European SMEs surpassed pre-crisis level of employment
The year 2016 marked the third consecutive year of steady increases in EU SME employment and value added. Most importantly, 2016 was also the year in which EU SME employment exceeded the 2008 level for the first time since the 2008/2009 economic and financial crisis.
The Annual Report on European SMEs for 2016/2017 shows that SMEs continue to recover. EU SME employment has fully recovered from the 2008/2009 economic and financial crisis and in 2016 it even exceeded the 2008 level, by 0.6 %. The value added generated by EU SMEs showed even greater recovery, as in 2016 it was 11 % higher than in 2008. At sectoral level, the employment recovery in SMEs was most dynamic in services industries.
The general macro-economic environment strengthened SME activity in all industries due to the expansion of all categories of final demand (i.e. household and government consumption, exports of goods and services, as well as capital investment by households, governments and businesses). In previous years, the main driver of the SME recovery was exports.
In 2016, the recovery encompassed nearly all EU Member States. SME employment growth surpassed 3 % in Malta, Croatia, Slovakia, Portugal, Cyprus, Lithuania and Luxembourg, while SME value added increased by more than 5 % in Romania, Malta, Bulgaria, Croatia and Ireland. Latvia did not record growth in SME employment, while Greece and Poland were the two EU Member States that did not see the SME value added increased in 2016.
EU SMEs as a group have recovered, but the picture is more mixed at Member State level:
- In nine Member States (Austria, Belgium, Finland, Germany, Luxembourg, Malta, Poland, Sweden and the United Kingdom) all three SME performance indicators (number of SME enterprises, SME employment and SME value added) were higher in 2016 than in 2008.
- In six Member States (Croatia, Cyprus, Greece, Italy, Portugal and Spain), the abovementioned three SME performance indicators were all still below their 2008 levels.
- The other 13 Member States show only partial recovery in one or two of the abovementioned indicators.
Start-ups and scale-ups are important drivers of economic growth. On average, 9.2 % of firms with at least 10 employees in the EU ‘business economy’ were high-growth firms. Over 90 % of newly created firms are born in traditional (i.e. non-ICT) sectors. The approximately 31 million self-employed, accounting for 14 % of total EU employment, have a sizeable impact on the EU economy.
A few additional years of solid economy-wide growth will be necessary to leave the effects of the crisis fully behind. EU SMEs are expected to continue their relatively steady pace of growth in 2017 and 2018. Their employment is forecast to increase by 1 % in 2017 and 0.9 % in 2018, while their value added is predicted to grow by 2.5 % in 2017 and 3.8 % in 2018.
Have you had a chance to read the Annual report on European SMEs 2015/2016 yet? We recommend that you do!
Have a read of our quick report summary below:
The main themes of the report can be summarised as follows: employment and growth, performance and population and the second chance principle.
Employment and Growth
SMEs are a vital part of the EU28 economy, in 2015 they employed 90 million people (an employment increase of 1.5%), accounting for two thirds of EU28 employment. Many of these SMEs are micro enterprises, with less than 10 employees, which form around 93% of all enterprises in the non–financial business sector. SMEs have also continued to grow, showing steady growth in value added both in 2014 (3.8%) and 2015 (5.7%). Growth varied across Member States but was generally positive.
Figure 1: SME employment and value added growth in 2014 and 2015, EU28
Performance and Population
Overall EU28 SMEs have performed better than previously, indicating better macro-economic conditions in 2015. However there are differing trends across small (e.g. legal and accounting services, advertising and marketing research) and large sectors (e.g. retail trade, construction). Smaller sectors experienced over 5% growth in employment, contrasting with only 2% growth or less in the larger sectors.
Figure 2: EU SME value added annual growth by Member State, 2015
The second chance principle
The SME population is in constant fluctuation, as many new businesses are born and others cease to operate every year. New firm creation in the EU has caught up with USA rates, however the strengthening of second chance public policies to encourage startup dynamism after failure, would certainly counteract the barriers faced by those starting afresh for the second time. This would also ensure that potential entrepreneurs are not deterred by the prospects of bankruptcy or that existing entrepreneurs are not disheartened from trying again. This is where the SBA second chance principle could be every effective, not only for improving the environment and procedure for those businesses that do fail, but also by putting in place mechanisms to avoid businesses falling into such situations.
However, the latest SBA reviews highlight some areas for improvement:
- in only slightly more than half of Member States can the discharge from bankruptcy be achieved in 3 years or less;
- half of EU Member States treat re-starters on an equal footing with new start-ups; and,
- all the other SBA second chance policy measures are implemented in less than half of Member States. Moreover, the SBA second chance principle is the one showing the least progress since 2008.
Progress has been made but more can be done, especially on the SBA second chance principle, so that SMEs can continue to recover and thrive, in turn strengthening the EU28 economy.
Figure 3: Forecast growth of SME value added and employment from 2015 to 2017 in Member States
A record number of 31 countries entered the 2014 EEPAs. 22 projects from 15 countries – Austria, Bulgaria, France, Germany, Hungary, Italy, Lithuania, Malta, Netherlands, Poland, Portugal, Serbia, Spain, Turkey and the UK – were shortlisted during the jury meeting held earlier this summer.
Commenting on the shortlist, Ferdinando Nelli Feroci, the newly appointed Commissioner for Industry and Entrepreneurship, stressed the creativity and imagination used to produce these outstanding results. He said it proves exactly why harnessing and celebrating the entrepreneurial spirit is so important to driving the growth of European business. He believes that the 22 shortlisted projects will inspire and encourage young people and women especially, to choose entrepreneurship as a viable career path.
Shortlist for the 2014 European Enterprise Promotion Awards
Category 1: Promoting the Entrepreneurial Spirit
Austria: AplusB build! Start-Up Centre’s two main goals are to promote entrepreneurship as a career option and stimulate entrepreneurship by providing coaching, training and financial support for innovative start-up projects in the Carinthia region. Their goal is to support 8-10 new start-up projects each year, and the initiative has already funded more than 95 start-ups, with over 90 per cent of these companies trading successfully.
Responsible organisation: build! Gründerzentrum Kärn GmbH
Organisation website: www.build.or.at
Hungary: Encouraging Business Start-ups by Mothers with Young Children helps mothers to acquire the entrepreneurial skills and mindset to start a business and make it profitable. The project delivers online resources including a blog, Facebook page, e-learning training programmes and a weekly newsletter, as well as the Entrepreneurial Women’s Roundtable meeting to help mothers navigate the world of business and network with each other. The project also hosts the annual Mother Company of the Year competition and the Business Mums’ Conference.
Responsible organisation: Gazdagmami Kft.
Organisation website: www.gazdagmami.hu
Lithuania: Mobile Apps Laboratories is an initiative to promote entrepreneurship in information and communication technologies. Working in the four biggest Lithuanian education institutions, Mobile Apps Laboratories bring together young people with academics and industry professionals to deliver ‘App Camp’ during their bachelor, master or PhD dissertation works, with the objective of bringing innovative new products and services to the market. It also aims to increase the number of women starting businesses in information technology.
Responsible organisation: App Camp, JSC
Organisation website: http://www.appcamp.lt/
Netherlands: International Business College 20:80 Learning is an entrepreneurial programme for students in secondary education. The young students complete the standard Dutch secondary school course in four days per week (80%) and during the remaining time (20%) they have an International Business College (IBC) day where they set up and run their own business. There are currently 10 active IBC schools and 350 students involved in this education programme.
Responsible organisation: International Business College
Project website: www.20-80learning.nl
Category 2: Investing in Entrepreneurial Skills
Bulgaria: Brandiko educates students on how to build a brand and register the brand as a Community Trade Mark. Students establish training companies and are mentored on how to build and manage their own brand, market the brand and use it to increase sales. Pupils also learn about the importance of intellectual property protection. More than 1,700 students have completed the Brandiko programme.
Responsible organisation: Ministry of Economy & Energy
Organisation website: www.mi.government.bg
Germany: BRENNEREI Next Generation Lab enables master’s students and graduates to learn and develop new entrepreneurial approaches. Together with professionals from the science and creative industries, scholars work full-time in inter-disciplinary teams to solve the real problems of companies or public entities. The activities include analyses and finding novel approaches that are socially relevant in the areas of communication, product design, and use of new media. Approximately 60 applications from all over Europe have been received for the 2014 scholarship.
Responsible organisation: WFB Wirtschaftsförderung Bremen GmbH
Organisation website: www.wfb-bremen.de
Project website: www.brennerei-lab.de
Serbia: Western Balkans Business Challenge is a unique competition for high school students from Serbia, Croatia, Bosnia and Herzegovina and Montenegro. In mixed teams (4 students from each country), they compete to provide the best business idea for the challenge put before them. The initiative develops entrepreneurial and financial skills and motives the students to think proactively. At least 1,500 students and 200 business community representatives have participated in the competition so far.
Responsible organisation: Junior Achievement Serbia
Organisation website: www.ja-serbia.org
UK: Primary to Professional (P2P) engages primary and secondary school pupils introducing them to important entrepreneurial skills including creativity, innovation and risk taking and leads to a specialist enterprise academy for start-up businesses. This has developed into supporting business start-ups with the first Start up Weekend in Wales and the new Tech Hub for new Tech Entrepreneurs. More than 4,000 secondary school pupils have taken part in Young Business Dragons and enterprise is now embedded in a number of educational institutions across Swansea.
Responsible organisation: Gower College Swansea
Organisation website: www.gowercollegeswansea.ac.uk
Category 3: Improving the Business Environment
Austria: Sources of Strength has five clear objectives to improve the manufacturing economy in the Murtal-Murau region. These include building a sustainable image of the industrial/manufacturing economy, positioning this sector as an attractive employer, strengthening the integration of businesses in the region and developing an industrial tourist product and launching this into the tourism market. Since its inception, 61 leading companies have come together to strengthen the integration of industry and trade services in the region.
Responsible organisation: Industrie- und Wirtschaftsentwicklung Murtal GmbH
Project website: http://kraft.dasmurtal.at
Italy: Grow and Compete with Business Network Contracts promotes and disseminates a business contract culture and to support companies interested in setting up business networks, particularly to facilitate internationalisation processes and increase competitiveness in foreign markets. The project includes a training phase and a customised support phase for businesses expressing an intention to aggregate through network contracts. So far, the project has led to 12 network contracts being finalised, involving 50 businesses.
Responsible organisation: Unioncamere Emilia-Romagna
Organisation website: www.ucer.camcom.it
Spain: Start-up in 3 is a technology platform that streamlines and simplifies business creation and business start-up procedures, linking existing platforms through a single point of access and connecting all the Local Authorities in Spain. The aim of the project is to reduce the time between the establishment of the company and the time it takes for the enterprise to become operational to just three days which is achieved by registering the enterprise through a cloud-based system.
Responsible organisation: Ministry of Finance and Public Administration (MINHAP)
Organisation website: www.minhap.es
UK: The Sharp Project has converted a redundant distribution centre into a media hub for over 60 companies, including those specialising in digital content production, digital media and TV and film production. It is where space, power, connectivity and people converge in the inspiring surroundings to develop careers and compete on a global stage. The aim of the project is to reduce barriers that prevent creative and digital businesses from growing, creating work and generating wealth.
Responsible organisation: Manchester City Council
Project website: http://www.thesharpproject.co.uk/
Category 4: Supporting the Internationalisation of Business
France: The French Label Living Heritage Company focuses on quality assessment and is awarded by the French Government to distinguish companies with excellent craft and industrial skills. Recognised businesses are characterised by a long trading history, innovation capabilities and rare know-how that has helped establish their reputation. Since 2005, the label has been awarded to 1,157 companies, who account for 53,000 jobs and more than €11 billion in cumulative turnover.
Responsible organisation: French Government
Organisation website: http://www.dgcis.gouv.fr/
Italy: Mirabilia: European Network of UNESCO Sites links together areas of common historical, cultural and environmental significance for the first time. The project is aimed at creating a network of places recognised by UNESCO as World Heritage sites, but which are lesser known to Italian and international tourism, with the aim of promoting them in a co-ordinated and organised way to Italian and foreign tourists.
Responsible organisation: Matera Chamber of Commerce, Industry, Crafts and Agriculture
Organisation website: www.mt.camcom.it
Project website: www.mirabilianetwork.eu
Netherlands: Get in the Ring is a worldwide platform for start-ups to raise capital. It brings together the most promising entrepreneurs from around the world and gives them a chance to secure an investment of up to €1,000,000 by pitching in front of prominent international investors. There have been 1326 participating start-ups attracting over €6million in investments.
Responsible organisation: Erasmus Centre for Entrepreneurship
Project website: www.getinthering.nl
Category 5: Supporting the Development of Green Markets and Resource Efficiency
Malta: EU LIFE+ Investing in Water is aimed at identifying water saving measures amongst best practice enterprises, disseminating this information to others and supporting their implementation. The project is focussed on sharing information through face to face meetings, printed materials and an interactive CD, workshops and via the website. The project has identified 26 best practice enterprises and saved an estimated 141 million litres of water per annum.
Responsible organisation: Malta Business Bureau
Organisation website: http://www.mbb.org.mt/
Project website: http://www.investinginwater.org/
Portugal: AMS – Thinking Ahead set itself the challenge of becoming ‘the most efficient supplier of tissue on the Iberian Peninsula’, achieving this through innovation and differentiation. It has revolutionized traditional industrial processes by installing a pipeline connection to its pulp supplier; a unique alliance that has reduced CO2 emissions by 11,000 tonnes per year and generated significant competitiveness in external markets.
Responsible organisation: Agency for Investment and Foreign Trade of Portugal, Public Enterprise (“AICEP”) in partnership with AMS Gomà-Camps, S.A. (“AMS”)
Organisation website: http://www.portugalglobal.pt/PT/Paginas/Index.aspx, http://www.amspt.eu/
Turkey: Developing a Widely Applicable, Low-Cost Model for Clean Production in the Textile Finishing Industry is a pioneering project which develops models to reduce the quantity of raw materials used in the textile industries and promote sustainable production. The project has resulted in solid methodologies and processes that can be widely adopted and used by a multitude of manufacturing businesses at almost no cost.
Responsible organisation: Uludağ Textile Exporters Association (UTEA)
Organisation website: www.uib.org.tr
Category 6: Responsible and Inclusive Entrepreneurship
France: The Entrepreneurs Team helps young and unskilled people, including those excluded from school, to succeed in employment and autonomy. Offering teaching and coaching based on entrepreneurship, the project involves two main phases; a University Diploma in Business Creation which is accessible to the unqualified, followed by socio-professional support in conjunction with an entrepreneurship advisory body and a University. The project has supported 167 individuals; 23% have successfully created their own business.
Responsible organisation: Association Nationale des Groupements de Créateurs (ANGC)
Organisation website: www.groupement-de-createurs.fr
Germany: Wiesbaden Engaged – the corporate citizenship strategy of the city of Wiesbaden – promotes the social sense of responsibility of businesses and entrepreneurs in Wiesbaden. They have developed four key activities within the project; an annual day promoting social engagement, two long term projects promoting integration and employability, an award for engaged businesses to establish a local reputation and participation in a national corporate social responsibility networking and consultation project.
Responsible organisation: Municipality of the City of Wiesbaden – Agency for Social Work
Project website: www.wiesbaden.de
Poland: The Construction and Equipping of the Intramunicipal Vocational Rehabilitation Centre aims to improve employment opportunities for people with disabilities, particularly mental disabilities, enabling them to participate equally in society and in a professional capacity. The Rehabilitation Centre offers employment within eight departments including catering, laundry, garden maintenance, cleaning and hygiene, assembly/disassembly and recycling. Employees not only earn an income, but also receive training in vocational and social skills to encourage independent living.
Responsible organisation: Polish Association for Persons with Mental Handicap, Szczecin Branch
Organisation website: www.psouuszczecin.org.pl
Portugal: DO IT – The idea behind Portuguese Origin is a competition to use the experience, talent and dynamism of Portuguese emigrants to benefit their country of origin. Under the slogan ‘They think of it there, they do it here”, the project aims to select and promote ideas and support the realisation of social entrepreneurship projects which contribute to transforming emigration trends in an effective way for Portuguese society and the country as a whole.
Responsible organisation: Calouste Gulbenkian Foundation in partnership with the Ministry of Foreign Affairs
Organisation website: www.gulbenkian.pt
SMEs are independent companies with fewer than 250 employees.
They provide two out of every three private sector jobs in the European Union and are responsible for 85% of new jobs created. SMEs account for 67% of total employment and 58% of gross value added (GVA).
Latest research shows that SMEs continue to form the bedrock of the European economy, with some 20.6 million companies employing more than 87 million people. SMEs account for more than 99.8% of all enterprises.
Micro companies – defined as enterprises with fewer than 10 employees – represent the biggest share of enterprise in the EU (92%).
The European Enterprise Promotion Awards recognises and celebrates organisations and initiatives that use ground breaking, creative ways to help to create and sustain Europe’s SME and entrepreneurship community.
Category | Grand Jury Prize
A special prize awarded to the entrepreneurial initiative considered the most creative and inspiring in Europe
Making enterprise a realistic option for the hard-to-reach
Outset, YKTO Ltd, United Kingdom
Outset is designed to show the unemployed that self-employment and enterprise is a realistic alternative to unemployment.
Specifically created to help the most vulnerable groups, including the long-term unemployed, recently redundant, under-25s, women, people from minority ethnic backgrounds, people with mental and physical disabilities and those who are over 50 years of age, the programme takes a unique approach to supporting start-ups. A national project that works in urban and rural settings, it seeks to change beliefs about the ability to start a small business.
The project ethos involves using support teams that often have similar challenging backgrounds, come from the same local areas and have had first-hand experience of being self-employed or running a business. Outset actively reaches, through all types of community spaces, from sports centres to Diwali and Chinese New Year festivals to find the people that will benefit most. This in-person outreach is reinforced by highly effective, targeted promotions including radio ads with direct response SMS facilities, quirky and enticing posters, postcards and flyers plus online and email marketing and lots of social media such as Facebook and Twitter. We use normal, jargon-free language.
Since the start of the programme, Outset has engaged with over 6,000 people. Of those, 673 have started a business, together creating 890 jobs. Outset Finance has helped its clients raise £790,258 from a variety of funding sources to either start or expand their business.
Most importantly, the businesses that Outset support do last: survival rates, particularly for women entrepreneurs, far outstrip national averages. Within disadvantaged client groups, conversion rates from engagement to start are approximately 1:5 and Outset’s new business survival rate after four years is over 80%.
Bev Hurley, Chief Executive
St John’s Innovation Centre, Cowley Road, Cambridge CB4 0WS, UK
Category | Promoting the Entrepreneurial Spirit
Recognising actions that promote an entrepreneurial culture and mindset and raise awareness about entrepreneurship in society.
Boosting women’s entrepreneurship by providing easy access to financing Women’s Co-operative Bank Ltd Women’s Co-operative Bank ‘initiative’ Ltd, Cyprus
The Women’s Co-operative Bank seeks to boost women’s entrepreneurship by providing easy access to financing. The organisation identifies gaps in the economy, promotes support programmes for female entrepreneurs and provides free advice and guidance, as well as loans, that are tailor-made to the needs of small business owners. Since the project began, women’s entrepreneurship has increased in Cyprus overall from 12% in 2001, to 28% in 2012.
Artemis Toumazi, Chairman/Director
Sinergatikos Organismos Protovoulias, Ginekon Kiprou Ltd, 30 Pavlou Valdaseridi Street, Branches 1-4, 6018 Larnaca, Postal Code 42251 6530, Larnaca, Cyprus
Category | Investing in Skills
Recognises regional or local initiatives to improve entrepreneurial, vocational, technical and managerial skills
Fostering knowledge transfer and digital visualisation
Visualisation Park, Sweden
Visualisation Park in Sweden focuses on the commercial application of digital visualisation technology. Using a business park model, the location in Eksjö offers a home to a cluster of businesses with expertise in this emerging field. They are gathered around Campus i12, which offers a range of vocational courses. 50 partner companies support the educational programmes and the Park provides a meeting place for educational environment and industry to identify and develop projects. Since it was founded in July 2009 the number of partner companies has more than doubled, to over 100. Most importantly, students’ attitudes shifted. More of them are now inclined to be entrepreneurs themselves, either by launching their own start-up or freelancing.
Joakim Falkäng, Manager
Visualisation Park, Kaserngatan 26, SE-575 35 Eksjö, Sweden
Category | Improving the Business Environment
Recognising measures to simplify administrative procedures for businesses, particularly for start-ups
Tackling difficulties faced by SMEs in urban areas
FaciliTO, Municipality of Turin, Italy
FaciliTO is a model that the Municipality of Turin adopted to tackle the difficulties that small enterprises encounter in struggling urban areas. Micro and small businesses in Turin have faced particular difficulty in accessing credit, which is often due to the absence of project expertise. FaciliTO attempts to meet these needs by providing free consultations to support the development of business plans as well as direct financial support. Over 200 businesses have accessed FaciliTO and 93 of them have received financial support.
Elisa Rosso, Servizio Fondi europei Innovazione
Sviluppo Economico, Via Braccini 2, Cap 10144, Turin, Italy
Category | Supporting the Internationalisation of Business
Recognises policies to encourage enterprises and particularly small and medium-sized businesses to benefit more from the opportunities offered by markets both inside and outside the European Union
Co-operating to bring Douro wines to the world
Douro Boys, Aicep Portugal Global, Portugal
A group of five small wine producers from the Douro region worked together to create the Douro Boys brand. Designed to exchange information and support each other to steadily improve the quality of the wines they produce, the group also aims to co-ordinate a marketing strategy centred on promoting the Douro region and its wines to the world. Between 2002 and 2011, the exports of wine from the five producers increased from €4.7 million to €11 million, an increase of 134%.
Jorge Holtreman Roquette, Administrator for Quinta do Crasto SA
aicep Portugal Global, Agência para o Investimento e Comércio Externo de Portugal, EPE
O’Porto Bessa Leite Complex, Rua António Bessa Leite, 1430 – 2o Andar, 4150-074 Porto
Category | Responsible and Inclusive Entrepreneurship
Recognises regional or local actions promoting corporate social responsibility and sustainable business practices
Supporting disabled people into the workplace, Disabled at Work, Denizli Municipality, Turkey
Disability is a major cause of social exclusion and poverty, primarily due to the lack of employment opportunities. Disabled at Work, a joint Turkish-Dutch project, seeks to change attitudes and support the integration of physically disabled people into the labour market. The group comprises 16 organisations from Turkey and the Netherlands. The projects provide training as well as a matching programme which offers disabled people mentors as they prepare to enter the workforce. At the end of the programme, 194 people had been trained and 65 were employed.
Ms Pınar GÜLMEZ AĞIRBAŞ, Director of Survey and Project Department
Altıntop Mahallesi Lise Caddesi No:1, 20100 Denizli, Turkey
The European Enterprise Promotion Awards have run since 2006. There have been 42 winning entries including one Grand Jury Prize winner in each competition. The most recent recipient of the Grand Jury Prize being Think Small First – Introduction to Micro Companies in Latvia.
Winners from previous years are listed below. We hope they inspire you to enter your national competition in 2015!
Outset, YTKO Cambridgeshire, United Kingdom
Outset is designed to show the unemployed that self- employment and enterprise is a realistic alternative to unemployment. Since the start of the programme, Outset has engaged with over 10,000 people. Of those, 1,916 have started a business, together creating 2,188 jobs.
Barcelona Activa SAU SPM, Barcelona City Council, Spain
With its mission to transform entrepreneurship and business growth in Barcelona, the centre acts as a reference point and hub for entrepreneurs and uses an innovative model of online and on-site services to train individuals, thereby fostering the establishment of more than 6,000 new companies.
Entrepreneurs’ Residencies, Auvergne Agence Regionale de Developpement des Territoires d’Auvergne (ARDTA), France
Entrepreneurs’ Residencies provides short and long-term support measures for business creators or buyers from outside the area willing to settle in the region. They are designed to support, facilitate and accelerate the setting up of new businesses by guiding potential entrepreneurs and refunding their living expenses.
The Scarborough Renaissance Partnership, North Yorkshire, United Kingdom
The development project transformed the north-east England seaside town of Scarborough by pioneering renaissance and boosting entrepreneurship, thus turning a seasonal economy with winter unemployment 50% higher than summer into a year-round economy with only a 10% difference between summer and winter employment.
Development of premises for business use, Lan Ekintza-Bilbao, Bilbao, Spain
Innovative urban redevelopment initiative that aims to prevent city decay by attracting startups and established businesses to relocate to the old heart of the city by providing financial support as well as combating marginalisation and social exclusion.
Y4 Committee, Finland
A complete methodology that introduces the business perspective in regional decision-making, encourages innovation and entrepreneurship espousing ethically sustainable values. The project triggered a cultural change in Central Finland, raising the proportion of entrepreneurs in a region that previously had a well- established culture of paid employment.