The announcement came last week in a review of the Small Business Act (SBA) held in the European Economic and Social Committee (EESC), a consultative EU body representing workers and employers.
Massimo Baldinato, a member of the cabinet of EU Internal Market Commissioner Antonio Tajani, told the meeting that the Commission would open a consultation on the definition of SMEs next year.
Currently there are three broad parameters which define SMEs.
- Micro-entities are companies with up to 10 employees;
- small companies employ up to 50 workers, whilst;
- medium-sized enterprises contain up to 250 employees.
A range of other criteria are taken into account under different rules, however, and may change the definition of a company for specific tax or regulatory purposes.
Baldinato told the meeting that a consultation would start in 2012, opening up all aspects of the definition to debate. Any changes to the definition arising from the consultation would be actioned in 2013, Baldinato said.
Current definition is a political compromise
He told EurActiv: "First we need to consult to see if there is any need to change the definition. If there is not, then why should we? It's just that we want to re-assess the situation."
The current definition represents a political compromise which ensured that the upper figure of 250 employees was reached for medium-sized businesses.
This was seen as a compromise between the German tradition – where Mittelstand companies often extend to more than 400 employees – and those countries where medium-sized means far fewer employees.
Baldinato told the meeting at the Economic and Social Committee: "In the SBA review we said we should not treat micro- medium and small businesses as monolithic. It is out of the question that a company with five workers should be treated like a company with 240 workers. You can call them both SMEs, but it is a simplification to do this, and we should change this if necessary."
'Waste of time'
The announcement received a mixed response: from calls for the Commission to focus on more concrete action than definitions, to requests for the Commission not to consider a definition of SMEs in excess of 250 employees.
Henri Malosse, president of 'group one' at the European Economic and Social Committee, said: "It's a philosophical debate. With 250 employees we split the difference, so I think it's a waste of time to have another consultation, it's not a concrete debate, it's something to do instead of doing something concrete."
Constance Hannify, rapporteur on the SBA at the Committee of the Regions, said: "It doesn't matter how you are described, it doesn't change your basic needs. If you are one or 100 employees your needs are still there. I would say what will the concrete results be of changing access to finance or employee creation [arising from a change of definition]?"
Patrick Gibbels, a spokesman for the European Small Business Alliance, supported the idea of a consultation regarding the SME definition. He said: "As important as it is to acknowledge the difference between SMEs and larger companies, and to adapt and 'tailor' legislation for SMEs accordingly, it is equally important to finally and fully accept that the same is true for the difference between micro-businesses and larger SMEs."
However, he stressed that "by no means should a revised SME definition ever exceed the current 250 employee threshold".
A spokesman for UEAPME, a small business group, agreed that the definition should never exceed 250 employees.