EU gives first review of Business Act

Germany

Dr Marc Evers, head of the SME and Entrepreneurship division of the German Chambers of Industry and Commerce (DIHK), said that after lagging behind for several years, Germany is now cutting bureaucracy.

"For example, we have imported and applied the standard cost model from the Netherlands. However, bureaucracy reduction should be expanded to other areas such as labour and fiscal law. SMEs have to bear unnecessary burdens in these areas as well," he said.

Evers said most states have targets for red tape reduction, but not all are ambitious enough. He wants an EU-wide binding target of cutting bureaucracy by 25%.

The SBA has addressed the right issues, according to Evers, but there remains much to do. The government has helped SMEs to access finance by extending credit and debt guarantees, but more transparency is needed to ensure that the cash is getting to companies that need it. The small business representative said the SBA could help produce a change in mindset, albeit slowly. "Every entrepreneur can remind his EU representative of the 'Think Small First' principle. But there are areas such as eco-design or consumer protection that might lead to more bureaucracy for SMEs. One should always keep an eye on the competitiveness of small businesses," said Evers.

France

The French government asserts that it has thoroughly implemented the measures facilitating SMEs' access to public procurement contracts. In December 2008, the threshold for some public contracts was raised. For instance, the threshold of the conclusion of a public contract without setting competitive calls went up from €4,000 to €20,000.

Moreover, the participation in public tenders has been facilitated: the possibility to reserve a share (15%) of high-tech and research public procurement for SMEs has been created. France was originally in favour of imposing rules forcing a set share of public procurement spending to be ring-fenced for SMEs, but this was refused by other member states.

According to the European Commission, "the share of SMEs in public procurement contracts in France is low" compared to the other member states, "but the proportion of state aid devoted to SMEs is substantially above the EU average".

To enhance SMEs' access to liquidity, France is looking to the recast of the Late Payments Directive. In France, laws designed to modernise the economy state that the term of public payments is reduced to 30 days by 1 July 2010.

In compliance with the Commission's temporary framework on state aid, guaranteed loans were promoted in October 2008. The government launched a €22 billion plan: €17 billion were allocated through the banks and €5 was allocated through OSEO, a state agency in charge of supporting the innovation and development of SMEs.

Nevertheless, "pessimism is high among managers," declared the president of CGPME, Jean-François Roubaud. Managers fear they will have difficulties in accessing finance because the "2009 books are going to be worse than in 2008". Jean-François Marraud, manager of SME Omnitech, said that "banks don't lean on OSEO enough to guarantee loans".

The French government has strived to facilitate the creation of SMEs. The 'single desk' was launched in January 2010. Various administrative burdens have therefore been reduced. For example, minimum capital is no longer needed to create an SAS (société par action simplifiée). The statute of "auto-entrepreneur" was also created in order to help people create business.

To facilitate access to finance, the French government ordered a report in March 2010 entitled 'Small Business Act of European Stock Exchange Law'. It aims at helping Small and Medium-Sized Issuers Listed in Europe (SMILEs) to access finance on the stock market. The author of the report, Fabrice Demarigny, proposes coming up with a European definition of SMILEs. He also wants to "link the Small Business Act for Europe and the stock exchange law. The European directives do not make the difference between big and little companies".

Pierre Simon, president of the Chamber of Commerce and Industry in Paris (CCIP), said the French government has largely kept its commitments under the SBA but he expressed disappointment with the lack of progress on applying the 'Think Small First' principle.

Spain

Spanish SMEs say they are living through a virtual "ice age" and are demanding legislative changes to make it easier for them to create jobs.

Salvador García Torrico, president of the National Confederation of SMEs, wants a specific contract for self-employed and micro-enterprises so both of them can employ people. The tax burden for registering a new job cannot be the same as that faced by big companies, according to the business group.

"Once we get this contract SMEs could create new jobs more easily, thus creating employment, which in turn generates wealth," he said.

García Torrico says employability is key to rejuvenating the fortunes of businesses and society.

"SMEs have to make an effort to survive in these times. If an SME has two people working for it and one gets sick, that's 50% of the workforce. Imagine if large companies like Telefónica, Repsol and other large companies have to work with half of its workforce?" he asked.

SMEs in Spain are far from optimistic about the future. "In a time of green shoots, frost has come," said García Torrico. He fears the new cuts proposed by the Spanish government will mean less investment in smaller companies, forcing some to close.

While business leaders in Spain see the cuts as overdue, they also want to see support measures for smaller firms and greater consultation with industry.

Czech Republic

"I would say that the situation of small and medium-sized enterprises (SMEs) has not changed significantly since the adoption of the Small Business Act (SBA)," Alena Vlačihová, deputy director of CEBRE, the Czech Business Representation to the EU in Brussels, said.

"For example, application of the so-called SME test is very rare both at European and national level," she complained. "The full implementation of SBA principles, quick adoption of outlined measures and informing SMEs about them is vital for the success of the package," according to Vlačihová.

She said enforcement of the package had been lacking. "Today, member states are not pushed to implement the SBA – national governments have no obligation to monitor and assess achieved progress. The new 'Europe 2020' strategy does not take this into account – it hardly deals with SMEs," Vlačihová explained.

Nevertheless, her colleague, director of CEBRE Michal Kadera notes that the Czech government has had a positive attitude to SMEs. "One can observe significant progress in cutting red tape, the digitalisation of governance and the simplification of business environment," he said.

Kadera said it is necessary to focuson assessing the impact of regulations on SMEs. On top of that, supporting cooperation between business, research institutes and universities and on solving the late payments problem is essential, he stated. However, he was critical of the government's failure to lower the tax rate for labour-intensive services.

Vice-chairman of the Czech Association of Small and Medium-Sized Enterprises and Crafts Karel Havlíček believes it is too soon to evaluate the impact of the SBA. "One year ago the implementation started and we have to wait for another three-to-five years to see the results," he explained, adding that most SMEs were seriously hit by the crisis. Thus the situation of most of them has worsened since 2008.

However, according to Havlíček, the business environment has improved – although not due to the SBA. He praised the introduction of so-called Czech points (single contact points) and moves to make it easier to establish micro-enterprises.

On the other hand, the biggest obstacle still persists: taxes. "The tax rates are around the European average but the system is way too complicated. According to the latest World Bank report, the Czech tax system is one of the worst globally: 160^th out of 180 countries," he underlined.

Slovakia

In its latest analysis of the Slovak business environment, the Economy Ministry in Bratislava said SMEs continue to face several obstacles, especially complicated legislation, problems with law enforcement, administrative burdens, incomplete e-government, corruption, lack of support for start-ups and a non-functioning capital market.

According to the latest measure of bureaucracy, administrative burdens for entrepreneurs cost €91 million. The government has launched an ambitious plan to cut red tape by 25% by 2012. In addition, government bodies have cooperated with entrepreneurs and SME associations to define what they consider to be the biggest administrative burdens in terms of legislation.

The single point of contact already exists for small enterprises, and has significantly cut the time needed to set up a new company in Slovakia. According to the OECD Economic Survey of the Slovak Republic 2009, "removing obstacles to the spread of e-business and a swift implementation of e-government are imperative".

In 2006, the Business Alliance of Slovakia (PAS) published a 'wish list' of measures the government could take to improve the business environment in Slovakia.

According to recently published results only around 14.5% of these have been implemented to date. The biggest disappointment was the failure to improve the situation in the area of business ethics and fighting against corruption, reform of the health sector and making public expenditure more transparent.

Entrepreneurs were fully satisfied only with one out of eleven points – euro adoption and macro-economic stability.