that enable craft and small enterprises to cope with this increased competition”.

The importance of effective EU policies to help firms which now employ some 70&percent; of the Union's working population will also be emphasised in reports to be tabled next week by Italian Union for Europe MEP Riccardo Garosci and Dutch Christian Democrat member Karla Peijs.

Both Torres Marques and Garosci single out EU finance ministers for special criticism over their failure to give the go-ahead for the European Loan Insurance Scheme for Employment (Elise), designed to encourage small firms to take on extra staff.

The Italian MEP is also recommending that the loans and interest subsidy scheme operated by the European Investment Bank should be extended and focused on firms with less than 250 employees and an annual turnover below 20 million ecu.