The spouse. To be considered a SME, one
The Lisbon Strategy, launched by the Lisbon European Council in March 2000, did non accomplish its primary aim of doing the European Union ( EU ) the most dynamic and competitory knowledge-based economic system in the universe by 2010. Discourse this facet from the position of little and average sized endeavors ( SMEs ) with peculiar accent on the Small Business Act and the new EU 2020 Strategy.The events of the last 10 old ages have put the European Union ‘s ( EU ) economic system to the trial.
However, while trying to get the better of the on-going planetary recession and seeking to come to an understanding on the EU budget under the recent Lisbon Treaty process, the EU continues to develop its economic programmes to keep prosperity and stableness amongst the bing member provinces and to future campaigners of the Union. The EU ‘s chief concentration in its endeavor policy is Small and Medium Sized Enterprises ( SMEs ) , which are said to be “ a cardinal driver for economic growing, invention, employment and societal integrating ” 1 . Aiming for a more competitory economic system, where high degrees of expertness in different sectors of the economic system are present, the EU introduced the Lisbon Strategy in March 2000. The inquiry is: has this latter development program succeeded to make its end with respects to SMEs?In a “ believe little first ” 2 European economic system, the EU decided to follow a common definition for SMEs, which entered into force on 1 January 2005. The European Commission, the European Investment Bank ( EIB ) and the European Investment Fund ( EIF ) urge the member provinces to adhere to this common definition in order to break the European economic system and to cut down amendss of competition within its internal market. Harmonizing to the definition, SMEs comprise three different types of endeavors: independent because they may be running as an independent entity which may hold partnership with other companies on a little graduated table ; spouse because there may be a relationship between two or more companies holding more than 50 % portion of the partnership ; and linked because one company can be more dominant than its spouse. To be considered a SME, one has to do certain that the peculiar house in consideration satisfies economic activities in order to be classified as an endeavor.
Harmonizing to the Commission Recommendation of 2003, “ a little endeavor is defined as an endeavor which employs fewer than 50 individuals and whose one-year turnover and/or one-year balance sheet does non transcend EUR 10 million ” 3 . The EU employs this definition as an instrument to find new schemes and programmes in order to keep a uninterrupted rate of success of SMEs for the benefit of the European economic system.In March 2000, the Lisbon Strategy was launched by the Heads of State and the Government of the EU. The chief end of the Lisbon Strategy was to do the European economic system the most competitory in the universe by 2010. At the clip, Europe was viing with the economic system of the United States of America ( USA ) , every bit good as the turning economic system of Asia, particularly against their turning market of Information and Communication Technology ( ICT ) . Therefore, Europe had to move rapidly.
Implementing the Lisbon Strategy was non an easy undertaking for the EU member provinces. Many resourceful aspirations were laid down in the Lisbon Strategy in order to further develop the European economic system. However, harmonizing to a midterm reappraisal presented by the European Council and the appraisals of Non-Governmental Organisation ( NGOs ) such as the European Association of Craft, Small and Medium-sized Enterprises ( UEAPME ) , the Strategy had failed to carry through its aims. This does non intend that no of import developments have been established. Looking at the employment rate statistics, a important alteration to the rate of employability in the EU could be noted.
In fact, whereas in 1999 the employment rate in the EU-15 was 62.5 % , in 2005 it had gone up to 64.9 % 4 .
Nevertheless expansion and recent events have introduced concerns. It has become a ambitious undertaking for all 27 member provinces to follow every bit the marks of the Lisbon Strategy. The Strategy prioritises its aspirations in five principle countries: “ the realization of cognition society, the completion of the internal market and publicity of competition, including service and fiscal services, the constitution of a favorable clime to concern and endeavor, constructing an adaptable and inclusive labor market, and the vigorous publicity of win-win environmental economic schemes ” 5 .
In simple footings, the Strategy was based on three pillars. The first was to do the EU ‘s economic system more competitory with the debut of a more innovated information society. The 2nd pillar represented the modernization of the European societal theoretical account and thirdly it advocates that such developments be implemented in an eco-friendly manner possible, such as utilizing renewable beginnings of energy to power its economic system.After a class of five old ages, mid-term reappraisals of the Lisbon Strategy were carried out during the Communication to the Spring European Council, which insisted that farther action at the European and national degree should be executed because the consequences showed that the Strategy suffered defects when it came to making its chief aims. One can note that the focal point of SMEs was generated during this reclamation of the Strategy.
The cardinal country of Research and Development ( R & A ; D ) has non been met. By 2010, Member States were supposed to do it to 3 % of GDP disbursement on R & A ; D, but this mark was merely reached by the minority. Harmonizing to the 2009 information on R & A ; D disbursement, merely Denmark and Finland managed to hit merely over 3 % . Today ‘s economic system is dependent on cognition.
ICTs were inefficiently used to back up R & A ; D. It is advised that the member provinces should promote their SMEs to put sagely in R & A ; D because this may profit the endeavor ‘s labour productiveness growing, every bit good as its fight in the internal and planetary market. Although the Lisbon Strategy calls for a set up of a European Research Area, as the European Commission calls it, it fails to bespeak its significance and as the statistics depict, non a batch of input has been given on the affair.
Due to this reluctance to encompass a alteration and innovate, the concern market lacked inaugural.The Barroso Commission urges the alterations that should be implemented as “ a new start for the Lisbon Strategy ” 6 . However, the Commission relied on the open-method of coordination ( OMC ) .
The latter is a tool “ which promotes policy inventions of and within member provinces ” 7 so that the cognition of how to implement policies in a successful mode may be shared in the Union. Harmonizing to the UEAPME, the OMC is deficient compared to other European competences because for starting motors, it had no adhering power over the member provinces. The Council calls on all member provinces, every bit good as the European establishments to work together to revitalize the bing SME policies and/or to come to an understanding on new 1s. Nevertheless, before this measure is taken, the Member States must simplify and administrate their regulative system because this presents itself as an obstruction for enterprisers to construct their company, or for bing SMEs to introduce. A complicated regulated system may enforce high costs and holds. The Commission had phased in action to diminish administrative loads on SMEs at an estimated economy of 1.
3 billion Euros at EU-level.Even though the countries which the Lisbon Strategy focused on could be employed in the SME sector, one can detect that the precedence was given largely to the large and transnational endeavors instead than to the SME sector. It failed to place specific necessities for micro-enterprises which hindered the EU ‘s growing. The issue today is that enterprisers are non sing Europe as an attractive zone to construct a concern. To rectify this hinderance, “ a regulative clime conducive to investing, invention and entrepreneurship ” 8 must be provided so that the EU can bask all the chances that this environment provides. With the acceptance of the Small Business Act ( SBA ) in 2008, the Commission presented its acknowledgment of giving SMEs a strengthening function towards the development of the EU ‘s economic system and besides spread outing their potency in the market, by giving it an of import place during decision-making procedures in the EU.
The SBA is set up on the Think Small First rule. The chief theory behind this rule is to set up or modify ordinance associating to entrepreneurship based on an SME point of position. The Commission seeks the feedback of SMEs in order for policies to be regulated.
Consulting little endeavors is a non ever straightforward but with the agreement of a SME minister plenipotentiary within the member province, the national Government would hold an person or a type of disposal supervising the concerns of its little endeavors. At the EU degree, the lobbying may be done through DG Enterprise in the Commission. With the SBA a set of 10 rules were introduced to help SME Policy. These rules were to be applied at EU and national degree. The statement of the Commission is that ordinance based on SMEs may in fact profit big endeavors. However, if it ‘s the other manner round obstructions may disadvantage the place of SME in the economic system. One of the 10 rules of the SBA portrays the state of affairs of an unskilled labor force in the modernization of SMEs.
The EU should put strongly in instruction in order to animate immature persons to gain a life through the accomplishment of entrepreneurship. The bing workers of a peculiar SME should non endure the effects of modernization. Therefore, it is imperative that the workers learn to accommodate with the debut of farther preparation in a SME.However, a bringing spread was still present.
Well-established member provinces were able to carry through the ambitious reforms set out in the Strategy. However, the lesser-performing member provinces lagged behind and unluckily the bringing spread expanded. The European SBA scoreboard carried out by the UEAPME in 2010 made it really clear that some betterments must be made. A instance in point is the assistance given to Bankss and big companies at the disbursal of smaller houses during the economic crisis. The statistics showed that SME finance was merely 45.9 % .
Bankruptcy is another issue, which the Lisbon Strategy did non organize efficaciously. Thousands upon 1000s of SMEs go bankrupt every twelvemonth and therefore, the SBA makes certain that a 2nd opportunity is given to SMEs, in order to press enterprisers to reconstruct the house, if this state of affairs may originate. Harmonizing to a study organised by the Commission, keeping a “ successful transportation of concern ” 9 would be able to continue the rate of employment in the Union. Access to finance for little houses was legislated with the SBA. Unfortunately, “ little houses have faced frozen recognition markets and a deep autumn in consumer disbursement ” 10 .
This has caused many SMEs to shut down their concern and unemployment to a batch of workers.The recent recession had re-highlighted the issue of the Lisbon Strategy and its deficiency of effectivity. In add-on, the Strategy was approaching its deadline.
However, the economic jobs which were faced by the EU during this clip, encouraged contemplations of the new Europe 2020 scheme. It is described as the “ scheme for smart, sustainable and inclusive growing ” . Once once more, merely like the Lisbon Strategy, great outlooks are expected to emerge with the Europe 2020 Strategy. First and first, it is expected to get the better of the obstructions brought approximately by the crisis and assist the EU to go stronger as a Union and at the international degree. Its marks are: to hold 75 % of its population between the ages of 24 and 64 employed ; the 3 % of GDP is one time once more set into R & A ; D ; poorness is decreased by 20 million persons ; promote more pupils to go on analyzing and accomplish a grade ; and eventually making the “ 20/20/20 ” clime ends, particularly where decreases in emanations are concerned.
The Europe 2020 Strategy purposes to travel off from short-run reforms to more long-run reforms because harmonizing to the Council, growing and employment can be maintained.Europe 2020 took its roots during a different scenario than the Lisbon Strategy. The consciousness on clime alteration and prolonging the environment has been linked to growing and employment. Today, high costs for fossil fuel and/or natural stuffs may endanger most endeavors, particularly those which are little and which truly to a great extent on these services in order to bring forth their production. Therefore, Europe 2020 has as its aim to advance the usage resources of energy, which would besides battle clime alteration and cut down nursery gases ( GHG ) . The challenge for SMEs will most likely present itself during the alteration to low-carbon production.
However, the European Commission will guarantee its support “ to better the concern environment, particularly for SMEs, including through cut downing the dealing costs of making concern in Europe, the publicity of bunchs and bettering low-cost entree to finance ” 11 .The new scheme is besides advancing for a digital engineering sector in its economic system. It stresses the fact that digital engineering may profit a SME in its production and services, non merely for the house itself but it can besides go a provider to larger houses. A unafraid Digital Single Market is being shaped so that investings can be generated under a well-functioning legal model in this broad internet-based system. Upgrading to a Digital Single Market may actuate relationships between SMEs globally and establishes one time once more a competitory place.
Bing a member of the EU can convey approximately many challenges to all the states, irrespective of their size. However, what one can be thankful for is that since it ‘s a Union of 27 Member States, many persons come together to construct a strong democratic establishment. A batch of development is still yet to be implemented, but whatever crisis Europe faces, it ever raises itself to the challenge.