6 Facts on the Status of European SMEs in 2012

Microfinance Focus Europe, 23 August 2013: In Europe, the global crisis tended to slow or halt the growth in SMEs. Data collected throughout 2012, however, showed evidence of the continued restoration within the sector. Employment, gross value added, and new infrastructure have displayed improvement since 2009. Taken from the European Commission's 2012 Annual Report on European SMEs, these six facts and figures help explain the importance, progress and future of SMEs within the European economy.

1. Despite the hype on large multinational corporations, SMEs continue to be the primary private sector employer of the EU. 99.8 percent of non-financial enterprises in the EU are registered SMEs, accounting for 20.7 billion businesses. As a primary driver of employment, SMEs provide 2 out of 3 private sector jobs. This comes in contrast to the large media coverage of the activities of multinationals and large-scale corporations.

2. The majority of SMEs employ less than 10 employees. 9 out of 10 SMEs are so-called "microenterprises€¯, meaning they maintain less than 10 employees. The average number of persons employed by an SME in Europe was 4.22 in 2012. The average size has decreased since 2009 from around 4.34, largely due to the economic turmoil.

3. SMEs continue to cover all sorts of sectors and services. Some examples include mining, manufacturing, information services, knowledge intensive services (KIS), tourism, telecommunications, research, consultancy, childcare, and more. The sectors also vary by country within the EU.

4. SMEs have proven their potential to be highly innovative. Their simple organization structure, flexibility and low risk make SMEs great candidates for innovative projects. A firm's ability to be innovative depends on the sector and regional conditions, but their innovative capabilities are cited by the European Commission as an important driver of the economy.

5. The global crisis hit SMEs hard, but some sectors have bounced back better than others. High-tech manufacturing in places such as Germany has seen better growth value added (GVA) and employment rates over the past two years. Likewise, SMEs specializing in KIS services –legal, accounting, motion picture, publishing, etc –have seen similar growth.

6. The key to the future economic growth in the EU lies in innovative, high-tech and knowledge-intensive SMEs. Encouraging these specific businesses is a challenge. The conditions necessary to foster high-quality services include access to education, entrepreneurial encouragement, immigration and protective measures for intellectual property rights. The European Commission believes fostering a university start-up nexus could be the key to ensuring the synthesis of research and SME creation.

By Anna Steinbrecher for Microfinance Focus Europe

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