Over the last few years, Europe’s 22.5 million micro, small- and medium-sized companies have faced the biggest global crises since World War II. Pandemics, supply and raw material problems, the war in Ukraine, energy deficits and, finally, high inflation, the latest onslaughts of which some countries are still suffering, have been serious obstacles that European SMEs have faced with mixed fortune.
SMEs have shown their resilience and continue navigating the transition in a world where economies are undergoing profound transformation. Europe cannot afford to let its SMEs fail to cope adequately with these transformations. Thus, the main challenge for small and medium-sized European companies is to recover and improve their competitiveness, which presents the EU with a number of challenges that we outline below.
The regulatory avalanche weighs down on SMEs. Over the next five years, Europe’s small businesses will be forced to adapt their businesses to regulations that don’t always foresee the concrete impact they will have on entrepreneurs. That is why we are calling for the EU to follow the SME Relief Package commitment to put in place measures to ensure that legislation takes into account the needs and specificities of small businesses.
In general terms, we call for each new initiative to first assess the possibility to improve existing rules before implementing new ones. This would generate real regulatory simplification.
Another major challenge for European SMEs is access to skills. European SMEs face enormous problems in recruiting staff due to the demographic change. Action must be taken to implement measures in all areas: from early stage education to dual vocational training or the improvement of hard and soft skills all along the working life and also in employment policies that enable more workers, especially women and young people, to enter the labour market.
Facilitating access to finance is a third challenge for the coming years. Addressing this challenge means facilitating European SMEs’ access to alternative systems of finance and markets and the establishment of regulations that encourage investment in small businesses, as well as the fight against the scourge of late payments.
The regulatory avalanche weighs down on SMEs
Of course, facilitating the digital and environmental transitions for businesses is a huge challenge. The process of decarbonisation of Europe, on the one hand, and the digitalisation of the European economy, on the other, cannot be undertaken without European small and medium-sized enterprises, which are vital for the success of these processes.
For this reason, the European institutions must involve European SMEs in these processes and encourage them to play a leading role in them.
We are also calling on the European Commission together with the European Parliament and the European Economic and Social Committee to undertake a reassessment of where we stand with the reaching of targets set by the Green Deal. We feel that such an exercise is required to ensure that the targets set are indeed achievable and, where they are not achievable, to engage in discussions with private enterprise to set new targets with realistic time frames. An immediate honest assessment is required.
Finally, none of what has been described will be possible without a stable economic framework that generates certainty. In this sense, both the outlook for inflation, high levels of debt and public deficit do not offer the best conditions for growth, job creation and investment in Europe.
That is why the Union’s last great challenge in relation to small companies is to generate this framework of certainty that fights inflation and encourages the adoption of fiscal reforms and bold investment policies in the member states.
Since the 1940s, Europe’s small- and medium-sized enterprises have been at the heart of economic growth, social transformation and the transformation of Europe into a global economic power.
As economic and trade balances continue to shift and Europe faces serious competitiveness challenges, we must finally create a single market which allows SMEs to reach their full potential.
Stefano Mallia is president of the European Economic and Social Committee (EESC) Employers’ Group. Gerardo Cuerva is president of the Spanish Confederation of Small and Medium Sized Enterprises (CEPYME). Petri Salminen is president of the European Association of Craft, Small and Medium-Sized Enterprises (SME united).