SME definition: EBC considers the definition as still fit for purpose and asks for more support for micro enterprises and craftsmen

Today the Industry, Energy and Research Committee (ITRE) of the European Parliament voted on the resolution of the definition of SMEs, initiated by Markus Pieper (EPP/DE). EBC welcomes that the European Parliament is taking a pro-active approach on this issue, because those enterprises that are in real need of support and simple rules require special attention. However, in contrast to the ITRE committee, EBC believes the SME definition is still fit for purpose and any extension as regards to financial thresholds and owner-structure will be counter-productive. “The current definition covers those enterprises that experience the same market challenges as other market actors but have fewer capacities to deal with them. Instead of widening it up to include bigger enterprises we should more strongly focus on the most vulnerable companies, namely micro and small enterprises that constitute the vast majority of the construction sector”, remarks Eugenio Quintieri, EBC Secretary General. EBC position paper on the SME definition can be found here.

Construction SMEs and craftsmen disapprove financial threshold adjustments and additional criteria

EBC believes that the SME definition should always work to the benefit of SMEs and ease their access to public support. The current SME definition already includes 99.8% of all enterprises in the European Union and an adaptation, especially regarding the financial thresholds, would only further dilute the distinction between the enterprises confronted with market failures and particular challenges due to their size and capacity and those that only want to ease their burden without real need. Within this frame, EBC does not consider it necessary to update the SME definition in regards to inflation and labour productivity forecasts, as suggested by the ITRE committee. Furthermore an adaptation of the financial thresholds in line with the cumulative inflation rate would lead to huge distortions due to the significant differences in inflation rates between European countries. EBC equally opposes the inclusion of additional criteria such as “export intensive”, “largely independently-run” and “high equity ratio”, because they further dilute the definition without bringing an added advantage.

Role of craftsmen and micro enterprises should be highlighted

EBC welcomes ITRE’s recognition of the headcount criterion as the main criteria for the definition of micro, small and medium-sized enterprises, as well as the position to better highlight the importance of micro enterprises by proposing the acronym MSMEs. While construction micro and small enterprises face particular challenges due to their size and capacity, European and national legislative processes as well as financial programmes often do not give them the attention needed. Hence, EBC believes that further efforts should be made to create an SME-friendly environment. Keeping this in mind, EBC strongly supports the call of ITRE that the future COSME, FP9 as well as Structural Funds Programmes under the next MFF should continue to earmark sufficient amounts to support SMEs to innovate and generate employment. Moreover, the future financial framework should also consider the establishment of a programme window for micro enterprises in EU funding programmes, like the SME window within the European Fund for Strategic Investment (EFSI).

EBC believes that further efforts should be made to create an SME-friendly regulatory framework and support ITRE’s call to make mandatory the SME impact test for all EU legislative proposals, in application of the Think Small First principle.

Next steps

The public consultation on the review of the SME definition, undertaken by the European Commission, ended on 6 May. Currently, the Commission summarises the replies and prepares an evaluation report.