Cooperation between SMEs and trade unions in Europe on ... - ETUC

etuc.org

Cooperation between SMEs and trade unions in Europe on ... - ETUC

Joong>inong>t ETUC – UEAPME Project:

ong>Cooperationong> ong>betweenong> ong>SMEsong> ong>andong> ong>tradeong>

ong>unionsong> ong>inong> ong>Europeong> on common economic

ong>andong> social concerns

Expert report

prepared by

Eckhard Voss

Wilke, Maack ong>andong> Partner

Hamburg, June 2009


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 2

Contents

Preface 3

Part I: Context ong>andong> background – The Challenges 5

The role of ong>SMEsong> ong>inong> ong>Europeong> today 5

Patterns ong>andong> drivong>inong>g forces of structural change ong>inong> ong>SMEsong> 10

“Silent restructurong>inong>g once agaong>inong>”:

The position of ong>SMEsong> ong>inong> the current economic crisis 12

The role of social dialogue 15

Part II: Factsheets on common economic ong>andong> social concerns 18

Introductory note 18

1 The territorial dimension: Local ong>andong> regional development 18

2 Management of demographic challenges

ong>andong> the role of traong>inong>ong>inong>g ong>inong> ong>SMEsong> 21

3 Innovation ong>andong> quality 31

4 Undeclared work 37

Part III: Conclusions 44

References 47


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 3

PREFACE

As ong>Europeong>an enterprises ong>andong> employees are seriously affected by the current fong>inong>ancial

ong>andong> economic crisis, the search for the best policy-mix to master theses crises ong>andong>

turmoil as well as to support economic recovery ong>andong> labour market stabilisation is a

joong>inong>t ong>inong>terest of ong>Europeong>an social partners. And havong>inong>g ong>inong> mong>inong>d the domong>inong>ant role small

ong>andong> medium sized enterprises play ong>inong> ong>Europeong>’s economy ong>andong> their important

contribution for employment, it is evident that SME have a crucial role ong>inong> this recovery.

It is a common view of the ong>Europeong>an Institutions ong>andong> the Social Partners that though

ong>SMEsong> are regarded as a key player ong>inong> job creation, ong>inong>novation ong>andong> economic as well as

social progress ong>inong> ong>Europeong> there still are many challenges ong>inong> the context of unlockong>inong>g

busong>inong>ess constraong>inong>ts, improvong>inong>g busong>inong>ess environments, workong>inong>g methods ong>andong>

processes ong>andong>/or workong>inong>g conditions ong>andong> fosterong>inong>g high quality employment ong>andong> ong>inong>

micro, small ong>andong> medium sized enterprises. Therefore the EU Commission has ong>inong>itiated

a number of activities ong>inong> order to support ong>SMEsong>, ong>inong>cludong>inong>g the adoption of the “Small

Busong>inong>ess Act” ong>inong> June 2008 ong>inong> order to improve the competitiveness of these

companies.

It is agaong>inong>st this background that UEAPME ong>andong> the ETUC have ong>inong>itiated a joong>inong>t project

onong>Cooperationong> ong>betweenong> ong>SMEsong> ong>andong> ong>tradeong> ong>unionsong> ong>inong> ong>Europeong> on common economic ong>andong>

social concerns”. This joong>inong>t project is not the first joong>inong>t ong>inong>itiative of the two

organisations: In recent years, UEAPME ong>andong> the ETUC have undertaken a number of

bilateral ong>andong> multilateral activities with the other two ong>Europeong>an employers'

organisations through joong>inong>t work programmes ong>andong> projects thereby documentong>inong>g their

joong>inong>t responsibilities ong>inong> the context of economic ong>andong> social change. These ong>inong>itiatives

have made the partnership ong>betweenong> UEAPME ong>andong> ETUC ong>inong>to one of the constituent

elements of ong>Europeong>an Social Dialogue. Three ong>inong>itiatives which have been developed by

UEAPME ong>andong> the ETUC or where both have been actively ong>inong>volved ong>inong> should be

mentioned ong>inong> particular here:

A joong>inong>t declaration on recognition of "Social dialogue as an ong>inong>strument for meetong>inong>g

the economic ong>andong> social challenges faced by small enterprises" published 2001.

A joong>inong>t project undertaken by the ETUC ong>andong> the UEAPME with a view to

enlargement, focusong>inong>g on the social acquis, social dialogue ong>andong> ong>SMEsong> ong>inong> the new

member states ong>inong> Central ong>andong> Eastern ong>Europeong>.

Fong>inong>ally, withong>inong> the framework of their joong>inong>t work programmes, the ong>Europeong>an social

partners have also organised a number of semong>inong>ars on the development capacity of

their respective members ong>inong> the new member states ong>andong> on restructurong>inong>g. These

joong>inong>t experiences, evaluated positively by employers ong>andong> ong>unionsong> alike, also

emphasised the ong>inong>terest of debatong>inong>g the role, common ong>inong>terests ong>andong> shared

responsibilities of the social partners, whether ong>Europeong>an or national.

Above that, the participation of UEAPME ong>andong> the ETUC (along with the other ong>Europeong>an

social partner organisations) ong>inong> the ong>Europeong>an Commission's "Restructurong>inong>g Forum” on

the theme of "Adaptation of ong>SMEsong> to change" ong>inong> November 2007, also constituted

encouragement for the further development of joong>inong>t research ong>andong> ong>inong>itiatives ong>inong> thematic


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 4

fields such as traong>inong>ong>inong>g, demographic challenges, the need to anticipate change, ong>andong>

social relations ong>inong> ong>SMEsong>. 1

Agaong>inong>st this background ong>andong> also ong>inong> the light of accelerated structural economic, social

ong>andong> political changes that occurred ong>inong> ong>Europeong> throughout the last decade, the ETUC ong>andong>

UEAPME ong>inong> 2008 have started a joong>inong>t project ong>inong> order to revise, adjust ong>andong> update their

partnership.

The purpose of this expert report is to support this process by deliverong>inong>g ong>inong>formation

ong>andong> evidence of practical experiences regardong>inong>g areas of common ong>inong>terests ong>andong> shared

responsibilities of employer organisations ong>andong> ong>tradeong> union organisations ong>inong> ong>Europeong> with

regard to SME development. The topics this report is focussed on have been identified

by both organisations as important – though of course not exhaustively – fields of joong>inong>t

ong>inong>terest.

While still to be regarded as an “ong>inong>dependent” expert report the followong>inong>g chapters not

only illustrate results of analyses carried out ong>betweenong> the end of 2008 ong>andong> May 2009

but also summarise the outcomes ong>andong> many ong>inong>formation provided by national ETUC ong>andong>

UEAPME member organisations ong>inong> the context of two transnational semong>inong>ars ong>inong> Warsaw

(9-10 March 2009) ong>andong> Rome (24-25 March 2009).

Therefore, a big thank you of the author of this report is sent to the participants of

these semong>inong>ars for their comments ong>andong> suggestions which contributed much to the

outcome of this report ong>andong> the overall success of this project.

1 In the context of the Background Report to the SME Restructurong>inong>g Forum prepared for the ong>Europeong>an

Commission ten key themes have been identified, amongst them those referred to ong>inong> the second part of this

report. See: „Structural change, company restructurong>inong>g ong>andong> anticipation of change ong>inong> the ong>Europeong>an small ong>andong>

medium-sized enterprise sector“, Background document, p. 39-43.

.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 5

PART I: CONTEXT AND BACKGROUND – THE

CHALLENGES

The role of ong>SMEsong> ong>inong> ong>Europeong> today

Micro, small ong>andong> medium-sized enterprises (as defong>inong>ed by employong>inong>g 1-249 persons 2 )

constitute the domong>inong>ant form of busong>inong>ess organisation ong>inong> all countries of the ong>Europeong>an

Union: Though no official figures exist at the EU level about the total number of ong>SMEsong>

ong>andong> their employees, it is a well known fact that more than 99% of enterprises ong>inong> the

ong>Europeong>an Union are ong>SMEsong>. 3

The relative importance of ong>SMEsong> is, however, lower ong>inong> terms of their contribution to

providong>inong>g jobs ong>andong> wealth: In 2005, 67.1% of the non-fong>inong>ancial busong>inong>ess economy

(NACE Sections C to I ong>andong> K) workforce ong>inong> the EU-27 was employed ong>inong> an SME, while

57.6% of the non-fong>inong>ancial busong>inong>ess economy’s value added was generated by ong>SMEsong>.

Key ong>inong>dicators for enterprises ong>inong> the non-fong>inong>ancial busong>inong>ess economy, EU-27, 2005

Total ong>SMEsong> Micro Small Medium Large

1 - 249 1 - 9 10 – 49 50 - 249 > 250

Number of enterprises (millions) 19.65 19.60 18.04 1.35 0.21 0.04

Share ong>inong> total (%) 100.0 99.8 91.8 6.9 1.1 0.2

Persons employed (millions) 126.7 85.0 37.5 26.1 21.3 41.7

Share ong>inong> total (%) 100.0 67.1 29.6 20.6 16.8 32.9

Value added (EUR billion) 5.360 3.090 1.120 1.011 954 2.270

Share ong>inong> total (%) 100.0 57.6 20.9 18.9 17.8 42.4

Source: Eurostat 2008

Withong>inong> the group of ong>SMEsong>, the vast majority (over 90%) are micro enterprises with less

than ten persons. Micro companies employed more than one third of the ong>Europeong>an

workforce but at the same time accounted only for one fifth of the value added ong>inong> the

EU-27 non-fong>inong>ancial busong>inong>ess economy. The second largest SME group is made up of

small enterprises defong>inong>ed as havong>inong>g 10-49 persons employed. This group ong>inong> 2005

consisted of about 1.3 million enterprises (excludong>inong>g agriculture, fong>inong>ancial services ong>andong>

public services) employong>inong>g a workforce of around 26 million throughout ong>Europeong>, i.e.

around 7% of all ong>Europeong>an enterprises ong>andong> around one fifth of their workforce.

However, the share of small companies ong>inong> turnover ong>andong> value added is nearly that of

the micro enterprise sector despite the significantly smaller number of persons

employed.

2 It should be noted that ong>inong> this report we are usong>inong>g the EU defong>inong>ition of micro, small ong>andong> medium-sized

enterprises accordong>inong>g to which an SME is made up of an enterprise which employs fewer than 250 persons

ong>andong> which has an annual turnover not exceedong>inong>g 50 million Euro, ong>andong>/or an annual balance sheet total not

exceedong>inong>g 43 million Euro. See ong>Europeong>an Commission: The new SME defong>inong>ition, DG Enterprise ong>andong>

Industry, Brussels.

3 SME data at the ong>Europeong>an level are available only ong>inong> the context of the Eurostat’s structural busong>inong>ess

statistics (SBS) providong>inong>g the most updated statistical data on certaong>inong> ong>inong>dicators accordong>inong>g to enterprise size

classes. However, SBS data are not coverong>inong>g the whole ong>Europeong>an busong>inong>ess economy but only the so-called

“non-fong>inong>ancial busong>inong>ess” is ong>inong>cludong>inong>g ong>inong>dustry (NACE sections C to E), construction (NACE section F) ong>andong>

non-fong>inong>ancial services (NACE sections G to I ong>andong> K). This means that sector such as fong>inong>ancial services or

agriculture are not ong>inong>cluded. See Eurostat: Enterprise by size class – overview of ong>SMEsong> ong>inong> the EU, Statistics

ong>inong> Focus 31/2008.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 6

Only 1.1% of enterprises ong>inong> the non-fong>inong>ancial busong>inong>ess economy ong>inong> 2005 belonged to

the medium-sized company sector defong>inong>ed as havong>inong>g 50-249 persons. With a workforce

of about 21 million people medium-sized companies are the smallest of the four

enterprise groups. However, the share ong>inong> turnover ong>andong> value added is rather similar to

both micro ong>andong> small enterprises.

In spite of their tong>inong>y share of 0.2% ong>inong> the overall number of enterprises, large

companies with 250 or more people) generated the highest amount of value added

(42.4% ong>inong> 2005) ong>inong> the non-fong>inong>ancial busong>inong>ess economy ong>inong> ong>Europeong> ong>andong> employed nearly

one third of the workforce ong>inong> the EU-27.

National varieties of ong>SMEsong> across ong>Europeong>

The geographic variety of ong>SMEsong> across ong>Europeong> reflects specific patterns of ong>inong>dustrial

structures, economic traditions ong>andong> other framework conditions, ong>inong> particular the

economic ong>andong> social transformation process ong>inong> the Central ong>andong> Eastern ong>Europeong>an

Member States. Withong>inong> EU member states, the relative importance of a particular size

class varied widely ong>inong> 2005 (see table on the followong>inong>g page). Very broadly, the

followong>inong>g groups of countries might be identified ong>inong> this context: With regard to the

overall importance of SME busong>inong>ess organisations for the national economies ong>inong> ong>Europeong>

there are seven countries where the SME sector is employong>inong>g more than three quarters

of the workforce ong>andong> which are clearly above the ong>Europeong>an average (67%): Cyprus

(84%), Portugal ong>andong> Greece (82%), Italy (81%) as well as Spaong>inong> (79%) ong>andong> Estonia

(78%). On the other end, most of the bigger EU countries are amongst a group quite

strongly characterised by high employment shares ong>inong> larger enterprises: Nearly one out

of two employees are workong>inong>g ong>inong> large enterprises ong>inong> the United Kong>inong>gdom ong>andong> Slovakia

(46%). Fong>inong>long>andong> (41.5%), Germany ong>andong> France (39%) are also characterised by high

shares of large enterprise employment.

Density of ong>SMEsong>: Number of ong>SMEsong> per 1,000 ong>inong>habitants, non-fong>inong>ancial busong>inong>ess economy, 2005

Source: Eurostat 2008

In the EU-27 there was an average of 39.3 ong>SMEsong> withong>inong> the non-fong>inong>ancial busong>inong>ess

economy per 1,000 ong>inong>habitants ong>inong> 2005. The highest densities of ong>SMEsong> were recorded ong>inong>

the Czech Republic (86.0) ong>andong> Portugal (80.5), followed by the three Mediterranean

countries of Greece, Italy ong>andong> Spaong>inong>. At the other end of the range, Romania ong>andong>

Slovakia recorded the lowest density of ong>SMEsong> per 1,000 ong>inong>habitants (18.9 ong>andong> 7.7

respectively).


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 7

Key ong>inong>dicators on ong>SMEsong> ong>inong> the EU-27 non-fong>inong>ancial busong>inong>ess economy, 2005

Number of

enterprises

Number of

persons

employed

Value added Number of

enterprises

Number of

persons

employed

Value added

1,000 1,000 EUR billion % % %

EU-27 19,602 85,000 3,090 99.8 67.1 57.6

Belgium 395 1,602 83 99.8 66.6 57,8

Bulgaria 240 1,318 5 99.7 72.6 53.2

Czech Republic 878 2,461 30 99.8 68.9 56.7

Denmark 202 1,129 67 99.7 66.0 64.8

Germany 1,654 12,357 553 99.5 60.6 53.2

Estonia 38 305 4 99.6 78.1 75.1

Irelong>andong> 85 654 53 99.5 67.5 58.2

Greece 820 2,031 44 99.9 81.9 69.6

Spaong>inong> 2,542 10,538 339 99.9 78.7 68.5

France 2,274 8,834 412 99.8 61.4 54.2

Italy 3,919 12,182 420 99.9 81.3 70.9

Cyprus 43 174 5 99.9 84.3 80.0

Latvia 62 469 5 99.7 75.6 71.1

Lithuania 93 619 5 99.7 72.9 58.5

Luxembourg 21 120 7 99.6 70.8 58.5

Hungary 556 1,783 20 99.8 70.9 50.2

Malta : : : : : :

Netherlong>andong>s 492 3,146 146 99.7 67.6 61.5

Austria 272 1,589 76 99.7 67.4 60.0

Polong>andong> 1,405 5,289 59 99.8 69.8 48.4

Portugal 848 2,676 47 99.9 82.0 67.8

Romania 410 2,463 13 99.5 60.8 48.4

Slovenia 88 371 8 99.7 66.4 60.6

Slovakia 42 501 7 99.8 54.0 44.5

Fong>inong>long>andong> 187 717 40 99.7 58.5 53.9

Sweden 523 1,667 83 99.8 63.2 55.6

United Kong>inong>gdom 1,535 9,636 501 99.6 54.0 51.0

Note: Data only coverong>inong>g the “non-fong>inong>ancial busong>inong>ess economy” accordong>inong>g to the defong>inong>ition of Eurostat.

See footnote 3 for more details. Source: Eurostat 2008

A closer look at the three different size groups of ong>SMEsong> ong>inong> the EU countries also reveals

some ong>inong>terestong>inong>g characteristics: In 2005, there were eight countries with a particularly

high share of employment ong>inong> micro enterprises: In Greece more than 55% of all

employees were workong>inong>g ong>inong> micro companies ong>andong> ong>inong> Italy, Portugal ong>andong> Cyprus micro

companies had a share of more than 40% ong>inong> total employment followed by Polong>andong>,

Spaong>inong> ong>andong> Hungary with nearly 40%. While the share of small companies is more

evenly spread across the EU-27 (with an average employment share of 20%), there

agaong>inong> are significant differences with regard to medium sized companies: The

contribution of this size group ranged from 26.6% ong>inong> Estonia ong>andong> Lithuania ong>andong> more

than 20% shares also ong>inong> Luxembourg, Latvia, Irelong>andong>, Slovakia, Romania, Bulgaria ong>andong>

Denmark down to only 12.4% ong>inong> Italy ong>andong> 9.7% ong>inong> Greece. Also the UK ong>andong> Spaong>inong> are

characterised by rather low employment shares of this size group.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 8

Sectoral varieties of ong>SMEsong> across ong>Europeong>

Also across economic activities the role of ong>SMEsong> is characterised by significant varieties:

The employment share of ong>SMEsong> varies ong>betweenong> under 20% ong>inong> the energy ong>andong> water

sector to more than 80% ong>inong> the construction sector ong>andong> ong>inong> hotel ong>andong> restaurant

activities. Also distribute ong>tradeong> ong>andong> busong>inong>ess services/activities are sectors where

around three quarters of all employees are workong>inong>g ong>inong> ong>SMEsong>.

There are also differences of position ong>inong> the three SME size groups ong>inong> major ong>inong>dustry

sectors. Sectors which are particularly domong>inong>ated by micro enterprises (as a share ong>inong>

total employment) are real estate (55.8%), hotels & restaurants (44.8%), motor ong>tradeong>

(42.9%), retail ong>tradeong> & repair (42.6%) ong>andong> construction (42.6%). 4 In contrast to this,

small enterprises strongly contribute to the workforce ong>inong> sectors such as metal

products, machong>inong>ery ong>andong> equipment (34.1%), construction (30.5%), wood ong>andong> wood

products (30.3%) ong>andong> motor ong>tradeong> (29.2). Fong>inong>ally, medium sized enterprises are strong

employers ong>inong> manufacturong>inong>g sectors, ong>inong> particular ong>inong> rubber ong>andong> plastics products

(34,8%), textiles (32.5%), pulp, paper ong>andong> paper products (31.3%) ong>andong> wearong>inong>g

apparel ong>andong> dressong>inong>g (29.0%). The followong>inong>g figures are illustratong>inong>g the distribution of

the four enterprise size classes ong>inong> different economic sectors as of 2004.

Role of ong>SMEsong> by sector of ong>inong>dustry, EU-27, 2004 (% share of total employment)

Source: Eurostat.

The figures illustrate clearly above the average employment share are sectors such as

the wood ong>inong>dustry, which is largely domong>inong>ated by ong>SMEsong> ong>inong> addition to sectors like the

manufacturong>inong>g of wood products, toys, jewellery etc.; basic metals ong>andong> metal products;

food processong>inong>g; textile ong>andong> clothong>inong>g. Contrarily, the ong>inong>fluence of ong>SMEsong> ong>inong> sectors like

mong>inong>ong>inong>g ong>andong> quarryong>inong>g, transport equipment, communications ong>andong> media is rather weak.

4 Figures for 2005 taken from Eurostat: Enterprises by size class – overview of ong>SMEsong> ong>inong> the EU, Statistics ong>inong>

Focus 31/2008.

Non-fong>inong>ancial busong>inong>ess

Manufacturong>inong>g

Electricity, gas & water supply

Construction

Distributive Trade

Hotels & restaurants

Transport & Communication

Busong>inong>ess Activities

0% 25% 50% 75% 100%

1 to 9 10 to 49 50 to 249 250 ong>andong> more


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 9

Role of ong>SMEsong> by sector of ong>inong>dustry, EU-27, 2004 (% share of total employment)

Source: Eurostat.

Manufacture of bas ic m etals ong>andong>

fabricated m etal products

Manufacture of m achong>inong>ery ong>andong> equipm ent

n.e.c.

Manufacturong>inong>g of w ood products , m us ic

ong>inong>s trum ents , toys , jew elry etc.

Manufacture of tra ns port equipm ent

Wood ong>inong>dus try

Manufacture of fo od products ; be verages

ong>andong> tobacco

Ma nufacture of textiles ong>andong> textile products

In general, smaller enterprises account for a greater role ong>inong> labour ong>inong>tensive sectors

with a lower labour productivity than their larger counterparts: In 2003 5 , labour

productivity ong>inong> the EU was on average highest ong>inong> the energy sector ong>andong> ong>inong> the mong>inong>ong>inong>g

ong>andong> quarryong>inong>g sector – both sector domong>inong>ated by large companies - while it was lowest

for typical SME sectors like hotels ong>andong> restaurants (see figure below).

Apparent labour productivity broken down by enterprise size class, EU-25, 2003

(EUR thousong>andong>)*

Mong>inong>ong>inong>g & quarryong>inong>g

Manufacturong>inong>g

Electricity, gas & water

supply

Construction

Distributive ong>tradeong>s

Hotels & restaurants

Transport &

communications

Real estate, rentong>inong>g &

busong>inong>ess activities

Source: Eurostat SBS size class; * Information shown may ong>inong>clude rounded Eurostat estimates.

5 See Eurostat: SME ong>andong> Entrepreneurship ong>inong> the EU, Statistics ong>inong> Focus, 24/2006.

0% 25% 50% 75% 100%

1 to 9 10 to 49 50 to 249 250 ong>andong> m ore

0 50 100 150 200

1 to 9

10 to 49

50 to 249

250 ong>andong> more


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 10

In manufacturong>inong>g, construction, hotels ong>andong> restaurants, ong>andong> transport ong>andong>

communications, there is a pattern of ong>inong>creasong>inong>g levels of labour productivity with each

larger size class across the EU as a whole. In mong>inong>ong>inong>g ong>andong> quarryong>inong>g as well as energy

activities, micro-sized enterprises ong>inong> the EU-25 recorded the highest labour productivity

across the respective size classes. 6 In distributive ong>tradeong>s ong>andong> real estate, rentong>inong>g ong>andong>

other busong>inong>ess activities, small ong>andong> medium-sized enterprises had higher labour

productivity levels than large enterprises.

Patterns ong>andong> drivong>inong>g forces of structural change ong>inong> ong>SMEsong>

ong>SMEsong> have always proven their constant capacity to face ong>andong> adapt to change thanks to

a higher degree of flexibility ong>inong> decision makong>inong>g ong>andong> the implementation of changes. In

this context it is important to stress an important difference ong>betweenong> ong>SMEsong> ong>andong> large

companies, ong>inong> particular the identity ong>betweenong> ownership ong>andong> personal responsibility for

the enterprise activities. In close connection to this, other features are, for example,

personal liability for the entrepreneur’s ong>andong> the enterprise's fong>inong>ancial situation, direct

ong>andong> personal responsibility for the success or failure of the busong>inong>ess ong>andong> ong>inong> most cases

the personal relationship ong>betweenong> employer ong>andong> employees. 7 The fact that corporate

practice ong>inong> ong>SMEsong> therefore is much more based on personal relationships with the

owner/entrepreneur ong>andong> much less on ong>inong>stitutional settong>inong>gs ong>andong> ong>inong>terplays has

important implications also for the nature ong>andong> form of restructurong>inong>g processes ong>inong> ong>SMEsong>

comparison with large enterprises. Accordong>inong>g to most ong>inong>terview partners this results

both ong>inong> strengths ong>andong> weaknesses. As the 2003 SME Observatory stated:

“Durong>inong>g downturns, smaller enterprises maong>inong>taong>inong> more employment above the efficient level

compared to larger enterprises. Micro companies especially have fewer opportunities to lay off

personnel. Moreover, considerong>inong>g stronger personal ties withong>inong> the enterprise, busong>inong>ess owners

are probably also less ong>inong>clong>inong>ed to discharge personnel, even if they have the chance to do so.” 8

Major drivong>inong>g forces of restructurong>inong>g ong>inong> SME prong>inong>cipally are the same as ong>inong> the case of

large enterprises. The maong>inong> drivers of busong>inong>ess restructurong>inong>g operations are economic

considerations ong>andong> factors such as:

Ensurong>inong>g the survival of the enterprise ong>inong> situations of serious economic difficulties

due to profit losses, ong>inong>creased competition, market liberalisation, new competitive

rules, fong>inong>ancial constraong>inong>ts etc.

Need to mention the current fong>inong>ancial crisis ong>andong> its repercussions on the real

economy, notably ong>SMEsong>

Reactong>inong>g to changong>inong>g ong>andong>/or shrong>inong>kong>inong>g market demong>andong>s

Increase profitability ong>inong> order to satisfy pressures from fong>inong>ancial markets, owners

ong>andong>/or shareholders

6 It should be added here however, that there are very few micro units operatong>inong>g withong>inong> the energy ong>andong> water

supply sectors ong>andong> that their economic weight is limited (accountong>inong>g for 2.9 % of total employment ong>inong> this

sector). Those micro enterprises ong>inong>clude power plants that may generate electricity with very few persons

employed, thus resultong>inong>g ong>inong> relatively high labour productivity figures.

7 Institut für Mittelstong>andong>sforschung Bonn: ong>SMEsong> ong>inong> Germany. Facts ong>andong> Figures 2004, Bonn 2004, p. 2.

8 “ong>SMEsong> ong>inong> ong>Europeong> 2003”, Observatory of ong>Europeong>an ong>SMEsong> 2003, No. 7, p. 44.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 11

Implementong>inong>g ong>andong> ong>inong>troduction of new busong>inong>ess models, products or services ong>inong>

order to react to changong>inong>g markets ong>andong> environments

Need to restructure resultong>inong>g from poor management practices ong>andong> failure, such as

short-term strategies, wrong strategic decisions ong>andong>/or failure to anticipate

necessary adaptation measures

While these drivong>inong>g forces ong>inong> general apply for ong>SMEsong> ong>andong> large companies, there are

certaong>inong> specificities with regard to the ability ong>andong> resources of ong>SMEsong> to react to these

drivong>inong>g forces by anticipation, pro-active measure of preparation ong>andong> managong>inong>g

restructurong>inong>g. SME-specific features ong>andong> patterns of structural change ong>andong> restructurong>inong>g

are ong>inong> particular related to the followong>inong>g aspects:

Corporate culture ong>andong> personal relationships: Identity of ownership ong>andong> personal

responsibility, personal liability of the owner, personal relationship ong>betweenong>

employer ong>andong> employees

Dependency on local markets: In particular micro ong>andong> small enterprises depend on

local markets, less than 10% of ong>Europeong>an ong>SMEsong> are active ong>inong>ternationally

Dependency on the large enterprise sector: Not only as suppliers – there is a

growong>inong>g role of subcontractong>inong>g, franchise or ong>tradeong>mark relationships with large

companies, SME also are ong>inong>volved ong>inong> busong>inong>ess orientated services.

It is quite a common characteristic of structural change ong>inong> ong>SMEsong> that ong>inong> most cases it is

carried out ong>inong> silence without much public attention. While restructurong>inong>g, particularly ong>inong>

the context of offshore relocation ong>andong> outsourcong>inong>g ong>inong> large companies, is subject ong>inong>

most EU countries to ong>inong>tense public debate, accordong>inong>g to most key actors ong>inong>terviewed ong>inong>

different countries, the effects of both macro- ong>andong> microeconomic restructurong>inong>g on

ong>SMEsong> are not present ong>inong> public discourse. Even ong>inong> countries like Italy or Spaong>inong> where

ong>SMEsong> play such an important economic role it is reported that restructurong>inong>g debate is

centred almost exclusively on large companies. 9 Micro companies ong>inong> particular but also

many small companies generally can reduce their labour force ong>andong> restructure more

easily than medium-sized ong>andong> large companies, song>inong>ce they are not covered by legal

commitments for dealong>inong>g with mass redundancies, ong>inong>formation ong>andong> consultation

obligations ong>andong> other forms of regulation ong>inong> the context of restructurong>inong>g.

Micro, small ong>andong> medium-sized companies ong>inong> many respects are affected directly by

restructurong>inong>g operations ong>inong> large companies as sub-contractors, suppliers, franchisers,

local service providers or labour reserves. Also, the departure of major regional

employers often results ong>inong> severe effects on SME employment ong>andong> the regional busong>inong>ess

environment which often are not an issue of public attention.

While ong>SMEsong> seem to be less ong>inong>clong>inong>ed to dismiss their employees, there are also certaong>inong>

barriers to lookong>inong>g for alternatives to downsizong>inong>g or even closure of the busong>inong>ess ong>inong>

periods of economic crisis. Though they seem to be more flexible ong>andong> able to adapt to

changong>inong>g environments than large enterprises, this flexibility is limited by certaong>inong>

disadvantages as compared with larger enterprises, as UEAPME comments ong>inong> a

statement on restructurong>inong>g ong>andong> ong>SMEsong>:

9 In this chapter we are only partly addressong>inong>g the general issue of restructurong>inong>g ong>inong> ong>Europeong>an ong>SMEsong>. This issue

has been the focus of a “Restructurong>inong>g Forum” of the ong>Europeong>an Commission, specially dedicated to ong>SMEsong>

which took place ong>inong> November 2007. See „Structural Change, company restructurong>inong>g ong>andong> anticipation of

change ong>inong> the ong>Europeong>an small ong>andong> medium-sized enterprise sector. Background document to the

Restructurong>inong>g Forum “Adaptation of ong>SMEsong> to Change”, Brussels, 26-27 November 2007, p. 17ff.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 12

“When it comes to change, ong>SMEsong> have always proven their constant capacity to face ong>andong> adapt

to change thanks to their high degree of flexibility. When it comes to company restructurong>inong>g,

they face greater difficulties because of their size ong>andong> the direct fong>inong>ancial commitment of the

busong>inong>ess owner. Moreover, ong>inong> the case of restructurong>inong>g of large busong>inong>esses, ong>SMEsong> workong>inong>g as

subcontractors or suppliers lack external support.” 10

The reasons for this limitation of alternative options ong>inong> dealong>inong>g with change ong>andong>

managong>inong>g restructurong>inong>g seem to be quite clear as key actors quite unanimously stress:

greater difficulties ong>inong> receivong>inong>g loans ong>andong> fong>inong>ancial support from fong>inong>ancial ong>inong>stitutions (ong>inong>

particular micro companies, enterprises ong>inong> low-pay sectors ong>andong> young companies) ong>andong>

shortcomong>inong>gs ong>inong> public frameworks for dealong>inong>g with temporary or structural crisis

situations, supportong>inong>g the development of ong>inong>novation ong>andong> change projects, activities on

foreign markets etc.

“Silent restructurong>inong>g once agaong>inong>”: The position of ong>SMEsong> ong>inong> the current economic crisis

The steep economic downturn by which the ong>Europeong>an economies are hit with ong>inong>creasong>inong>g

speed song>inong>ce summer 2008 has resulted ong>inong> severe cuts ong>inong> production ong>andong> output, with

the jobs of tens of thousong>andong>s of ong>Europeong>an workers suddenly at stake. Initially caused by

the failure of the fong>inong>ancial sector to perform their basic function of fong>inong>ancong>inong>g the

economy, ong>inong>vestments are blocked ong>andong> consumption has collapsed ong>inong> fields ong>inong> which

credit fong>inong>ancong>inong>g is playong>inong>g an important role.

Economic outlook accordong>inong>g to the EU Commission’s Economic Forecast as of Sprong>inong>g 2009

Gross domestic product, volume (percentage change on precedong>inong>g year, 1992-2010*

*For 2008, 2009 ong>andong> 2010 the current forecast (IV-2009) is compared with the autumn 2008 (X-2008)

ong>andong> the January 2009 ong>inong>terim forecast (I-2009).

Source: EU Commission, Sprong>inong>g 2009, Brussels 22.4.2009.

10 “UEAPME Position on the Communication from the Commission Restructurong>inong>g ong>andong> employment”, Brussels, 6

July 2005, p. 2.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 13

All this has resulted ong>inong> a sudden demong>andong>-shock, affectong>inong>g exports, ong>inong>vestment goods

ong>andong> private consumption alike ong>inong> ong>Europeong>. However as the figure ong>inong> the tables above are

showong>inong>g, ong>Europeong>an economies are not hit by the economic crisis evenly. The downswong>inong>g

is expected to be broad-based across countries, although sizeable differences persist:

some countries already have experienced a stronger downturn than other, dependong>inong>g

on their exposure to the fong>inong>ancial crisis, the global manufacturong>inong>g cycle, a substantial

housong>inong>g-market correction or other country-specific factors.

Economic outlook accordong>inong>g to the EU Commission’s Economic Forecast as of Sprong>inong>g 2009:

Number of unemployed (as a percentage of total labour force, 1992-2010

Source: EU Commission, Sprong>inong>g 2009, Brussels 22.4.2009.

Countries particularly hit by the crisis are the UK, Irelong>andong> ong>andong> Spaong>inong> which durong>inong>g the

last decade have been very much relied on private consumption not beong>inong>g based on real

wage development but fuelled by the credit market ong>andong> asset bubbles. Also the new

member states were especially vulnerable to the economic crisis despite their

impressive growth rates durong>inong>g the last decade. However, ong>inong> most of the region growth

was driven by foreign direct ong>inong>vestments ong>andong> to large degree credit fong>inong>anced

consumption.

There also is a strong bias towards the fong>inong>ancial sector ong>andong> large ong>andong> multong>inong>ational

companies ong>inong> the public debates around ong>Europeong> with regard to the effects of the crisis

ong>andong> the discussion of economic recovery measures. This is quite understong>andong>able song>inong>ce

the fong>inong>ancial sector ong>andong> ong>inong> particular the automotive ong>inong>dustry has been most severely

affected by the crisis. Agaong>inong>st this, the effects on other economic sectors ong>andong> company

groups, ong>inong> particular developments ong>inong> various types of ong>SMEsong> – often ong>inong>tegrated ong>inong> the

production value chaong>inong>s as suppliers ong>andong> contractors – are much less visible ong>andong> tend to

be systematically eluded ong>inong> public debates of governments ong>andong> social partners.

Analysong>inong>g responses ong>andong> plant-level developments as a reaction to the economic crisis

throughout ong>Europeong>, a recent survey of the ETUI ong>inong> Brussels states that:


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 14

“There is a clear divide ong>betweenong> large enterprises ong>andong> ong>SMEsong>, both ong>inong> Western ong>Europeong> ong>andong> – ong>inong>

particular – ong>inong> the new member states. Large enterprises with more resources ong>andong> ong>inong>ternal

flexibility are ong>inong> general better equipped to fend off sudden external shocks, while ong>SMEsong> are

more likely to implement redundancies.” 11

While large companies – often backed by active ong>inong>volvement of social partners, workers

ong>inong>terest representation ong>andong> collective agreements ong>betweenong> social partners – are able to

respond to sudden crisis situations by work organisation measures ong>andong> negotiated ways

of managong>inong>g the situation (though even ong>inong> these cases dismissals take place, mostly

ong>inong>volvong>inong>g those ong>inong> temporary ong>andong>/or agency employment), the situation is much more

difficult at ong>SMEsong>, which do not have the resources, ong>inong>stitutional or otherwise, to cushion

the effects of the crisis. This is quite exemplary illustrated by the massive utilization of

short-work schemes as a major respond ong>inong> order to avoid permanent lay-offs ong>inong>

countries were this ong>inong>strument exists (e.g. German “Kurzarbeit”, French “chômage

partiel” or the Fong>inong>nish “temporary unemployment” schemes” ). Song>inong>ce these schemes are

not applicable for small enterprises, ong>inong> the case of ong>SMEsong> ong>andong> suppliers, contractors or

service providers, dismissals were, from the begong>inong>nong>inong>g, the major ong>inong>strument of

adjustment.

A further feature of particularly difficulties of ong>SMEsong> ong>inong> regard to copong>inong>g with the effects

of the fong>inong>ancially driven crisis is money: Though with significant country-specific

variations throughout ong>Europeong>, ong>SMEsong> suffer from the contraction of the fong>inong>ancial market

ong>andong> ong>inong> particular from more cautious banks ong>andong> risong>inong>g ong>inong>terest rates. At the same time

small companies don’t have the strength of large companies to negotiate favourable

credit terms with banks ong>andong> suppliers, so they are not able to cut prices profitably.

Agaong>inong>st this a growong>inong>g number of EU countries have established fong>inong>ancial programmes

ong>inong> particularly targetong>inong>g the SME sector ong>andong> improve their access to fong>inong>ance. This also is

supported by new EU wide framework on temporary state aid concluded ong>inong> December

2008.

An ong>inong>itial screenong>inong>g of SME specific measures ong>inong>cluded ong>inong> the national recovery plans

carried out ong>inong> February 2009 by UEAPME is ong>inong>terestong>inong>g ong>inong> this context: The evaluation

reveals a strikong>inong>g bias towards fong>inong>ancial measures such as ong>inong>creased volumes of

guarantees for credits ong>andong> loans, additional loans ong>andong> credits, new fong>inong>ancong>inong>g

ong>inong>struments, cut of employers’ social contributions, moratoriums for the repayment of

loans etc. 12

In contrast to this, dealong>inong>g with the negative effects on employment, cushionong>inong>g the

social effects both on employees made redundant ong>andong> employers (agaong>inong>st the

background of demographic trends ong>andong> the scarcity of qualified labour ong>inong> many

occupational fields) are hardly to discover ong>inong> this context.

In particular agaong>inong>st this bias towards larger companies with regard to measures of

cushionong>inong>g the social costs of dealong>inong>g with the current economic crisis it is quite

astonishong>inong>g that also ong>inong> the current economic situation, ong>SMEsong> seem to be more firm ong>inong>

terms of employment stability than larger companies as the followong>inong>g graph on

employment expectations as of February 2009 illustrates.

11

B. Galgoczi et. al. 2009: Plant level responses to the economic crisis ong>inong> ong>Europeong>, ETUI Brussels, Workong>inong>g

Paper 2009.01, p. 31

12

UEAPME 2009: National Recovery plans from an SME perspective. Brussels, 13 February.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 15

UEAPME Craft ong>andong> SME Barometer 2009: Employment Expectations as of February 2009

The role of social dialogue

With regard to company based structures of ong>inong>terest representation ong>andong> employee

participation ong>SMEsong> are characterised by a large ong>inong>ternal variety which often is

determong>inong>ed by size-class specificities: In many countries micro ong>andong> small companies ong>inong>

most cases are not covered by ong>inong>stitutional structures of ong>inong>terest representation ong>andong>

employee participation is organised ong>inong> a mostly ong>inong>formal way along personal ties. 13

The Nordic countries differ from this pattern due to a very strong ong>tradeong> union

membership base across all company size groups. Only here, ong>SMEsong> ong>andong> large

companies are covered by ong>inong>stitutional structures of ong>inong>terest representation to a similar

degree.

Medium sized companies differ from these patterns to certaong>inong> degrees. In general

ong>inong>stitutional employee ong>inong>terest representation structures are more widespread (also

derivong>inong>g from the legal frameworks). Above that many ong>inong>terview partners ong>inong> our survey

stated that medium-sized companies ong>andong> ong>inong> particular ownership enterprises are

characterised ong>inong> many cases by a corporate culture based on active employee

ong>inong>volvement ong>andong> participation through ong>inong>stitutional forms as well as other forms

(fong>inong>ancial participation, co-ownership etc.). Accordong>inong>g to the social partners ong>inong> Germany

for example, the success ong>andong> remarkable stability of ong>inong>dustrial relations of the German

“Mittelstong>andong>” is largely based on a strong social dialogue ong>andong> partnership both at the

company level ong>andong> beyond.

A particular challenge with regard to social dialogue ong>andong> the organisation of SME

specific collective ong>inong>terests both on the employers ong>andong> employee side has been the

strong ong>inong>crease ong>inong> self-employment ong>andong> ownership enterprises (i.e. the owner beong>inong>g

also the only employee) ong>inong> ong>Europeong>. 14

13 See also the results of the ong>Europeong>an project “SMALL – Representation ong>andong> Voice ong>inong> Small ong>andong> Medium

Sized Enterprises”, www.ong>unionsong>-ong>inong>-small-firms.net. Results are also presented ong>inong> the special issue of

TRANSFER, Vol. 13, No. 1, Sprong>inong>g 2007.

14 These trends have been reported as beong>inong>g particularly pronounced ong>inong> the Northern ong>Europeong>an countries ong>andong>

also ong>inong> Austria ong>andong> Germany as participants ong>inong> the joong>inong>t semong>inong>ars carried out ong>inong> the context of the ETUC-

UEAPME project reported.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 16

Agaong>inong>st the reality of a less developed formal social dialogue at the enterprise level,

social dialogue practice ong>andong> experience at other levels (at the level of region ong>andong> sector

as well as at national ong>andong> ong>Europeong>an level) is becomong>inong>g more ong>andong> more important.

The examples of good ong>andong> ong>inong>novative practice ong>inong> addressong>inong>g major challenges ong>inong> the

context of structural change ong>andong> restructurong>inong>g ong>inong> ong>Europeong>an ong>SMEsong> presented ong>inong> the

second part of this report illustrate the important role of social dialogue at different

levels – local, regional, sectoral ong>andong> national. Also the ong>Europeong>an level of social dialogue

has become more ong>andong> more important song>inong>ce its ong>inong>stitutionalization more than two

decades ago ong>inong> the context of the Maastricht ong>andong> Amsterdam treaties (see textbox).

20 years of ong>Europeong>an Social Dialogue

Consultation ong>andong> cooperation ong>betweenong> the social partners began ong>inong> the 60s ong>andong> 70s withong>inong> the advisory

committees, the stong>andong>ong>inong>g committee on employment ong>andong> the tripartite conferences on economic ong>andong>

social questions. However, it was ong>inong> 1985, with the launch of a bipartite social dialogue on the ong>inong>itiative of

the then President of the Commission, Jacques Delors, that the dialogue really began to evolve ong>inong>to a

forum for negotiation on a ong>Europeong>an level. When we retrace the evolution of the cross-ong>inong>dustry social

dialogue ong>inong> ong>Europeong> song>inong>ce then, we can see three distong>inong>ct stages: Durong>inong>g the first period (1985-1991), the

bipartite activities maong>inong>ly led to the adoption of resolutions, declarations ong>andong> joong>inong>t opong>inong>ions without any

bong>inong>dong>inong>g power.

The signong>inong>g, on 31 October 1991, of an agreement ong>betweenong> the social partners, which was later

ong>inong>corporated ong>inong>to the Protocol on Social Policy, itself annexed to the Maastricht Treaty (1993), marked the

begong>inong>nong>inong>g of the second period. After this, agreements negotiated by the ong>Europeong>an social partners could,

if they so desired, be given legal force through a decision by the Council, which would then be transposed

ong>inong>to the legislation of each Member State. The agreement of 31 October 1991 was ong>inong>tegrated ong>inong>to Articles

138 ong>andong> 139 of the Treaty of Amsterdam, ong>andong> led to the implementation of three agreements through

Council directives (parental leave ong>inong> 1995, part-time work ong>inong> 1997 ong>andong> fixed-term contracts ong>inong> 1999).

The third period was ong>inong>augurated ong>inong> December 2001, when the ong>Europeong>an ong>inong>terprofessional social

partners presented a ‘joong>inong>t contribution’ to the Laeken ong>Europeong>an Council. This phase is characterised by

the growth ong>inong> ong>inong>dependence ong>andong> autonomy of the ong>Europeong>an social dialogue. The foundations of this new

era were bolstered the followong>inong>g year atthe Social Dialogue Summit ong>inong> Genval on 28 November 2002

when the social partners adopted their first joong>inong>t multiannual work programme for 2003-2005.

This more autonomous social dialogue can also be seen ong>inong> the second method chosen by the social

partners for implementong>inong>g the negotiated ong>Europeong>an agreements ong>inong> Article 139(2), namely ‘ong>inong> accordance

with the procedures ong>andong> practices specific to management ong>andong> labour ong>andong> the Member States’. This

method was chosen for the ‘autonomous’ agreements concluded on telework (2002) ong>andong> work-related

stress (2004). In both cases, the social partners committed to directly implementong>inong>g them at a national

level through their member organisations. They also provide for monitorong>inong>g procedures, notably through

implementation reports.The Commission has provided support ong>andong> assistance throughout this evolution,

ong>inong> accordance with the role assigned to it by Article 138 of the Treaty.

Source: ong>Europeong>an Commission: Industrial Relations ong>inong> ong>Europeong>, Brussels, p. 91

As mentioned already ong>inong> the ong>inong>troduction to this report, UEAPME ong>andong> the ETUC have

undertaken a number of activities through joong>inong>t work programmes ong>andong> projects thereby

documentong>inong>g their joong>inong>t responsibilities ong>inong> the context of economic ong>andong> social change

with regard to SME development. Particularly ong>inong>terestong>inong>g ong>inong> the context here of course is

the UEAPME/ETUC joong>inong>t declaration on recognition of "Social dialogue as an ong>inong>strument

for meetong>inong>g the economic ong>andong> social challenges faced by small enterprises" where nong>inong>e

specific recommendations have been described (see textbox on the followong>inong>g page)

This progress of social dialogue, however, should not lead us to overlook the problems,

particularly as regards the ong>inong>clusion of the position of ong>SMEsong> ong>andong> their employees by all

the bodies where social dialogue takes place. This has been clarified also by research

studies ong>andong> stock-takong>inong>g measures carried out by the ETUC ong>inong> the past. 15 Also, the

15 See: “Trade ong>unionsong> ong>andong> ong>SMEsong>. A report of ETUC activities to improve workong>inong>g conditions ong>inong> small ong>andong>

medium-size enterprises, Brussels 2001.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 17

sectoral social dialogue committees have often encountered similar difficulties when

tacklong>inong>g questions which pose problems for ong>SMEsong>, e.g. on workong>inong>g time issues.

However, many examples of good practice ong>andong> ong>inong>novative projects at regional ong>andong> local

level, ong>inong> ong>inong>dividual sectors ong>andong> ong>inong> different national frameworks illustrate a clear addedvalue

of social dialogue ong>andong> active employee participation ong>inong> SME restructurong>inong>g ong>andong>

adaptation to change. Good practice can be found ong>inong> all types of ong>SMEsong> without regard to

size or sector or territory.

Joong>inong>t ETUC/UEAPME Declaration on Small Companies May 2001

“Social dialogue as a tool to meet the economic ong>andong> social challenges of Small Enterprises”

(1) The ETUC ong>andong> UEAPME declare their full support for the objectives of the Lisbon ong>Europeong>an summit

to strengthen the co-ordong>inong>ation ong>andong> synergies ong>betweenong> the Luxembourg, Cardiff ong>andong> Cologne

processes ong>inong> order to improve growth ong>andong> create full employment via well-coordong>inong>ated economic

policies ong>andong> improvements ong>inong> the operation of the labour market.

(2) The Lisbon Summit emphasised the role of ong>SMEsong> ong>inong> the new ong>Europeong>an Union drive for employment

ong>andong> for a competitive economic area based on ong>inong>novation, knowledge, social cohesion ong>andong> regional

development. Referrong>inong>g to this role, the Charter for Small Enterprises ", ong>inong>cluded ong>inong> the conclusions of

the ong>Europeong>an Summit ong>inong> Santa Maria da Feira, poong>inong>ts out the specific needs of small enterprises.

(3) The ETUC ong>andong> UEAPME call upon the public authorities ong>andong> policy decision-makers at all levels to

establish ong>andong> maong>inong>taong>inong> an admong>inong>istrative, fiscal, social ong>andong> economic environment, which supports

the creation, maong>inong>tenance ong>andong> growth of small enterprises ong>andong> employment.

(4) The ETUC ong>andong> UEAPME are ready to contribute to the success of these objectives withong>inong> their own

areas of responsibility, ong>andong> stress the importance of social dialogue ong>betweenong> employers ong>andong>

representative ong>tradeong> ong>unionsong> as an essential factor ong>inong> the new context of Lisbon ong>andong> ong>inong> the follow up of

the Charter. This dialogue must be considered as a precondition for balancong>inong>g the need of flexibility,

which is necessary for job creation ong>andong> economic growth, with the need for security ong>inong> a good

workong>inong>g environment ong>andong> ong>inong> organisong>inong>g the necessary changes.

(5) UEAPME ong>andong> the ETUC stress the need to take ong>inong>to account the specific characteristics of, ong>andong>

particular situation ong>inong> which, craft ong>andong> small enterprises are workong>inong>g ong>andong> developong>inong>g ong>inong> order to

identify appropriate ways of establishong>inong>g good employment conditions particularly as regards

professional traong>inong>ong>inong>g, qualifications, health ong>andong> safety ong>inong> the workplace, ong>andong> the organisation of work

ensurong>inong>g conditions of adaptability for both, workers ong>andong> busong>inong>esses.

(6) Social dialogue can provide tailor-made answers for small enterprises. The economic, educational

ong>andong> social development of small enterprises can be promoted by further developments of networks,

co-operations ong>andong> joong>inong>t measures, for example those for flexibility ong>andong> adaptability as well as for

professional traong>inong>ong>inong>g ong>andong> health ong>andong> safety organised at ong>inong>ter-sectoral, sectoral, branch ong>andong>

regional/local level, or withong>inong> an enterprise.

(7) Therefore, the ETUC ong>andong> UEAPME underlong>inong>e the role ong>andong> the benefits of social dialogue ong>betweenong>

employers ong>andong> workers ong>andong> their representative organisations at all levels on modernisong>inong>g the

organisation of work. The UEAPME ong>andong> ETUC joong>inong>tly recognise the specificity ong>andong> quality of the

workong>inong>g environment ong>andong> workong>inong>g relations ong>inong> the small enterprises, ong>andong> recognise the

consequences of these characteristics for the organisation ong>andong> structure of staff representation.

(8) As well as their shared readong>inong>ess to contribute to the quality of the social dialogue ong>betweenong>

UNICE/UEAPME, CEEP ong>andong> the ETUC, the two organisations hope to brong>inong>g added value through

developong>inong>g the dialogue on specific issues concernong>inong>g small enterprises ong>andong> their workers as it has

been ong>inong>itiated through the UEAPME Futurisme Project ong>andong> the ETUC’s ong>inong>itiatives. The results of

these efforts show that co-operation ong>andong> joong>inong>t actions on different levels can improve the adaptability

of workong>inong>g conditions ong>inong> small enterprises, ong>inong>cludong>inong>g the responds to the challenges of enlargement.

(9) The ETUC ong>andong> UEAPME ong>inong>vite their members to improve ong>andong> develop such co-operations ong>inong> their

national context.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 18

PART II: FACTSHEETS ON COMMON ECONOMIC

AND SOCIAL CONCERNS

Introductory note

The maong>inong> purpose of this part of the report is to provide facts, ong>inong>formation ong>andong>

examples of practical experience with regard to major areas of common economic ong>andong>

social concerns of social partners representong>inong>g ong>SMEsong> ong>inong> ong>Europeong>. It should be stressed,

that the followong>inong>g chapters of course do not cover all topics ong>andong> issues regarded as

common ong>inong> this context but should be rather seen as priority fields of action ong>inong> the

context of this specific project. Also the examples ong>andong> ong>inong>itiatives documented here are

necessarily a limited selection of ong>inong>formation available to the authors of this report. It

should also be mentioned here, that many practical examples presented on the

followong>inong>g pages have been documented ong>andong> analysed ong>inong> the context of the preparation

of the EU Commissions’ Forum on Restructurong>inong>g ong>inong> November 2007 which was

particularly dedicated to the issue of ong>SMEsong>. Further examples ong>andong> ong>inong>formation has been

provided by the participants at the two semong>inong>ars with national ETUC ong>andong> UEAPME

member organisations ong>inong> Warsaw ong>andong> Rome ong>inong> Sprong>inong>g 2009.

1 The territorial dimension: Local ong>andong> regional development

ong>SMEsong> form part of employment areas characterised by specific social ong>andong> economic

realities. Withong>inong> this framework, co-operation with various local ong>andong> regional structures,

ong>inong>cludong>inong>g the public authorities, is a key aspect. There is also a strong territorial

dimension ong>inong> the context of forward-lookong>inong>g jobs ong>andong> skills management, the fong>inong>ancong>inong>g

of ong>inong>frastructures or the development of centres of competitiveness groupong>inong>g players ong>inong>

the same sector (researchers, companies, ong>unionsong>, etc.).

The ong>Europeong>an Social Partners have stressed the territorial dimension also ong>inong> the context

of economic change ong>andong> restructurong>inong>g ong>inong> ong>Europeong>:

The Territorial dimension

When economic ong>andong> social changes have serious repercussions for an entire region or territory,

complementarily ong>andong> synergies ong>betweenong> the actions of the various actors (employers, ong>tradeong>

ong>unionsong> ong>andong> territorial public authorities) assumes particular importance. The importance of this

partnership to foster new job-creatong>inong>g economic activities, manage reassignments ong>andong> improve

the operation of the local labour market was highlighted ong>inong> the experience of regions changong>inong>g

economic activity but also of some companies. In this context the social partners recall the

importance of the role played by EC structural funds ong>andong> territorial ong>inong>frastructures to maong>inong>taong>inong>

social cohesion, ensure redevelopment ong>inong>itiatives ong>andong> economic development.

UNICE/UEAPME/ETUC/CEEP: “Orientations for reference ong>inong> managong>inong>g change ong>andong> its social consequences”, Brussels

16 October 2003

There is also a strong territorial dimension ong>inong> the context of job creation ong>andong> the best

possible management of the current economic crisis ong>inong> ong>Europeong> as underlong>inong>ed ong>inong> the

ong>Europeong>an Economic Recovery Plan: Here, the EU Commission sees a strong need to

improve the monitorong>inong>g ong>andong> matchong>inong>g of skills both ong>inong> the short ong>andong> longer term ong>inong>

order to address the employment impact of the crisis, facilitate matchong>inong>g with existong>inong>g


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 19

vacancies ong>andong> helpong>inong>g people return to the labour market. This objective clearly has a

local ong>andong> regional dimension. This territorial dimension also characterises the objectives

defong>inong>ed ong>inong> the context of the recent “New Skills for New Jobs” ong>inong>itiative of the EU

Commission, namely the aim to make sure that ong>Europeong>an labour markets anticipate

future needs, to improve the long-term job prospects on the workforce ong>andong> to exploit

opportunities for growth ong>andong> jobs.

Not only crisis management, prevention ong>andong> anticipation have a strong territorial

dimensions: Also concrete needs ong>inong> the field of traong>inong>ong>inong>g ong>andong> skills development agaong>inong>st

the background of globalisation, market developments ong>andong> technological change as well

as issues such as the effects of demographic change on busong>inong>ess transfers or

entrepreneurship development seems to be best monitored ong>andong> anticipated at the local

ong>andong> regional level. The ong>inong>formation on good ong>andong> ong>inong>novative practices ong>inong> this context is

characterised to a large extent by a strong ong>inong>volvement of social partners' ong>inong>itiatives

ong>andong> pro-active approaches by local ong>andong> regional public authorities.

Also a clear message derivong>inong>g from the background study ong>inong> the context of the EU

Commissions’ SME Restructurong>inong>g Forum ong>inong> 2007 was that those ong>SMEsong> who are actively

ong>inong>volved ong>inong> cooperation ong>andong> networkong>inong>g (with large companies as well as other ong>SMEsong>

but also with public ong>inong>stitutions, R&D bodies, social partner organisations ong>andong>

professional organisations) are performong>inong>g better than others. 16

In particular, the specific features ong>andong> development conditions of micro ong>andong> small

companies might be addressed more efficiently, accordong>inong>g to most people ong>inong>terviewed,

if small companies created networks, chaong>inong>s or districts focusong>inong>g on strategic objectives.

By creatong>inong>g a network, the ong>SMEsong> acquire more bargaong>inong>ong>inong>g power towards third bodies

(i.e. banks, suppliers, clients, fong>inong>ancial bodies etc) ong>andong> can afford more consistent

ong>inong>vestments ong>inong> research, traong>inong>ong>inong>g, ong>inong>novation ong>andong> technology, developong>inong>g

competitiveness ong>andong> busong>inong>ess skills.

Sustaong>inong>able development ong>andong> employment growth ong>inong> a region are strongly correlated

with the development of entrepreneurship ong>andong> of ong>SMEsong>. Among the maong>inong> factors that

reduce the likelihood of the creation ong>andong> growth of ong>SMEsong> are the lack of or difficult

access to fong>inong>ancial resources, an ong>inong>adequate regulatory framework, an ong>inong>efficient

ong>inong>stitutional environment ong>andong> ong>inong>sufficient ong>inong>vestment ong>inong> ong>inong>novation, poor ong>inong>frastructures.

As a consequence, restructurong>inong>g can also be seen as the opportunity for regions to

reshape their policy ong>inong> these fields ong>andong> to overcome traditional ong>andong> ong>inong>efficient policy

strategies.

Makong>inong>g a Change a Chance ong>inong> the Tampere Region of Fong>inong>long>andong>

This project focus on developong>inong>g the readong>inong>ess ong>andong> flexibility of ong>SMEsong> to respond to changes ong>inong>

the regional economy of the Tampere Region through ong>inong>novative ong>andong> comprehensive

approaches. Three sub projects “Learn, Adapt ong>andong> Renew”, “Work Capability” ong>andong> “Contact”

have been designed to give an all-embracong>inong>g service to ong>SMEsong> facong>inong>g structural change. They

aim to improve the adaptability of firms by raisong>inong>g the skills ong>andong> “readong>inong>ess for change” of their

most vulnerable workers. 17

16 See: Structural change, company restructurong>inong>g ong>andong> anticipation of change ong>inong> the ong>Europeong>an small ong>andong>

medium-sized enterprise sector, Background Document, SME Restructurong>inong>g Forum, Brussels, 26/27

November 2007-

17 “How dynamic regions face restructurong>inong>g - The role of the ong>Europeong>an Social Fund ong>andong> of the other Structural

Funds”, Background Paper, RESTRUCTURING FORUM , Brussels, 4/5 December 2006, p. 9/10.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 20

In this context representatives of cooperatong>inong>g ong>SMEsong>, social partner organisations ong>andong>

professional ong>inong>stitutions also stressed that cooperation ong>andong> networkong>inong>g for many ong>SMEsong>

preconditions a “change of mentality” of the entrepreneur. In this context there are

many practical experiences ong>inong> particular at the local ong>andong> regional level of developong>inong>g a

more pro-active ong>andong> systematic approach of anticipatong>inong>g change, implementong>inong>g

ong>inong>novations ong>andong> improvong>inong>g the framework conditions of SME development, ong>inong> particular

micro ong>andong> small enterprises as the followong>inong>g examples from Germany ong>andong> Spaong>inong>

illustrate.

Innovative approaches to the management of change ong>inong> small ong>andong> micro enterprises

The MIC project which is coordong>inong>ated by the regional craft chamber ong>inong> North Rhong>inong>e-Westphalia

is helpong>inong>g micro ong>andong> small companies to understong>andong> the need ong>andong> the prospects of systematic

anticipation ong>andong> managong>inong>g change. It will enable small companies to shape their future

themselves ong>andong> to implement anticipation tools ong>inong> their daily routong>inong>e as a basis for successful

busong>inong>ess management. For two years partners from Spaong>inong>, the Netherlong>andong>s, Italy ong>andong> Germany

will develop special strategies for micro ong>andong> small-sized companies. These companies have

ong>betweenong> one ong>andong> 49 employees. Four sectoral projects will develop ong>andong> test tools to help ong>SMEsong>

ong>inong> the mechanical engong>inong>eerong>inong>g, metal ong>andong> wood ong>inong>dustries to anticipate risks ong>andong> opportunities.

They will develop concepts for a better management of restructurong>inong>g ong>andong> compile examples of

good practice ong>inong> the context of anticipation ong>andong> good company management.

www.mic-project.org

Establishong>inong>g regional ong>andong> sectoral observatories ong>inong> Spaong>inong>

The Spanish social partners ong>inong> the chemical ong>andong> textile ong>inong>dustries have established an

ong>inong>novative ong>inong>itiative to support sectoral actors ong>andong> companies anticipate ong>andong> deal with structural

change: they created observatories to analyse joong>inong>tly the development of their sectors ong>andong>

advise companies on successful strategies to adapt, with special attention paid to ong>SMEsong>. The

aim of this tripartite agreement is to establish the basis for collaboration ong>andong> action of the

signatory ong>inong>stitutions ong>inong> order to foster the implementation ong>andong> the modernisation of ong>inong>dustrial

sectors, through measures such as promotion of productive ong>andong> export company competence,

ong>inong>vestment ong>andong> employment consolidation, technological modernisation ong>andong> adaptation to new

ong>inong>ternational competition conditions. With this aim six sectoral observatories ong>andong> two horizontal

observatories have been created. The sectoral observatories have been created ong>inong> the

followong>inong>g sectors: Textile-Apparel; Chemicals; Automotive machong>inong>ery; Automotive; Equipment

goods; Electronics. The two horizontal observatories concern the Spanish technological parks

ong>andong> Innovation ong>andong> Technologies entities. The work of each of these observatories, managed

by employers' organisations, ong>tradeong> ong>unionsong> ong>andong> public ong>inong>stitutions, will be based on follow-up

reports focused on three different areas: economic foresight ong>andong> situation of the sector, dealong>inong>g

specifically with the evolution of its competitiveness; employment evolution ong>andong> growth ong>andong>

future developments ong>inong> the social field; recent technological development ong>andong> future

technological needs ong>andong> scenarios.

Unice/Busong>inong>essong>Europeong>: “Restructurong>inong>g. Report on social partners’ activities on managong>inong>g change”, Brussels, 2006, p. 9.

The territorial dimension also is reong>inong>forced ong>inong> the context of cluster policy throughout

ong>Europeong>: Many Member States have proposed to support competitiveness poles ong>andong>

clusters. These poles brong>inong>g together several dimensions – regional, ong>inong>dustrial ong>andong>

ong>inong>novationong>andong> may be a good tool to anticipate structural changes. 18

Competitiveness poles target ong>inong>dustrial clusters ong>inong> specific sectors. This is the case ong>inong>

Belgium or France where they propose the creation of “pôles de compétitivité”

18 See for example: Innovation Clusters ong>inong> ong>Europeong>. A statistical analysis ong>andong> overview of current policy upport,

ong>Europeong> Innova / PRO INNO ong>Europeong> paper N° 5, DG Enterprise ong>andong> Industry, Brussels 2007.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 21

specialized ong>inong> some sectors. In France, 66 “pôles de compétitivité” have been selected,

among which six are entitled “world class” (health, aerospace, nanotechnology…). The

second approach is more horizontal ong>andong> promotes clusters ong>inong> general as such, for

example groupong>inong>g of ong>SMEsong> with other partners (universities…). Albeit their specific

nature, clusters are an ong>inong>terestong>inong>g example of the ways to manage structural change

ong>andong> foster ong>inong>novation ong>andong> job creation by long>inong>kong>inong>g private ong>andong> public organisations ong>andong>

optimise synergies ong>betweenong> them. Clusters also put emphasis on the long>inong>k ong>betweenong> large

firms ong>andong> ong>SMEsong>, ong>andong> promote research ong>andong> ong>inong>novation measures. They also help to

promote the attractiveness of regions.

Fong>inong>ally, the regional level also seems to be crucial ong>inong> order to overcome the

disadvantages of ong>SMEsong> ong>inong> the context of ong>inong>struments ong>inong> managong>inong>g concrete

restructurong>inong>g situations ong>andong> redeployment activities as the followong>inong>g example illustrates.

Establishong>inong>g regional redeployment ong>inong>struments for ong>SMEsong>

In the West-Midlong>andong>s based MEIRG project (“East Midlong>andong>s Pan Busong>inong>ess Redeployment

Project “) ong>inong> the UK, the ong>inong>novation was that it transferred the redeployment agency model used

by big enterprises to ong>SMEsong>. Unlike their larger counterparts, ong>SMEsong> lack the capacity ong>andong>

resources to offer services ong>andong> options to their employees ong>inong> restructurong>inong>g situations, services

such as careers guidance ong>andong> new job traong>inong>ong>inong>g, ong>andong> options such as relocation to another

location or flexible workong>inong>g. A key success factor ong>inong> MEIRG’s model was that it went beyond the

usual package of support. It made the most of ong>SMEsong> workong>inong>g together, such that a new set of

re-conversion options ong>andong> services could be offered to SME employees; for example, ong>SMEsong>

could pool together vacancy ong>inong>formation or collaborate ong>inong> secondong>inong>g their staff. Secondly, the

redeployment unit itself was mobile - essentially a fully resourced ong>andong> satellite-long>inong>ked vehicle

known as ‘ERIC’ - ong>andong> therefore able to respond quickly ong>andong> flexibly to need.

See: www.meirg.org.uk ong>andong> http://pbrem-cweb.wong>inong>con.co.uk

2 Management of demographic challenges ong>andong> the role of traong>inong>ong>inong>g ong>inong>

ong>SMEsong>

Facts ong>andong> challenges ong>inong> the context of demographic change

ong>SMEsong> are directly concerned by the challenges resultong>inong>g from demographic changes, the

ageong>inong>g ong>andong> scarcity of the workforce ong>andong> the growong>inong>g shortage of qualified labour. In

fact, due to the generally more labour-ong>inong>tensive mode of busong>inong>ess, lower productivity

ong>andong> other factors (such as the attractiveness of ong>SMEsong> as workplaces) the SME sector is

more affected by demographic change ong>andong> problems ong>inong> the context as large companies

are. In particular countries with a significant share of large companies ong>andong> labour

shortages smaller companies are facong>inong>g certaong>inong> challenges ong>inong> this context. Amongst

them also the issue of how to attract more younger ong>andong> skilled people to work ong>inong> ong>SMEsong>.

ong>SMEsong> affected stronger by demographic challenges

“Qualified labour ong>inong> the Czech Republic is ong>inong> short supply to meet the demong>andong>s of big

companies – consequently, they suck away labour, especially young labour, from the small

enterprises. As a result, the age of SME employees tends to ong>inong>crease while the age of

employees at multong>inong>ationals tends to decrease. This leads to major disproportions ong>inong> ong>inong>comes,

to the detriment of the older workers.”

Source: Background Report for the EU Commission’s SME Restructurong>inong>g Forum, November 2007


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 22

Agaong>inong>st this, also the EU Commission ong>inong> it’s recent “New Skills for New Jobs” ong>inong>itiative

has identified the demographic factor as a key challenge: "Too little is [beong>inong>g] done to

ong>inong>crease ong>andong> adapt the skills of an ageong>inong>g workforce," the Commission states. 19

One major specific challenge many ong>SMEsong> will face durong>inong>g the next years is the issue of

busong>inong>ess transfer due to the departure of the owner of the enterprise. As the EU

Commission outlong>inong>ed ong>inong> a recent communication on this issue, accordong>inong>g to estimates

one third of EU entrepreneurs ong>andong> maong>inong>ly those runnong>inong>g family busong>inong>ess will withdraw

from their busong>inong>ess withong>inong> the next then years ong>andong> up to 690 000 small ong>andong> mediumsized

enterprises ong>andong> 2.8 million job are affected by busong>inong>ess transfer operations every

year. 20 Accordong>inong>g to a survey of “KMU Forschung Austria”, ong>betweenong> 2001 ong>andong> 2010

approx. 52,000 small ong>andong> medium-sized companies ong>inong> Austria with around 440000

employees are confronted with the task of organisong>inong>g a smooth busong>inong>ess transfer ong>inong> the

context of the retirement of the owner. The figure is quite impressive song>inong>ce nearly one

fourth of all domestic companies are affected ong>andong> approx. 17% of all manufacturong>inong>g

jobs. Also ong>inong> Germany the issue of busong>inong>ess transfer is one of the maong>inong> challenges for

SME development. Accordong>inong>g to estimates by the German “Institute of SME Research” 21

more than 70000 enterprises with nearly 700,000 employees will have to look for a new

owner/director durong>inong>g the next five years.

Other issues ong>inong> connection with demographic change are challenges arisong>inong>g from the

changes ong>inong> the age structure of the ong>Europeong>an population, the subsequent decrease of

the population ong>inong> workong>inong>g age ong>andong> the ageong>inong>g of the company’s workforce. While

measures like the ong>inong>crease of the employment rates of women ong>andong> older employees are

important ong>inong> this context, other ong>andong> more pro-active responses are necessary, e.g. the

receivong>inong>g ong>andong> better labour market ong>inong>tegration of immigrants, seizong>inong>g the opportunities

of older employees ong>andong> the ‘silver economy’ ong>andong> adequate social protection measures

as the EU Commission has described ong>inong> a respective Communication ong>inong> 2006. 22

Facts ong>andong> challenges ong>inong> the field of traong>inong>ong>inong>g

Accordong>inong>g to recent studies, there are around 100 million workers who are at risk due

to their level of qualifications, ong>andong> 20 million unemployed. At the same time 80 million

people are considered low-skilled. ong>Europeong>’s population is ageong>inong>g ong>andong> companies face

more ong>andong> more skills shortages. To be fit for future jobs, workers need higher skill

levels, ong>andong> up-to-date ong>andong> adaptable competences. Also ong>inong> the context of the

development of ong>Europeong> towards a more services-oriented economy focused on ICT ong>andong>

'green' technologies, its workforce needs to adapt to new requirements ong>andong> develop

new skills: Around 20 million new jobs could be created ong>inong> the EU 25 by 2020,

accordong>inong>g to a study presented by the EU Commission ong>inong> December 2008.. Almost three

quarters of these will be ong>inong> the services sector, the study forecasts. As the EU shifts

towards a knowledge-based economy, the number of jobs requirong>inong>g a high level of

education will rise from 25% to 31%, forecasts the study compiled by CEDEFOP.

19

Communication of the EU Commission: New Skills for New Jobs Anticipatong>inong>g ong>andong> matchong>inong>g labour market ong>andong> skills needs,

Brussels, COM(2008) 868/3.

20

Communication of the EU Commission: “Implementong>inong>g the Lisbon Community Programme for Growth ong>andong> Jobs: Transfer of

Busong>inong>esses – Contong>inong>uity through a new begong>inong>nong>inong>g” , COM(2006) 117 fong>inong>al, p.3.

21

Bundesmong>inong>isterium für Wirtschaft und Technologie: Der Mittelstong>andong> ong>inong> der Bundesrepublik Deutschlong>andong>. Eong>inong>e

volkswirtschaftliche Bestong>andong>saufnahme, Berlong>inong>, 2007, p. 39

22

See the Communication of the EU Commission on “The demographic future of ong>Europeong> – from challenge to

opportunity”, 12 October 2006, COM(2006)571.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 23

All thong>inong>gs considered, over 19.6 million additional jobs are expected to be created

ong>betweenong> 2006 ong>andong> 2020 ong>inong> the EU-25 ong>inong> the baselong>inong>e scenario considered ong>inong> the study. 23

However, the actual number of jobs created will depend on the global economic

environment. The current fong>inong>ancial crisis ong>andong> its impact on the real economy make the

pessimistic scenario more probable. The more pessimistic scenario projects the

generation of fewer jobs ong>inong> the service sector, but still growth. (see figure). In this

scenario, the employment declong>inong>e of manufacturong>inong>g will be stronger.

Employment trends by broad sectors accordong>inong>g to different scenarios, change ong>inong> 000s

(2005- 2015)

Source: CEDEFOP 2008.

The present crisis may accelerate the foreseen restructurong>inong>g ong>inong> these sectors. However,

even ong>inong> the pessimistic scenario, the manufacturong>inong>g sector should still account for more

than 33 million jobs ong>inong> 2015: this sector would still correspond to an important part of

jobs ong>inong> some ong>Europeong>an regions. In addition, some regions would experience positive

trends ong>inong> manufacturong>inong>g as a result of the transfer of jobs from older to newer Member

States. Lastly, ong>inong> some ong>inong>dustries (for example engong>inong>eerong>inong>g), demong>andong> will outstrip

productivity gaong>inong>s ong>andong> create new jobs. The primary sector ong>andong> utilities are expected to

declong>inong>e significantly ong>inong> all cases.

Agaong>inong>st this the issues of traong>inong>ong>inong>g, adaptation of qualifications ong>andong> skills are a priority of

politics both at the ong>Europeong>an level ong>andong> below at national, regional ong>andong> local government

levels. The ong>Europeong>an Commission ong>inong> the context of the “Education ong>andong> Traong>inong>ong>inong>g 2010” 24

work programme which - ong>inong> the context of the Lisbon Strategy - established for the first

time a solid framework for ong>Europeong>an cooperation ong>inong> the field of education ong>andong> traong>inong>ong>inong>g,

based on common objectives ong>andong> aimed primarily at supportong>inong>g the improvement of

national education ong>andong> traong>inong>ong>inong>g systems through the development of complementary

EU-level tools, mutual learnong>inong>g ong>andong> the exchange of good practice via the open method

of coordong>inong>ation.

Basic objectives ong>andong> tasks of ong>Europeong>an cooperation ong>inong> education ong>andong> traong>inong>ong>inong>g for the

period up to 2020 were defong>inong>ed recently ong>inong> Conclusions of the ong>Europeong>an Council. 25

23 CEDEFOP: Future skill needs ong>inong> ong>Europeong>. Focus on 2020, Thessalonica 2008.

24 See also the recent document of the EU Commission on “An updated strategic framework for EU

cooperation ong>inong> education ong>andong> traong>inong>ong>inong>g” with new targets COM (2008) 865 fong>inong>al from 16/12/08.

25 “Council Conclusions on a strategic framework for ong>Europeong>an ong>Cooperationong> ong>inong> education ong>andong> traong>inong>ong>inong>g”

("ET 2020"), Brussels, 12 May 2009.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 24

Accordong>inong>g to the ong>Europeong>an Council, lifelong learnong>inong>g should be regarded as a

fundamental prong>inong>ciple underpong>inong>nong>inong>g the entire framework, which is designed to cover

learnong>inong>g ong>inong> all contexts - whether formal, non-formal or ong>inong>formal - ong>andong> at all levels:

from early childhood education ong>andong> schools through to higher education, vocational

education ong>andong> traong>inong>ong>inong>g ong>andong> adult learnong>inong>g.

Specifically, the framework of action until 2020 should address the followong>inong>g four

strategic objectives:

Makong>inong>g lifelong learnong>inong>g ong>andong> mobility a reality;

Improvong>inong>g the quality ong>andong> efficiency of education ong>andong> traong>inong>ong>inong>g;

Promotong>inong>g equality, social cohesion ong>andong> active citizenship;

Enhancong>inong>g creativity ong>andong> ong>inong>novation, ong>inong>cludong>inong>g entrepreneurship, at all levels of

education ong>andong> traong>inong>ong>inong>g.

The periodic monitorong>inong>g of progress towards a set objective provides an essential

contribution towards evidence-based policy makong>inong>g. The strategic objectives outlong>inong>ed

above should accordong>inong>gly be accompanied durong>inong>g the period 2010 - 2020 by ong>inong>dicators

ong>andong> by reference levels for ong>Europeong>an average performance ("ong>Europeong>an benchmarks").

In December 2008, the Commission also launched the "New skills for new

jobs" 26 ong>inong>itiative ong>inong> order to ensure a better match ong>betweenong> the skills that workers have

ong>andong> the jobs that are available. The ong>inong>itiative also will take ong>inong>to account the growong>inong>g

importance of soft skills, such as problem-solvong>inong>g, analytical, self-management ong>andong>

communication skills, but also language skills, digital competences ong>andong> the ability to

work ong>inong> a team will become more important, accordong>inong>g to the Commission. In the

context of the new ong>inong>itiative the Commission plans to regularly assess the labour

market's long-term supply ong>andong> demong>andong> until 2020. For this purpose the Commission

has commissioned a number of sectoral studies usong>inong>g a common foresight methodology

to identify emergong>inong>g competences ong>andong> changes.

SME specific challenges ong>andong> needs

Agaong>inong>st the background of ong>inong>tensified competition from foreign countries ong>inong> the context

of EU enlargement ong>andong> globalisation, SME actors throughout ong>Europeong> today regard the

need to improve their ong>inong>novation capacity ong>andong> the upgradong>inong>g of qualification ong>andong> skills

as a crucial challenge. It is also important that this challenge is faced not only by larger

ong>SMEsong> but also by micro companies ong>andong> the crafts sector. In particular the capacity of

ong>SMEsong> to ong>inong>novate requires a complex set of skills, networks ong>andong> processes.

Here, it also has been stressed that the strategy of ong>SMEsong> ong>inong> ong>Europeong> to compete at the

price level with low wage countries is no real alternative. Cost competition is currently

won by emergong>inong>g countries, even when takong>inong>g ong>inong>to account the better productivity of

ong>Europeong>an workers. The solution is to be more competitive ong>inong> quality ong>andong> technology as

the followong>inong>g ong>inong>terview carried out ong>inong> the context of the 2007 SME Restructurong>inong>g Forum

illustrate.

26 Communication of the EU Commission: New Skills for New Jobs Anticipatong>inong>g ong>andong> matchong>inong>g labour market ong>andong> skills needs,

Brussels, COM(2008) 868/3.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 25

Quality orientation becomes more ong>andong> more important

“In the past, around 80% of all ong>SMEsong> ong>inong> Polong>andong> identified the price as the maong>inong> factor of the

competitiveness of the own busong>inong>ess. The quality of the products or services was rather

secondary. Less than 1% of all ong>SMEsong> were reportong>inong>g ong>inong>novation activities. Recent surveys show

a clear change with regard to these issues: Though the price factor for most ong>SMEsong> still seems

to be the most important aspect of competition (for more than 50%) the quality ong>andong> ong>inong>novative

character of the product or service is becomong>inong>g more important now. More ong>andong> more ong>SMEsong> are

realisong>inong>g that long-term competitiveness could not be build only on cost/price advantages.”

“The Spanish employer organisation respondent highlights an important change here, with the

new generations of entrepreneurs who tend to set up more technical ong>andong> complex

organisational processes from the start, ong>andong> try to develop new products: ‘they know perfectly

well that the sector has to ground its competitiveness ong>andong> productivity ong>inong> quality, not ong>inong> cheap

products.’ “

Source: Background Report for the EU Commission’s SME Restructurong>inong>g Forum, November 2007

In this context, the issue of a skilled workforce, educational attaong>inong>ment ong>andong> access to

contong>inong>uous traong>inong>ong>inong>g is seen by SME experts as an issue which is crucial. Here, it is noted

that ong>SMEsong> are already carryong>inong>g out a good deal of vocational traong>inong>ong>inong>g but that at the

same time many employees are leavong>inong>g the SME for a better paid position ong>inong> a large

enterprise, leavong>inong>g the company to bear the cost of the traong>inong>ong>inong>g, without gaong>inong>ong>inong>g any

correspondong>inong>g reward.

Song>inong>ce also agaong>inong>st the background of demographic changes ong>andong> – ong>inong> many EU member

states an ong>inong>creasong>inong>g scarcity of qualified labour – preconditions competitiveness ong>andong>

growth ong>inong> small ong>andong> medium sized companies, the followong>inong>g challenges are arisong>inong>g ong>inong>

particular from the poong>inong>t of view of ong>SMEsong> ong>inong> ong>Europeong>:

Retaong>inong>ong>inong>g qualified workers ong>andong> makong>inong>g ong>SMEsong> more attractive

Development of appropriate ong>andong> tailor made concepts, methods ong>andong> support for

traong>inong>ong>inong>g ong>andong> skills development

Recognition ong>andong> validation of soft skills ong>andong> ong>inong>formal qualifications

Supportong>inong>g traong>inong>ong>inong>g ong>andong> skills development ong>inong> ong>SMEsong> fong>inong>ancially

Change ong>inong> mong>inong>dsets both of workers ong>andong> mangers ong>inong> micro ong>andong> small enterprises

Recent surveys have stressed significant gaps ong>inong> participation rates for employee

traong>inong>ong>inong>g by firm size 27 : In general the participation rates ong>inong> large enterprises are much

higher than ong>inong> smaller companies. At the same time there are strong differences

ong>betweenong> ong>Europeong>an countries: Nordic countries havong>inong>g the highest rates while Southern

ong>Europeong> ong>andong> the Central ong>andong> Eastern ong>Europeong>an countries show the lowest participation

rates.

There also is a direct correlation ong>betweenong> the lack of respective resources for traong>inong>ong>inong>g

ong>andong> competence development ong>andong> the adaptability of employers ong>andong> employees ong>inong> the

SME sector as the followong>inong>g quote from an ong>inong>terview with a Spanish employers’

federation representative illustrates:

27 OECD: SME ong>andong> entrepreneurship outlook, OECD 2005, p. 80. See also the Report of the Observatory of

ong>Europeong>an ong>SMEsong>: “Competence development ong>inong> ong>SMEsong>”, Brussels 2003.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 26

The need of a qualified workforce

“Their reduced fong>inong>ancial ong>andong> management capacities have prevented them from makong>inong>g the

necessary technological ong>inong>vestments, whereas our respondents ong>inong>sist ong>inong> this beong>inong>g the key for

developong>inong>g products with higher added value, ong>andong> therefore for competitiveness ong>andong>

adaptation. Too many unqualified workers ong>andong> too few specialised professionals have meant

that ong>SMEsong> ong>inong> sectors such as the metal ong>andong> chemical ong>inong>dustry could not survive the

restructurong>inong>g of hub companies.”

Source: Background Report for the EU Commission’s SME Restructurong>inong>g Forum, November 2007

But ong>inong> this context it must be also mentioned that the official statistics on traong>inong>ong>inong>g ong>andong>

further qualification rates are only partly presentong>inong>g the reality of traong>inong>ong>inong>g ong>inong> ong>SMEsong> song>inong>ce

ong>inong> particular ong>inong> the small enterprise sector traong>inong>ong>inong>g often is takong>inong>g place ong>inong> the form of

ong>inong>formal competence ong>andong> skills development ong>andong> on the job traong>inong>ong>inong>g which are not

taken ong>inong>to account ong>inong> official statistics.

Fong>inong>ally, ong>andong> agaong>inong> ong>inong> particular for smaller enterprises, there also is a problem with

existong>inong>g traong>inong>ong>inong>g offers ong>andong> programmes because they normally are designed ong>andong>

organised from the poong>inong>t of view of larger companies ong>andong> they simply don’t fit ong>inong>to the

organisational needs of smaller companies. There clearly is a need for tailor-made

solutions. 28

As the recent ong>Europeong>an SME Observatory Survey illustrates, the lack of skilled labour is

a problem for more than one third of all ong>SMEsong> ong>inong> the EU with significant varieties: While

it seems that the problem is least widespread ong>inong> countries like the Netherlong>andong>s or

Germany (reported only by 20-25% of the managers ong>inong>terviewed), it is an emong>inong>ent

concern for almost three quarter of managers ong>inong> other countries (72% ong>inong> Lithuania,

50% ong>inong> Estonia ong>andong> Turkey, more than 50% ong>inong> Greece, Romania ong>andong> Fong>inong>long>andong>).

Lookong>inong>g at ong>SMEsong> havong>inong>g problems fillong>inong>g their job vacancies, the survey stresses that

these ong>SMEsong> are primarily complaong>inong>ong>inong>g about the scarce availability of a skilled

workforce. 28% of ong>SMEsong> ong>inong> the EU ong>inong>dicate that this is their primary concern ong>inong>

recruitong>inong>g. If the problem of the limited availability of unskilled labour (5%) is added, it

becomes clear that one third of ong>Europeong>an ong>SMEsong> are strugglong>inong>g with fong>inong>dong>inong>g the

necessary human resources. Though SME managers also are mentionong>inong>g that high wage

levels expected by cong>andong>idates are a serious problem for recruitong>inong>g, the scarcity of

skilled ong>andong> non-skilled labour is the most important barrier. As the graph below

ong>inong>dicates, ong>inong> all but one ong>Europeong>an economy, the scarcity of labour is a more significant

problem than high wages.

28 See: DG Employment, Social Affairs ong>andong> Equal Opportunities: Guide for Traong>inong>ong>inong>g ong>inong> ong>SMEsong>, Brussels 2009

(forthcomong>inong>g)


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 27

ong>Europeong>an SME Observatory 2007

100

75

56

5 3 wage levels

49 48

50

46 46 46 46 45 43 42 42 41 40

36 35 35 34 34 33 33 32 32 32 31 30 30 29 29 29 29

26

22 22 22

25

15 16 15

11 13

10 12 13

7 6 5

6 8 8 9 11 12 12 11 11 11 12 14

5

7 7

6

8 10

9 10

5

6

3 5

0

Maong>inong> recruitong>inong>g problem

(the two most frequently mentioned difficulties)

scarcity of labour (skilled + unskilled)

LT

EE

FI

RO

MT

NO

LV

TR

IE

EL

PL

SK

SI

AT

IS

ES

NMS12

NMS10

FR

UK

PT

EU27

EU25

EU15

LU

CZ

SE

DE

IT

BG

DK

CY

NL

BE

HU

Role of social dialogue ong>andong> good practice experience

Traong>inong>ong>inong>g, skills ong>andong> competences

Q63. What is your maong>inong> recruitong>inong>g problem?

Base: ong>SMEsong>, % by country, question was not asked from 1-person firms

Song>inong>ce 1986, the ong>Europeong>an Social Dialogue has produced a series of “Common Opong>inong>ions”

or joong>inong>t statements on policy, many of which have dealt with education ong>andong> traong>inong>ong>inong>g.

Moreover ong>inong> 2002 the ETUC, UNICE/UEAPME ong>andong> CEEP adopted their “Framework of

Actions for the lifelong development of competencies ong>andong> qualifications”. The

Framework of Actions represents a significant ong>inong>tervention by the social partners ong>inong> the

field of lifelong learnong>inong>g. It commits the social partners, at national ong>andong> ong>Europeong>an

levels, to work together on the development of competences ong>andong> the acquisition of

qualifications, as major aspects of lifelong learnong>inong>g. The Framework identifies four

priorities ong>andong> fields of joong>inong>t responsibility ong>betweenong> the social partners:

Common responsibilities of the EU Social Partners with regard to Lifelong Learnong>inong>g

- Identification ong>andong> anticipation of needs ong>inong> terms of skills ong>andong> qualifications, both at

enterprise ong>andong> at national/sectoral level

- Recognition ong>andong> validation of skills ong>andong> qualifications, ong>inong>cludong>inong>g provision of a system of

transferable qualifications ong>andong> identification of long>inong>ks ong>andong> complementarities ong>betweenong>

recognised diplomas

- Information, support ong>andong> advice to employees ong>andong> busong>inong>esses

- Mobilisation of all the available resources for the lifelong development of competences by

all parties (enterprises, public authorities ong>andong> social partners), together with the effective

management of fundong>inong>g resources, particularly the ong>Europeong>an Social Fund.

ETUC/ UNICE/UEAPME ong>andong> CEEP: “Framework of Actions for the lifelong development of competencies ong>andong>

qualifications”, 2002

The ong>Europeong>an Social Partners have monitored the progress annually ong>andong> conducted a

comprehensive evaluation of this work ong>inong> 2006. The report analysed the impact of more

than 350 selected social partners’ ong>inong>itiatives. Among the ong>inong>itiatives analysed, over 70


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 28

concern companies’ good practice examples ong>andong> 280 comprise social partners’

ong>inong>itiatives at sectoral or national levels. 29

Also at national, regional ong>andong> local level as well as ong>inong> the context of specific economic

sectors, social partners are ong>inong>creasong>inong>gly aware of the importance of highly qualified ong>andong>

traong>inong>ed management ong>andong> employees to meet busong>inong>ess ong>andong> SME needs ong>inong> the context of

structural change. There are various approaches ong>inong> this context: through more flexibility

ong>inong> educational systems; by establishong>inong>g stronger long>inong>ks ong>betweenong> enterprises, research

ong>inong>stitutions, through lifelong learnong>inong>g programmes, the provision of consultancy ong>andong>

traong>inong>ong>inong>g services ong>andong> tools web-site based feasibility assessments or ong>inong>formation

services. The followong>inong>g examples are illustratong>inong>g good practice ong>inong> specifically addressong>inong>g

the needs for ong>SMEsong> with regard to traong>inong>ong>inong>g ong>andong> competence development.

Innovative solutions to deal with barriers for traong>inong>ong>inong>g ong>inong> France

Also the issue of further traong>inong>ong>inong>g ong>andong> SME-specific barriers for upgradong>inong>g the skills of

employees as well as the management is an important issue. 30 The difficulty for microenterprises

or small enterprises is the cost of a traong>inong>ong>inong>g course ong>andong> the organisational problems

ong>inong> this context song>inong>ce ong>inong> particular micro ong>andong> small companies are not able to send senior staff

ong>andong> professional workers to lengthy traong>inong>ong>inong>g courses, although they regard this as important ong>inong>

order to adapt. A solution can be ong>inong> the development of some existong>inong>g schemes, like the

employer pools or company networks (groupement d’ong>inong>térêt économique) ong>inong> France. A groupong>inong>g

can be constituted for the development of a particular technology or ong>inong>novative process, for a

limited time. ong>SMEsong> engage less often ong>inong> such schemes that large ong>inong>dustrial enterprises or public

structures.

In order to ong>inong>crease the participation of micro, small ong>andong> mediums sized companies ong>inong>

Italy, the social partners at national level came to quite a remarkable joong>inong>t ong>inong>itiative: In

2004/2005 they established traong>inong>ong>inong>g funds ong>inong> order to foster lifelong learnong>inong>g which are

coordong>inong>ated at the sectoral level ong>andong> fong>inong>anced by a 0.3% wage deduction. Beside a fund

for larger companies, there is a fund focussong>inong>g on the Italian crafts enterprises ong>andong> a

further one for small ong>andong> medium sized companies.

The Relanz@ project ong>inong> Spaong>inong>

The project Relanz@ ong>inong> Spaong>inong> which was supported by the ong>Europeong>an Equal programme until

2007, created three “Communal Centres of Resources” for local micro companies

(predomong>inong>antly family run craft busong>inong>ess) ong>inong> the provong>inong>ce of Cuenca. The project offered traong>inong>ong>inong>g

for the companies ong>andong> facilitated the ong>inong>troduction of new technologies. The Communal Centres

of Resources were set up ong>inong> order to concentrate capacities under cost-sufficient conditions

ong>andong> to provide traong>inong>ong>inong>g for ong>SMEsong> ong>inong> remote areas. The project has developed two advisors

supportong>inong>g the concept of lifelong traong>inong>ong>inong>g, the enterprise tutor ong>andong> the socio-corporate

mediator. Relanz@ was implemented joong>inong>tly by the provong>inong>cial government ong>andong> local

admong>inong>istration ong>inong> close cooperation with the social partners’ organisations such as the regional

employer’s organisations, chamber of commerce ong>andong> ong>tradeong> ong>unionsong>.

Source: EU Commission, DG Employment: SME Traong>inong>ong>inong>g Guide, forthcomong>inong>g.

Trade ong>unionsong> are also directly ong>inong>volved ong>inong> the issue of supportong>inong>g employees ong>inong> ong>SMEsong> to

adapt their skills ong>andong> qualifications as the “Unionlearn” ong>inong>itiative of the TUC illustrates.

29 See ETUC/ UNICE/UEAPME ong>andong> CEEP: “Framework of actions for the lifelong development of

competencies ong>andong> qualifications, Evaluation report 2006, Brussels.

30 See Observatory of ong>Europeong>an ong>SMEsong>: “Competence development ong>inong> ong>SMEsong>”, Brussels 2003.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 29

The “unionlearn” Initiative of the British TUC

In Britaong>inong>, for example, the TUC has established unionlearn to help ong>unionsong> open more learnong>inong>g

opportunities to their members, particularly those disadvantaged ong>inong> the labour market, ong>andong> to

promote collective action to ong>inong>crease learnong>inong>g ong>inong> the workplace. Song>inong>ce 2002, around 20,000

Union Learnong>inong>g Representatives have been traong>inong>ed to encourage ong>andong> support learnong>inong>g activities

for employees.

A key priority for unionlearn is assistong>inong>g ong>unionsong> to secure employer engagement ong>andong> ongoong>inong>g

commitment through the signong>inong>g of learnong>inong>g agreements. In 2007/2008, more than 130 formal

learnong>inong>g agreements, more than 200 learnong>inong>g agreements with facilities for ULRs/ong>unionsong> were

signed ong>andong> nearly 700 learnong>inong>g agreements with time off for learners were signed ong>betweenong>

ong>tradeong> union learnong>inong>g representatives ong>andong> song>inong>gle employers.

Source: www.unionlearn.org.uk

Fong>inong>ally, it should not be forgotten, that social partners are also playong>inong>g a crucial role ong>inong>

the field of ong>inong>itial vocational education ong>andong> traong>inong>ong>inong>g, i.e. the major schemes of

apprenticeship: Here, many ong>inong>itiatives, programmes ong>andong> reform projects have been

ong>inong>itiated by the social partners throughout ong>Europeong> who also play a crucial role ong>inong> the

implementation addressong>inong>g specific national challenges such as ong>inong>creasong>inong>g the number

of apprenticeships ong>andong> traong>inong>ong>inong>g activities ong>inong> ong>SMEsong> (here, the German “Traong>inong>ong>inong>g Pact”,

“Ausbildungspakt”) or supportong>inong>g ong>SMEsong> with are laggong>inong>g the resources to establish own

traong>inong>ong>inong>g facilities (e.g. the joong>inong>t social partners run “construction traong>inong>ong>inong>g sites”

“Lehrbauhöfe” ong>inong> Austria).

Also at the ong>Europeong>an level, the social partners recently have called for ong>inong>creased

activities ong>inong> the context of vocational traong>inong>ong>inong>g ong>andong> apprenticeship places as a reaction to

the current economic crisis. In order to foster apprenticeship ong>andong> traong>inong>ong>inong>g activities the

ong>Europeong>an social partners also recommend an active use of ESF fundong>inong>g. 31

Demographic challenges

From the poong>inong>t of ong>SMEsong>, many challenges ong>andong> questions are arisong>inong>g ong>inong> this context: How

to better ong>inong>tegrate older employees or migrant workers? How to attract young

employees ong>andong> retaong>inong> them after vocational traong>inong>ong>inong>g? How to attract more women? How

to improve the image of micro, small ong>andong> medium sized companies?

An ong>inong>creasong>inong>g number of countries therefore has established schemes ong>andong> programmes

ong>inong> order to be better prepared ong>andong> support companies to adapt to the challenges of

demographic change.

“50plus” - Addressong>inong>g the greyong>inong>g of the workforce ong>inong> Germany

An ong>inong>itiative launched by the Federal Mong>inong>istry of Labour already some years ago focussong>inong>g on a

better ong>inong>tegration of older employees is the “50plus” programme which so far has been

implemented ong>inong> about 60 so-called model-regions which have developed ong>inong>tegrated

programmes on employment measures, further traong>inong>ong>inong>g courses ong>andong> company support

measures aimong>inong>g at supportong>inong>g companies ong>andong> ong>inong> particular small ong>andong> medium sized

companies with the development of concepts ong>andong> company specific measures for older

workers.

Further ong>inong>formation: www.perspektive50plus.de

31 “Joong>inong>t recommendations on the support to economic recovery by the ong>Europeong>an Social Fund”, ETUC,

Busong>inong>essong>Europeong>, UEAPME ong>andong> CEEP, Brussels, 7 May 2009


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 30

There are also practical experiences of social partners at sectoral level directly engaged

ong>inong> addressong>inong>g demographic challenges ong>andong> developong>inong>g practical solutions at the

followong>inong>g sector agreement shows.

The Textile Sector Agreement ong>inong> Spaong>inong> on CVT ong>andong> retaong>inong>ong>inong>g older workers

The Spanish government, employers ong>andong> ong>tradeong> ong>unionsong> ong>inong> July 2007 32 reached a sector based

agreement focussong>inong>g on supportong>inong>g companies affected by restructurong>inong>g ong>inong> the textile ong>andong> shoe

ong>inong>dustry. Beside a series of activities ong>inong> the context of promotong>inong>g re-ong>inong>dustrialisation ong>andong>

technological ong>inong>novations, economic ong>andong> employment support measures, support for the

technological clusterong>inong>g of ong>inong>novative enterprises ong>andong> for busong>inong>ess-creation ong>inong> emergong>inong>g

sectors, the agreement also provides for reong>inong>tegration policies to alleviate the negative effects

on employment. These also ong>inong>clude measures, targeted to employment retention are ong>inong>

particular focussong>inong>g on the support for contong>inong>uous traong>inong>ong>inong>g ong>inong> companies ong>andong> special ong>inong>centives

for companies retaong>inong>ong>inong>g workers aged more than 55 amongst their staff.

Source: Background Report for the EU Commission’s SME Restructurong>inong>g Forum, November 2007

The important role played by national social partners ong>andong> social dialogue as well the

emergence of joong>inong>t ong>inong>terests ong>inong> the field of dealong>inong>g with the demographic challenge is

illustrated by many ong>inong>itiatives ong>andong> projects, for ong>inong>stance the followong>inong>g two examples

from Austria ong>andong> Denmark.

Improvong>inong>g the ong>inong>tegration of older workers ong>inong> Austria ong>andong> Denmark

The Austrian WAGE (Wong>inong>nong>inong>g age, Gettong>inong>g Future) is a joong>inong>t ong>inong>itiative of the two maong>inong> Social

Partners ong>inong> Upper Austria, the Chamber of labour (as the coordong>inong>ator) ong>andong> the Chamber of

Economy focussong>inong>g on successful management of demographic change. The ong>inong>itiative was

launched ong>inong> 2007 ong>andong> is also supported by the regional government ong>andong> professional

organisations. As a platform of exchange for busong>inong>ess, politics, research, it serves as a drivong>inong>g

force for ong>inong>novation ong>andong> offers workshops, knowledge sharong>inong>g ong>andong> ong>inong>formation, participation ong>andong>

ong>inong>volvement ong>inong> pilot projects. Another focus is to support respectfulness ong>andong> appreciation

ong>betweenong> generations ong>andong> to raise the awareness for the challenges of demographic change.

The SAW (“Senior Advisors at Work”) project by Danish ong>tradeong> union organisations (3F, SIPTU

ong>andong> LO) together with ong>tradeong> ong>unionsong> ong>andong> employers’ organisations ong>inong> further countries (Italy,

Irelong>andong>, Spaong>inong> ong>andong> Polong>andong>) was an ong>inong>ternational ong>inong>itiative supported by the ESF Art. 6 fundong>inong>g

programme. SAW offered an analysis ong>inong> all partner countries on current practise at the labour

market ong>andong> served as a platform of exchange of ong>inong>formation ong>andong> experiences ong>betweenong> the

partners. SAW promoted an awareness campaign for a sensitive approach to problems ong>andong>

opportunities for seniors. A key ong>inong>novative element of SAW was the defong>inong>ition of a curriculum

for Senior Advisors at Work (SAWs) or so-called Good Will Ambassadors.

Source: Fagligt Internationalt Centre (FIC)

Also at the ong>Europeong>an level, key actors have ong>inong>itiated programmes ong>andong> projects ong>inong> this

context as the followong>inong>g example illustrates:

Practical experience: Older workers as an asset for the automotive sector

The “Knowmove” project which is carried out with support of the ong>Europeong>an Social Fund by

private companies, ong>tradeong> ong>unionsong> ong>andong> research ong>inong>stitutions ong>inong> several ong>Europeong>an countries

(Belgium, Germany, Italy, Sweden, Bulgaria, the Czech Republic ong>andong> the United Kong>inong>gdom)

ong>inong>cludong>inong>g the ong>Europeong>an Metalworkers Federation EMF is aimong>inong>g at encouragong>inong>g automotive

companies to recognise their older workers as a valuable resource. The project is focussong>inong>g on

the development of management tools that can map, organise ong>andong> store older workers’

experiences ong>andong> examples of good practice. The project also ong>inong>cludes the analysis of

arrangements ong>andong> organisational models that make the best use of older workers’ skills ong>andong>

32 See EIRO-Onlong>inong>e, 9.7.2007.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 31

knowledge. The “Knowmove” project also ong>inong>cludes aspects of competence development,

traong>inong>ong>inong>g ong>andong> ong>inong>novation policy: An important aim is to encourage ong>andong> motivate older workers to

stay longer ong>inong> the labour market ong>andong> focus on knowledge transfer ong>andong> mentorong>inong>g functions. This

should also foster ong>inong>novations withong>inong> the company by encouragong>inong>g a flow of ideas ong>betweenong>

older ong>andong> younger workers. Fong>inong>ally, the project is tryong>inong>g to improve traong>inong>ong>inong>g environments by the

search for the best pedagogical models for both deliverong>inong>g traong>inong>ong>inong>g to ong>andong> transferrong>inong>g

knowledge from older workers.

Further ong>inong>formation: http://ec.europa.eu/employment_social/events/2006/demog/programme_de.pdf

3 Innovation ong>andong> Quality

Facts ong>andong> challenges

ong>SMEsong> ong>inong> the EU observe that competition ong>inong> their markets has ong>inong>creased over the past

two years. Accordong>inong>g to the 2007 ong>Europeong>an SME Observatory Survey, 60% of managers

stated that competition has recently ong>inong>tensified. 33 Major drivers for this ong>inong>tensification

are globalisation ong>andong> ong>inong>ternationalisation which have characterised busong>inong>ess

development ong>inong> almost all ong>inong>dustrial sectors ong>andong> sizes affectong>inong>g both enterprises with a

strong export profile ong>andong> firms focusong>inong>g on domestic markets. In this context also new

patterns of value creation have emerged: while exportong>inong>g as the traditional way of

becomong>inong>g an ong>inong>ternationalised enterprise still is important, there is also an ong>inong>creasong>inong>g

ong>inong>ternationalisation of enterprise processes ong>andong> modifications ong>inong> the relationship among

partners throughout the “value chaong>inong>” or “networks of value creation”. 34 The

transnational reorganisation of supply ong>andong> value chaong>inong>s has several effects on ong>SMEsong>

which are a part of “pyramid-like” ong>inong>tegrated networks of value creation. At the same

time it is a well known fact that ong>SMEsong> are, ong>inong> general, underrepresented ong>inong> world ong>tradeong>.

Still less than 10% of ong>SMEsong> ong>inong> ong>Europeong> are active ong>inong>ternationally ong>andong> most of them ong>inong> the

EU ong>inong>ternal market only. 35 With regard to the ong>Europeong>an Union, a recent survey confirms

that besides foreign supply relations, export is the most frequent form of SME

ong>inong>ternationalisation. The study also confirms that ong>SMEsong> ong>inong> countries with a small

domestic market (like Luxembourg, Irelong>andong>, Austria, Denmark) ong>inong> general are more

active on export markets than ong>SMEsong> ong>inong> larger countries. While ong>inong> these smaller countries

the share of exportong>inong>g ong>SMEsong> is ong>betweenong> 30% (Denmark, Austria) ong>andong> 40%

(Luxembourg), Germany is the only larger country with a share of exportong>inong>g ong>SMEsong>

above 20%. 36

Apart from the need to strengthen export orientations, there are other aspects of

globalisation affectong>inong>g SME development: although ong>inong> particular for micro ong>andong> small

enterprises a strong local dimension of their busong>inong>ess will contong>inong>ue to be the maong>inong> focus

of activity, there clearly is an impact of globalisation, as not only large companies are

confronted with growong>inong>g ong>inong>ternational competition but also the SME sector. As a study

33

ong>Europeong>an Commission: Observatory of ong>Europeong>an ong>SMEsong>, Analytical report, Flash Eurobarometer B Series

No. 196, Conducted by Gallup Organization Hungary, 2007.

34

EESC 2007: Opong>inong>ion of the ong>Europeong>an Economic ong>andong> Social Committee on the Value ong>andong> supply chaong>inong>

development ong>inong> a ong>Europeong>an ong>andong> global context (Own-ong>inong>itiative opong>inong>ion), CCMI/037 Value ong>andong> supply chaong>inong>

development, Brussels, 25 April 2007, p. 3.

35

See „Global ong>Europeong> – Competong>inong>g ong>inong> the World: A Contribution to the EUs Growth ong>andong> Job Strategy”, COM

(2006)567.

36

Observatory of ong>Europeong>an ong>SMEsong>: ”Internationalisation of ong>SMEsong>“, 2003, No. 4, p. 16.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 32

on the effects of globalisation on the crafts sector ong>inong> Germany 37 states, there are

various new challenges emergong>inong>g from globalisation for micro ong>andong> small companies:

Increasong>inong>g competition by foreign suppliers ong>andong> micro companies outside crafts,

customised mass products from large companies, a general trend towards

franchisong>inong>g ong>andong> the emergence of large companies with local subsidiaries ong>inong> sectors

like bakery, opticians, cleanong>inong>g etc.

Change ong>inong> demong>andong> structures ong>andong> markets, e.g. ong>inong> the context of large enterprises

relyong>inong>g ong>inong>creasong>inong>gly on foreign suppliers, ong>inong>creasong>inong>g role of environmental issues.

Changes ong>inong> the labour market ong>inong> the context of labour migration, ong>inong>creasong>inong>g reliance

on flexible labour (seasonal work, job agencies, part-time work etc.) ong>andong> pressure

on labour costs.

Changes ong>inong> political ong>andong> other forms of regulation, e.g. decreasong>inong>g role of local

fong>inong>ancial ong>inong>stitutions like savong>inong>g banks (“Sparkassen”) or co-operative banks ong>andong>

ong>inong>creasong>inong>g role of ong>inong>stitutional ong>inong>vestors.

Accordong>inong>g to SME experts ong>inong> the Central ong>andong> Eastern ong>Europeong>an Member states

manufacturong>inong>g enterprises today are facong>inong>g an ong>inong>creasong>inong>g competition from Asia ong>andong>

other low cost countries. In this context it is expected that sectors which are

characterised by strong global competition like textiles ong>andong> leather, footwear, paper,

consumer electronics ong>andong> others are goong>inong>g to disappear or shrong>inong>k ong>inong> the comong>inong>g years

ong>andong> that ong>inong> particular ong>SMEsong> will be confronted with many challenges ong>inong> this context.

Most EU member states have put a range of programmes ong>andong> support structures ong>inong>

place to help smaller firms to tackle foreign markets. 38

In response to tighter competition, the primary strategy of ong>SMEsong> ong>inong> the EU is to put

more effort ong>inong>to the quality of products ong>andong> marketong>inong>g as the recent ong>Europeong>an SME

Observatory Survey illustrates: 39 64% would improve their product (or service) quality,

62% would ong>inong>crease product differentiation, ong>andong> 61% would ong>inong>crease marketong>inong>g efforts

ong>inong> response to ong>inong>creased competition. In this context, cuttong>inong>g costs is only the fourth

most popular strategy adopted by ong>SMEsong> keepong>inong>g an effort to keep up with tighter

competition.

In this context, the capacity of enterprises to ong>inong>novative ong>andong> the unlockong>inong>g of ong>inong>novation

potential is becomong>inong>g more ong>andong> more important. Here, the ong>Europeong>an Innovation

Scoreboard (EIS) provides some evidence with regard to the ong>inong>novation performance of

EU member States, under the EU Lisbon Strategy. The most recent EIS report shows a

large variety amongst EU member states with regard to their ong>inong>novation performance

(see table).

37 Klaus Müller: Strukturwong>andong>el ong>inong> eong>inong>er globalisierten Welt, „Zukunftsforum Hong>andong>werk ong>inong> Bayern“, Nürnberg,

22.05.2007. See also KfW: „Die Globalisierung des Mittelstong>andong>es: Chancen und Risiken“, 2006

38 DG Enterprise ong>andong> Industry has established a group of experts from all EU states to identify ong>andong> share details

of good practice ong>inong>itiatives ong>inong> promotong>inong>g ong>inong>ternational activities of ong>SMEsong>. The group is due to produce a report

on good practice ong>inong> early 2008.

39 ong>Europeong>an Commission: Observatory of ong>Europeong>an ong>SMEsong>, Analytical report, Flash Eurobarometer B Series

No. 196, Conducted by Gallup Organization Hungary, 2007.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 33

Summary ong>inong>novation performance ong>inong> EU Member States accordong>inong>g to the ong>Europeong>an Innovation

Scoreboard (EIS)

Note: The Summary Innovation Index (SII) is a composite of 29 ong>inong>dicators goong>inong>g from a lowest possible

performance of 0 to a maximum possible performance of 1.

Source: ong>Europeong>an Innovation Scoreboard 2008. Pro Inno ong>Europeong> ong>andong> Inno Metrics, January 2009.

With regard to ong>SMEsong>, it should be noted here also that the EIS only to a limited extend

is takong>inong>g ong>inong>to account specific ong>inong>dicators: The EIS is usong>inong>g seven dimensions clustered ong>inong>

three maong>inong> blocks ong>inong> order to measure ong>inong>novation. 40 Out of 30 ong>inong>dicators, there are only

5 SME specific ong>inong>dicators measurong>inong>g the ong>inong>novation capacity of ong>SMEsong>:

Innovatong>inong>g ong>inong>-house

Innovative ong>SMEsong> collaboratong>inong>g with others

Firm renewal (ong>SMEsong> entries plus exits)

ong>SMEsong> ong>inong>troducong>inong>g process ong>inong>novations

ong>SMEsong> ong>inong>troducong>inong>g market or organisational ong>inong>novations

The 2007 ong>Europeong>an SME Observatory Survey disclosed very clearly that there still is a

lack of ong>inong>novation activities ong>inong> ong>SMEsong> - the larger an enterprise, the more likely it is to

capitalize on ong>inong>novation: Only about every tenth Euro spent with ong>Europeong>an ong>SMEsong> is

spent on a new or significantly improved product or service. Almost four out of ten

ong>SMEsong> ong>inong> ong>Europeong> say that they do not have new products or that they do not have

ong>inong>come from new products. While nearly 40% of micro firms (ong>andong> 37% of ong>SMEsong> ong>inong>

general) can not report any turnover from improved products or services, the similar

proportion among large enterprises was 24%. This lack of ong>inong>novation – at least on the

product level – is the highest ong>inong> the transport sector (46%) ong>andong> ong>inong> construction (42%). 41

However, the most promong>inong>ent fong>inong>dong>inong>g of the survey of course is that a large proportion

of ong>SMEsong> just do not plan to ong>inong>troduce ong>inong>novations to their products or technology –

agaong>inong> nearly 40%. Beyond that, there is no song>inong>gle most important constraong>inong>t on

40 External “enablers” capturong>inong>g maong>inong> drivers of ong>inong>novation: Human resources, fong>inong>ancial resources ong>andong> support

(e.g. projects ong>andong> programmes, government activities; firm activities: Firm ong>inong>vestments to generate

ong>inong>novations, long>inong>kage ong>andong> entrepreneurship (collaboration ong>betweenong> enterprises ong>andong> public sector) ong>andong>

throughputs (IPR – ong>inong>tellectual property rights); ong>andong> the output of firm activities: Innovators (share of firms that

have ong>inong>troduced ong>inong>novations) ong>andong> economic effects (with regard to employment, exports ong>andong> sales).

41 It is of course hard to ong>inong>terpret this question for the ong>tradeong> sector, as most retailers sell new or significantly

improved products without any ong>inong>novative activity (if the products have been improved by the manufacturers

or if retailers have broadened their sales portfolio, then there will clearly be sales ong>inong>come from improved

products). Accordong>inong>gly, besides the manufacturong>inong>g sector ong>tradeong> is where we fong>inong>d the fewest managers

claimong>inong>g that they have no ong>inong>come from ong>inong>novative products (both 31%).


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 34

ong>inong>novation at the EU level. On average, ong>SMEsong> regard four factors as beong>inong>g about equally

important: Almost one ong>inong> 10 managers ong>inong> the EU says that problematic access to

fong>inong>ance (10%), scarcity of skilled labour (9%) the lack of market demong>andong> (8%) ong>andong>

expensive human resources (8%), are the key challenges to their ong>inong>novation plans.

Overall, human resources seem to be the more important. 17% complaong>inong> either about

the scarcity or the cost of labour, while a little less (16%) are troubled by high ong>inong>terest

rates ong>andong> other problems with access to fong>inong>ance.

ong>Europeong>an SME Observatory 2007

Maong>inong> constraong>inong>t for ong>inong>novation activities

Problems with access to fong>inong>ance,

other than ong>inong>terest rates

Too expensive human resources

Lack of skilled human resources

Lack of market demong>andong> for ong>inong>novation

High ong>inong>terest rates

Lack of ability to use new technologies

Hard to protect ong>inong>tellectual property

Did not plan to ong>inong>novate

DK/NA

3

3

6

9

8

8

10

15

0 5 10 15 20 25 30 35 40

Q52. What was the maong>inong> constraong>inong>t for your ong>inong>novation activities ong>inong> the last two years? Please consider constraong>inong>ts of ong>inong>novation

regardong>inong>g products ong>andong> services as well as production technology?

Base : ong>SMEsong>, %, EU-27

Regardong>inong>g the maong>inong> obstacle to ong>inong>novation, there is only slight variation across various

ong>inong>dustries as well. Differences remaong>inong> very modest, but ong>inong> the transport ong>andong> hospitality

sectors, access to fong>inong>ance seems to be slightly more important than elsewhere. The lack

ong>andong> cost of manpower is the maong>inong> obstacle ong>inong> the construction sector.

At the same time it is important to stress, that many ong>SMEsong> are very well prepared to

address new challenges because often they are more flexible ong>andong> better prepared to

deal with structural change ong>andong> adapt to new framework conditions as both larger

companies ong>andong> smaller ones. Accordong>inong>g to the ong>inong>terview partners of employers'

federations ong>andong> ong>tradeong> ong>unionsong> ong>inong> Italy, the Italian medium-sized companies ong>inong> general

perform better than the smaller ong>andong> even the larger companies. As a project carried out

by the employer federation Confong>inong>dustria found out, medium-sized companies do better

ong>inong> terms of ong>inong>novation, sales ong>andong> employment performance.

Innovation performance of medium sized companies ong>inong> Italy

“Italian medium-sized enterprises perform better than the smaller ong>andong> larger ones. Durong>inong>g the

last years, the former have ong>inong>creased their performance ong>inong> terms of both sales ong>andong> employment

ong>inong>dicators, playong>inong>g an important role ong>inong> pushong>inong>g the Italian market towards higher stong>andong>ards ong>inong>

terms of competitiveness ong>andong> quality. Medium-sized companies present particularly strong

positions withong>inong> the typical manufacturong>inong>g sectors of the “Made ong>inong> Italy”, such as food ong>andong> drong>inong>k,

textile ong>andong> clothong>inong>g, footwear, leather, wood ong>andong> furniture. Medium-sized companies are

particularly successful ong>inong> high-quality sectors but also on markets characterised by high

competitiveness, such as the cement, buildong>inong>g ong>andong> the iron ong>andong> steel sectors. The ong>inong>creasong>inong>g

sales ong>andong> occupational performance of the medium companies does not refer to a song>inong>gle

model. The dynamism ong>andong> the positive reaction to ong>inong>ternationalisation ong>andong> globalisation

processes are widespread. The medium enterprises are fundamental for the Italian market

because they simultaneously combong>inong>e the flexibility derived from the company’s size ong>andong> their

role ong>inong> haulong>inong>g the market.”

Source: Background Report for the EU Commission’s SME Restructurong>inong>g Forum, November 2007

38


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 35

Agaong>inong>st the background of the major trend ong>inong> large companies, to outsource ong>andong>

offshore production activities ong>andong>/or busong>inong>ess related services to subcontractors ong>andong>

cooperation partners, an ong>inong>creasong>inong>gly important aspect regardong>inong>g ong>inong>novation is the issue

of ong>inong>novation-transfer ong>andong> joong>inong>t activities ong>inong> the context of ong>inong>novation, research ong>andong>

development ong>betweenong> large companies ong>andong> the SME sector.

However, it is also important to understong>andong> other differences ong>betweenong> small enterprises

ong>andong> large companies with regard to ong>inong>novation: As UEAPME has stressed ong>inong> a position

paper on ong>Europeong>an Innovation Policy, ong>inong>novation processes ong>inong> crafts ong>andong> ong>SMEsong> are

“characterised more by on-goong>inong>g permanent processes ong>andong> less by long>inong>ear technicaldriven

ong>inong>ventions.” Therefore, ong>inong> order to exploit the ong>inong>novation potential of ong>SMEsong>, there

should be a more all-encompassong>inong>g approach towards ong>inong>novation ong>inong> ong>Europeong>, ong>inong>cludong>inong>g

not only high level research ong>andong> technology but also issues such as the supply of

qualified labour, improvement of the regulatory environment as UEAPME concluded:

Ratios of ong>inong>novation ong>inong> ong>SMEsong>

So far, ong>inong>novation policy ong>inong> ong>Europeong> has been focussong>inong>g nearly exclusively on R&D ong>andong> the High-

Tech sector ong>andong> missed the reality of the majority of ong>inong>novative ong>SMEsong>. For them, ong>inong>novation is a

permanent process ong>andong> they are not engaged ong>inong> research as officially defong>inong>ed.”

Source: UEAPME: “ong>Europeong>an Innovation Policy: Take ong>SMEsong> on board too”, Brussels, 31.10.2006

The role of social dialogue

Many examples ong>inong> the context of reactong>inong>g to growong>inong>g competition illustrate the

important role of social dialogue ong>andong> co-operation of public authorities, professional

organisations ong>andong> social partners ong>inong> developong>inong>g ong>inong>novative solutions ong>inong> ong>SMEsong>. Practical

experience shows that growong>inong>g competition ong>andong> macro-economic ong>andong> social change can

be be addressed much better on the basis of stronger cooperation, more pro-active

approaches of public authorities ong>andong> other actors (e.g. the fong>inong>ancial system).

Preventive agreements ong>inong>volvong>inong>g social partners, local authorities, professional

organisations ong>andong> the fong>inong>ancial sector concernong>inong>g the ong>SMEsong> of a specific local area are

regarded as fundamental here, because they may favour ong>inong>novation projects ong>inong>volvong>inong>g

all actors ong>andong> defong>inong>ong>inong>g reciprocal responsibilities ong>andong> competences: the bank system

fong>inong>ances the projects, the public authorities ong>andong> professional organisations provide the

necessary ong>inong>frastructure, the employers’ organisations ong>andong> ong>tradeong> ong>unionsong> negotiate ong>andong>

manage collective agreements ong>andong> organisational flexibility ong>andong> the employers ong>inong>vest

their equity.

Sectoral ong>inong>novation approaches ong>inong> North Rhong>inong>e-Westphalia

Exemplary ong>inong>itiatives of joong>inong>t social partner ong>inong>itiatives ong>inong> the German Federal State of North-

Rhong>inong>e Westphalia focussong>inong>g on two manufacturong>inong>g sectors which are both confronted with

ong>inong>creasong>inong>g ong>inong>ternational competition as well as characterised by a strong SME structure are the

so called “ZIMIT” (“Future Initiative Furniture”) ong>andong> “ZITEX” (“Future Initiative Textile”). Both

aim at improvong>inong>g the capacity of regional enterprises ong>inong> these two sectors by supportong>inong>g

ong>inong>novations ong>inong> products, processes ong>andong> organisation, exchange of good practice ong>inong> fields like

further qualification ong>andong> management capacities ong>andong> also supportong>inong>g the ong>inong>ternationalisation of

the enterprises ong>inong>volved ong>inong> the ong>inong>itiatives. Both sectoral ong>inong>itiatives are joong>inong>t ong>inong>itiatives of the

German metalworkers ong>tradeong> union IG Metall ong>andong> the maong>inong> sectoral employers' federations,

supported by the regional government ong>andong> specialised sectoral research ong>inong>stitutions.

Further details: www.zimit.de ong>andong> www.zitex.de.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 36

An efficient general strategic policy is also needed to support the ong>SMEsong>’ development

ong>andong> to anticipate ong>andong> accompany structural changes ong>andong> restructurong>inong>g. The role of

public authorities ong>inong> supportong>inong>g ong>SMEsong> vary: e.g. by reducong>inong>g bureaucratic practices,

encouragong>inong>g local ong>andong> sectoral solutions by takong>inong>g ong>inong>to account specific territorial needs

ong>andong> shortenong>inong>g the gap ong>betweenong> large ong>andong> small enterprises at different levels.

There are other national ong>andong> sectoral approaches here, for example the concept of

“employee driven ong>inong>novation ong>inong> Denmark.

“Employee driven ong>inong>novationong>inong> Denmark

While the Danish ong>tradeong> ong>unionsong> acknowledge the activities of governments ong>inong> the field of

ong>inong>novation, they also poong>inong>t out certaong>inong> shortcomong>inong>gs, ong>inong> particular regardong>inong>g ong>inong>novation activities

ong>inong> the SME sector ong>andong> regional disparities regardong>inong>g the exploitation of ong>inong>novation ong>andong> R&D

potentials. Agaong>inong>st this LO Denmark states: “So a stronger ong>andong> more holistic policy is needed

to enhance ong>inong>novation. Because Denmark does have fong>inong>e conditions for becomong>inong>g one of the

world’s most ong>inong>novative societies. But it requires far more targeted ong>andong> ambitious ong>inong>itiatives –

ong>andong> a common understong>andong>ong>inong>g of the “soft strengths” that offer Denmark special global

advantages. The potential of employee-driven ong>inong>novation must be exploited, but this calls for

active ong>andong> systematic ong>inong>volvement of all employees.”

Source: LO Denmark, Danish Labour News, No. 2, 2007, p. 7

This approach is also reflected ong>inong> recent collective bargaong>inong>ong>inong>g agreements ong>inong> Denmark:

the 2007 agreement ong>betweenong> social partners ong>inong> ong>inong>dustry which will affect about 250 000

employees ong>andong> covers a three-year period contaong>inong>s a number of significant changes

with regard to these issues, ong>inong> particular regardong>inong>g further ong>andong> stronger access to

contong>inong>uong>inong>g traong>inong>ong>inong>g. This is seen as a crucial ong>inong>strument to develop the competitiveness

of companies. The agreement provides for the establishment of a “Competence

Development Fund of Industry” to which the employer will pay 35 Euro per employee

each week, ong>inong>creasong>inong>g to 70 Euro over the agreement period. These funds will be used

to fong>inong>ance the employees’ wages while they are on two weeks of contong>inong>uong>inong>g traong>inong>ong>inong>g. 42

There are also examples of good practice from Central ong>andong> Eastern ong>Europeong> to foster ong>inong>novations ong>inong>

the SME sector such as IPOSZ ong>inong> Hungary:

Fosterong>inong>g ong>inong>novation ong>andong> adaptability ong>inong> Hungarian crafts ong>andong> micro enterprises

The Hungarian Association of Craftsmen’s Corporation IPOSZ is an umbrella organisation

representong>inong>g around 280 legally ong>inong>dependent craftsmen's corporations which employ around

200,000 persons. IPOSZ promotes ong>andong> raises awareness on the importance of traong>inong>ong>inong>g among

small ong>andong> micro enterprises ong>andong> represents the ong>inong>terests of its members as employers ong>inong> regard

to collective sectoral agreements ong>andong> towards politics, mong>inong>istries ong>andong> public ong>inong>stitutions. As ong>inong>

other countries, micro enterprises ong>andong> family-run busong>inong>esses ong>inong> Hungary rarely participate ong>inong>

traong>inong>ong>inong>g activities. Their fong>inong>ancial sources are very limited ong>andong> most of the company owners are

not very familiar with the possibilities of lifelong learnong>inong>g ong>andong> the availability of support sources.

At the same time, technological change is of high importance for them to remaong>inong> competitive.

Micro enterprises can easily react to changong>inong>g demong>andong>s of their customers ong>andong> society due to

their size ong>andong> flexibility, but need to be able to professionally assess their own economic

assets, of their environment ong>andong> to manage their enterprise. Agaong>inong>st this IPOSZ is focussong>inong>g its

activities ong>inong> particular on providong>inong>g counsellong>inong>g ong>andong> advise with regard to traong>inong>ong>inong>g ong>andong> other

forms of adaptong>inong>g to economic changes.

Further details: www.iposz.hu

42 See: http://www.eurofound.europa.eu/eiro/2007/03/articles/dk0703019i.htm.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 37

Fong>inong>ally it must be mentioned here, that the issue of technological ong>inong>novation ong>inong>

particular regardong>inong>g small enterprises ong>andong> the crafts sector is ong>inong>creasong>inong>gly

acknowledged by social partners ong>andong> public authorities. Here, a number of positive

examples ong>inong> particularly with regard to the cooperation ong>betweenong> academic ong>andong> scientific

ong>inong>stitutions ong>andong> SME professional organisations exist. 43

4 Undeclared work

Facts ong>andong> challenges

There is quite a large variety of undeclared work throughout ong>Europeong>. Recent surveys

(Eurobarometer, EF Dublong>inong> Report) differentiate the followong>inong>g forms of undeclared work:

Undeclared work withong>inong> a formal enterprise, or what might be termed undeclared

waged employment. This can be either wholly undeclared where all one’s wages are

paid off-the-books, or partially undeclared where a portion of the wage from one’s

formal employer is paid officially ong>andong> a portion off-the-books (‘envelope wages’);

Own-account undeclared work, for a formal enterprise or another client such as a

household, conducted under social relations akong>inong> to self-employment; ong>andong>

more socially embedded own-account undeclared work deliverong>inong>g goods ong>andong>

services directly to consumers who are neighbours, kong>inong>, friends or acquaong>inong>tances.

ong>SMEsong>, particularly those active ong>inong> labour-ong>inong>tensive services, suffer from unfair

competition resultong>inong>g from undeclared work. The followong>inong>g quotes taken from ong>inong>terviews

ong>inong> the context of the EU Commission’s Restructurong>inong>g Forum on ong>SMEsong> are describong>inong>g the

complex phenomenon of the “black ong>andong> grey” economy ong>andong> its effects on the SME

sector.

Perception of undeclared work by SME representatives

“The existence of the “black ong>andong> the grey” economy has a major ong>inong>fluence on the operation of

ong>SMEsong>. The ong>inong>formal economy today is undermong>inong>ong>inong>g macro-economic processes ong>andong> the SME

policy of the government” (Hungary)

“As a consequence self-employment may be regarded as a cheaper alternative to regular

employment – most often self-employed do exactly the same job as if they were full time

employees. The only, ong>andong> the most significant, difference is that they issue ong>inong>voices ong>andong> are not

on the enterprise’s payroll, therefore their wages do not add to the personnel cost.” (Polong>andong>)

“Undeclared work is the cancer of our societies” (Czech Republic)

“Undeclared work is a social bomb” (Spaong>inong>)

Sources: Background Report for the EU Commission’s SME Restructurong>inong>g Forum, November 2007. Quote from the

joong>inong>t UEAPME-ETUC semong>inong>ar ong>inong> Warsaw, 9-10 March 2009.

Estimates of the size of the ong>inong>formal economy are necessarily imprecise. An

Eurobarometer Survey put of 2007, A report of the EU Commission ong>inong> 2004 on

43 Profiles of cases of good practice exemplifyong>inong>g this approach are documented ong>inong> the sample of 50 cases of

good practice ong>inong> the “Guide for Traong>inong>ong>inong>g ong>inong> ong>SMEsong>”, DG Employment, Social Affairs ong>andong> Equal Opportunities

(2009). See for example the cases from Greece (GR01 ong>andong> GR02), France (FR04), Italy (IT02) focusong>inong>g on

micro ong>andong> small companies ong>inong> traditional sectors such as leather, textile or furniture. Also the Irish Skillsnet

Initiative (IE01) is illustratong>inong>g this approach.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 38

undeclared work 44 put the ong>inong>formal economy at somewhere under 5% of ong>Europeong>an GDP.

It estimated that the level of undeclared workong>inong>g was particularly high ong>inong> Greece (over

20% of GDP). 45 It was also common ong>inong> Italy (16%) ong>andong> several accession countries

(Polong>andong>, 14%; Slovakia, 13%-15%; Slovenia, 17%). It was rarest ong>inong> Austria, the

Netherlong>andong>s ong>andong> the UK (all 2% or less).

Major drivong>inong>g forces for undeclared work accordong>inong>g to the EU Commission are ong>inong>

particular:

the growong>inong>g demong>andong> for household ong>andong> care services as a result of sociodemographic

changes, possibly ong>inong> combong>inong>ation with workong>inong>g time reduction;

the trend towards smaller ong>andong> less hierarchical workong>inong>g relationships with more

flexible pay systems or time accountong>inong>g;

self-employment (ong>inong>cludong>inong>g false self-employment) ong>andong> sub-contractong>inong>g ong>andong>, more

generally, flexible contracts ong>andong> on-call work, when they are misused for

nondeclaration of part of the revenue;

the growong>inong>g ease of settong>inong>g up cross-border groupong>inong>gs of enterprises, which require

efficient ong>inong>ternational cooperation ong>betweenong> monitorong>inong>g ong>andong> enforcement bodies

ong>andong>/or systems.

A recent stocktakong>inong>g by experts of the ong>Europeong>an Employment Observatory network

ong>inong>dicates that undeclared work is still on the rise ong>inong> several Member States (see table on

the followong>inong>g page).

Undeclared work obstructs growth-oriented economic, budgetary ong>andong> social policies,

runs agaong>inong>st the prong>inong>ciples of flexicurity ong>andong> ong>inong>terferes with immigration policies. From a

microeconomic perspective, undeclared work tends to distort fair competition among

firms, pavong>inong>g the way for social dumpong>inong>g. Moreover, undeclared work tends to be

associated with poor workong>inong>g conditions for ong>inong>dividuals ong>andong> subsequent risks to workers'

health, low prospects for career progress ong>andong> ong>inong>sufficient social protection coverage. It

also causes productive ong>inong>efficiencies, as ong>inong>formal busong>inong>esses typically avoid access to

formal services ong>andong> ong>inong>puts (e.g. credit) ong>andong> prefer to stay small.

The issue of 'undeclared work' therefore has been receivong>inong>g ong>inong>creasong>inong>g attention as part

of the ong>Europeong>an employment strategy, ong>andong> song>inong>ce 2003 the EU employment guidelong>inong>es

have ong>inong>cluded a specific guidelong>inong>e entitled 'transform undeclared work ong>inong>to regular

employment'. This provides that Member States should develop ong>andong> implement broad

actions ong>andong> measures to elimong>inong>ate undeclared work, which combong>inong>e simplification of the

busong>inong>ess environment, removong>inong>g disong>inong>centives ong>andong> providong>inong>g appropriate ong>inong>centives ong>inong>

the tax ong>andong> benefits system, improved law enforcement ong>andong> the application of

sanctions. They should undertake the necessary efforts at national ong>andong> EU level to

measure the extent of the problem ong>andong> progress achieved at national level.

44 EU Commission: Undeclared work ong>inong> an enlarged Union. An analysis of undeclared work: An ong>inong>-depth study

of specific items, Brussels, Employment ong>andong> Social Affairs DG, 2004.

45 Given the nature of undeclared work – i.e. it is neither observed nor registered - it is naturally extremely

difficult to assess its extent ong>andong> structure. The study draws on ong>inong>formation from statistical offices ong>inong> several

countries ong>andong> results from a study coverong>inong>g five ong>Europeong>an countries. A ong>Europeong>an wide survey based on

direct methods, i.e. ong>inong>terviews was carried out ong>inong> 2007. See: EU Commission: Undeclared Work ong>inong> the

ong>Europeong>an Union, Special Eurobarometer Report 2007.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 39

Changes ong>inong> the prevalence of undeclared work 2004 - 2007

Source: ong>Europeong>an Employment Observatory, Special Review on Undeclared work, Sprong>inong>g 2007, p. 7.

In 2007, the Commission issued a Communication on undeclared work 46 which aims to

take stock of the actions undertaken ong>inong> the Member States, ong>andong> to illustrate the scope

for mutual learnong>inong>g about successful practices.

In view of the complexity ong>andong> heterogeneity of undeclared work, there is no simple

solution to combatong>inong>g it.

The ong>Europeong>an Commission’s Employment Guidelong>inong>e no. 9 on undeclared work, adopted

ong>inong> 22 July 2003, was quite explicit concernong>inong>g the approach that should be adopted:

46 Communication from the Commission to the Council, the ong>Europeong>an Parliament, the ong>Europeong>an Economic ong>andong>

Social Committee ong>andong> the Committee of the Regions: Steppong>inong>g up the fight agaong>inong>st undeclared work,

Brussels, 24.10.2007, COM(2007) 628 fong>inong>al.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 40

“Member states should develop ong>andong> implement broad actions ong>andong> measures to elimong>inong>ate

undeclared work, which combong>inong>e simplification of the busong>inong>ess environment, removong>inong>g

disong>inong>centives ong>andong> providong>inong>g appropriate ong>inong>centives ong>inong> the tax ong>andong> benefits system, improved law

enforcement ong>andong> the application of sanctions.”

ong>Europeong>an Employment Guidelong>inong>e No. 9

A further aspect of counteractong>inong>g to undeclared work was mentioned ong>inong> the 2007

Communication on Undeclared Work, i.e. measures that facilitate greater commitment

to tax morality. In general, tacklong>inong>g undeclared work requires not only the punishment

of non-compliance ong>inong> the form of ‘improved law enforcement ong>andong> the application of

sanctions’ but also a range of enablong>inong>g ong>inong>itiatives to facilitate compliance. The

recommendation therefore is that EU member states should combong>inong>e deterrence ong>andong>

penalities’ measures with preventative ong>andong> curative measures that enable compliance

ong>andong> foster commitment to declared work.

Measures used to tackle undeclared work ong>inong> EU Member States, 2005

Approach Method Measures

Deterrence Improve detection Data matchong>inong>g ong>andong> sharong>inong>g

Joong>inong>ong>inong>g-up strategy

Joong>inong>ong>inong>g-up operations

Enablong>inong>g

compliance

Penalties Increase penalties for evasion

Preventative Simplification of compliance

Direct & ong>inong>direct tax ong>inong>centives

Smooth transition ong>inong>to self-employment

Introducong>inong>g new categories of work

Micro-enterprise development

Curative Purchaser ong>inong>centives: service vouchers, targeted direct ong>andong> ong>inong>direct

taxes,

Supplier ong>inong>centives: society-wide amnesties; voluntary disclosure,

busong>inong>ess advisory & support services

Fosterong>inong>g commitment Promotong>inong>g benefits of declared work

Education

Peer-to-peer surveillance

Tax fairness

Procedural justice

Redistributive justice

Source: ong>Europeong>an Foundation for the Improvement of Livong>inong>g ong>andong> Workong>inong>g Conditions Measures to

combat undeclared work ong>inong> 27 ong>Europeong>an Union Member States ong>andong> Norway: Overview Report, Dublong>inong>,

March 2009, p.12.

A balanced policy approach consistong>inong>g of measures to curb or prevent its occurrence

ong>andong> their enforcement, ong>inong>volvong>inong>g the social partners, is needed. Such an approach was

set out ong>inong> the 2003 Council resolution on transformong>inong>g undeclared work ong>inong>to regular

employment, which called for

reducong>inong>g the fong>inong>ancial attractiveness of undeclared work stemmong>inong>g from the design

of tax ong>andong> benefit systems, ong>andong> the permissiveness of the social protection system

with regard to the performong>inong>g of undeclared work;

admong>inong>istrative reform ong>andong> simplification, with a view to reducong>inong>g the cost of

compliance with regulations;

strengthenong>inong>g the surveillance ong>andong> sanction mechanisms, with the ong>inong>volvement of

labour ong>inong>spectorates, tax offices ong>andong> social partners;

trans-national cooperation ong>betweenong> Member States, ong>andong>

awareness raisong>inong>g activities.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 41

One concrete measure ong>inong> the context of counteractong>inong>g to undeclared work recently has

been re-ong>inong>troduced ong>inong> the ong>Europeong>an discussion on measures ong>inong> the context of the

economic recovery plan: the recommendation of the ong>Europeong>an Commission to the

Council to adopt the proposed directive on a permanent reduction of VAT rates for

labour-ong>inong>tensive services. 47

Role of social partners ong>andong> practical experiences

Social partners are playong>inong>g an important role ong>inong> combatong>inong>g undeclared work ong>andong>

transformong>inong>g undeclared work ong>inong>to regular work relationships. Therefore, the EU level

social partners have envisaged a joong>inong>t analysis of undeclared work ong>inong> the framework of

their 2006–2008 work programme. 48

Dependong>inong>g on the specific national legal ong>andong> economic as well as sectoral framework

conditions social partners have developed ong>inong>itiatives ong>inong> all areas listed above ong>inong> order to

combat undeclared work ong>andong> its negative effects on workong>inong>g conditions ong>andong>

competition. Some examples:

Together with labour taxation, the admong>inong>istrative burden, notably for atypical ong>andong>

seasonal work, appears to be the strongest driver of undeclared work. Therefore, for

example ong>inong> Spaong>inong>, where regional comparisons reveal a correlation ong>betweenong> the

ong>inong>cidence of temporary contracts ong>andong> undeclared work, the Social Partner agreement

concluded ong>inong> 2005, aimong>inong>g at reducong>inong>g temporary employment, may be regarded as a

promisong>inong>g step towards the regularisation of undeclared work as well.

There is considerable scope for sector-specific solutions to control ong>andong> regularise

undeclared work with the ong>inong>volvement of the social partners. Sector specific agreements

of social Partners have been concluded ong>inong> many countries, notably ong>inong> the construction

sector, e.g. ong>inong> Germany, Fong>inong>long>andong>, Italy, Belgium. As ong>inong> the case of Sweden (see textbox

below) an approach to improve the detection of undeclared work is the ong>inong>troduction of

identity cards which have also been ong>inong>troduced ong>inong> Italy, Norway or the Czech Republic

for ong>inong>stance.

There are many other ong>inong>itiatives tacklong>inong>g undeclared work or the problems it causes

both form national economies as well as employees, were social partner are playong>inong>g a

crucial role:

In Italy, ong>inong> 2007 the Mong>inong>istry of Labour, ong>inong> cooperation with the social partners, have

ong>inong>troduced a normative system to estimate actual numbers of hours worked ("ong>inong>dici

di congruità").

In Portugal, the social partners organisations ong>inong> 2008 came together to discuss ong>andong>

launch joong>inong>t ong>inong>itiatives ong>inong> the context of tacklong>inong>g undeclared work.

Fong>inong>ally, social partners also play a key role with regard to ong>inong>creasong>inong>g awareness

among the public on the risks long>inong>ked to undeclared work. Several successful

awareness campaigns have been conducted with active ong>inong>volvement of social

partners, such as the "fair play" campaign ong>inong> Denmark or similar campaigns of social

partners ong>inong> Austria or Germany.

47 See: EC Recovery Plan – COM (2008) 800 p.10

48 Work Programme of the ong>Europeong>an Social Partners 2006 – 2008.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 42

The ID06 project ong>inong> Sweden

The construction sector ong>inong> Sweden is challenged by widespread undeclared work ong>andong> tax

evasion. Undeclared work is not only illegal, but usually leads to a more ong>inong>secure workplace

ong>andong> personal safety risks. In order to prevent obligatory staff registration beong>inong>g imposed by the

state, the construction ong>inong>dustry ong>inong> Sweden has ong>inong>troduced a voluntarily system usong>inong>g identity

cards, namely the ID06 project ong>inong>itiated ong>inong> 2007 by the social partner organisations (seven

busong>inong>ess organisations ong>andong> five ong>tradeong> ong>unionsong>) withong>inong> the construction sector. The head

organisation is the Swedish Construction Federation (Sveriges Byggong>inong>dustrier, BI). The ID06

project ong>inong> the construction sector has proven to be an effective control measure aimong>inong>g to tackle

undeclared work ong>inong> the construction sector by requirong>inong>g all workers at construction sites to be

registered ong>andong> carry proper identity (ID) cards.

The project consists of the followong>inong>g measures:

- A requirement that everyone who attends a construction site must carry valid ID06

identification.

- The sub contractor is obliged to register the employees ong>inong> advance with the head

contractor.

- Daily registration of authorized employees at the workplace.

- The daily registration must be saved for two years ong>andong> be available at the site ong>inong> case of a

control visit from the National Tax Agency.

- The head contractor has the right to remove anyone from the construction site who is not

authorized. The head contractor has the right to demong>andong> a fong>inong>e of 500 SEK (€50) per day

ong>andong> person if an employee can not show the required identification.

The success of the social partners’ ong>inong>itiative has also led other sector to apply similar

approaches, e.g. the restaurants ong>andong> hairdressers sectors.

Source: EIRO Network article, 2 April 2009.

Another strategy to tackle undeclared work are measure of wage realignment ong>inong> order

to reduce the tax ong>andong> social contribution burden which should help to encourage greater

compliance ong>andong> less tax evasion. There are many examples ong>inong> ong>Europeong> of this type of

measure, for ong>inong>stance the German “mong>inong>i” or “mid” jobs established by the Government

ong>inong> the late 1990.

Incentives for declared work also is fostered by service cheque schemes which are

carried out ong>inong> many ong>Europeong>an countries ong>andong> various measure to support busong>inong>ess-start

ups ong>inong> order to promote entrepreneurship ong>inong> a declared manner as the “First Busong>inong>ess

Programme” ong>inong> Polong>andong> illustrates (see textbox below).

With regard to the ong>inong>creasong>inong>g trend of self-employment ong>andong> 1-person enterprises

(literally the German “Ich-AG” scheme as an employment policy measure is illustratong>inong>g

this trend also) it was stressed by discussions with SME representatives that this trend

also has an impact on social dialogue ong>andong> the organisation of collective ong>inong>terest

representation ong>inong> the SME sector song>inong>ce more ong>andong> more busong>inong>ess entities are not covered

by social dialogue ong>andong> the respective social partners organisations.

Agaong>inong>st this, the approaches of some national social partner organisations to open their

doors to people runnong>inong>g their own busong>inong>ess are important steps of respondong>inong>g to

changes ong>inong> the labour market ong>andong> the rise of self-employed without personnel.

Examples from the ong>tradeong> union side are for ong>inong>stance the Federation Dutch Labour

Movement FNV (FNF Zelfstong>andong>ige Bondgenoten), the Swedish Union for Technical ong>andong>

Clerical Employees SIF or the Fong>inong>nish Confederation of Unions for Professional ong>andong>

Managerial Staff AKAVA. Also employers organisations have undertaken measures to

better ong>inong>tegrate these ownership companies, for example UNIZO ong>inong> Belgium, CNA ong>inong>


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 43

Italy or the Spanish organisation only dedicated to “los autonomos”, the Federación

Española de Autónomos (CEAT).

First Busong>inong>ess Programme, Polong>andong>

Song>inong>ce the turn of the millennium, youth entrepreneurship has moved up the public policy

agenda ong>inong> Polong>andong> as it has become evident that the expected 5 percent growth of the national

economy will be unable to absorb all of the unemployed ong>andong> baby boom cohort ong>inong>to the labour

market. In 2005 the government ong>inong>itiated the ‘First Busong>inong>ess’ programme as a supplement to

the ‘First Job’ programme. Where ‘First Job’ was designed to boost youth employment, ‘First

Busong>inong>ess’ focuses on nurturong>inong>g entrepreneurship ong>andong> self-employment amongst the younger

generations. The First Busong>inong>ess Programme aims to promote entrepreneurship among young

persons (high school graduates younger than 25 ong>andong> university graduates younger than 27)

ong>andong> to help them create ong>andong> run their own busong>inong>ess or start workong>inong>g as a self-employed person.

The programme provides theoretical courses on settong>inong>g up ong>andong> runnong>inong>g an enterprise, gives

practical traong>inong>ong>inong>g ong>inong> matters related to entrepreneurship, ong>andong> provides loans ong>andong> subsidies from

the Labour Fund (Fundusz Pracy) ong>andong> from the Bank of Domestic Economy (Bank

Gospodarstwa Krajowego). The maong>inong> focus of the programme is to offer young entrepreneurs

real assistance ong>inong> settong>inong>g ong>andong> conductong>inong>g busong>inong>ess ong>andong> not just to give them fong>inong>ancial aid. No

evaluations have been conducted of whether participants ong>inong> this scheme are less likely to

engage ong>inong> undeclared workong>inong>g practices than those who have not benefited from it.

Source: ong>Europeong>an Foundation for the Improvement of Livong>inong>g ong>andong> Workong>inong>g Conditions Measures to combat undeclared

work ong>inong> 27 ong>Europeong>an Union Member States ong>andong> Norway: Overview Report, Dublong>inong>, March 2009, p.28.

However, it is important to stress a certaong>inong> trend ong>inong> many EU member states with

regard to the rise of self-employment ong>inong> the context of structural changes ong>inong> the labour

market: On the one hong>andong> the number of self-employment is risong>inong>g due to the

outsourcong>inong>g of staff resultong>inong>g ong>inong> self-employed persons with only one or two contracts,

very often with the former company. This group ong>inong> many countries (e.g. Germany or

the Netherlong>andong>s) is referred to as “Selbständige Arbeitnehmer” (“self-employed

workers”) which have to be distong>inong>guished from other types of one-person entrepreneurs

such as freelancers, high skilled professionals ong>andong> one-person busong>inong>esses ong>inong> crafts or

retail. While employer organisations traditionally are organisong>inong>g the latter group, the

orientation towards the former group is rather unclear song>inong>ce they occupy a position ong>inong>

ong>betweenong> dependent employees ong>andong> self-employed.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 44

PART III: CONCLUSIONS

Arisong>inong>g from the analyses documented ong>inong> this expert report but also from the openmong>inong>ded

ong>andong> constructive discussions ong>andong> exchange ong>inong> the context of the two semong>inong>ars

with national member organisations of the ETUC ong>andong> UEAPME ong>inong> Warsaw ong>andong> Rome,

some key messages are arisong>inong>g with regard to common economic ong>andong> social concerns,

ong>inong>terests as well as roles ong>andong> responsibilities of social partners ong>inong> the context of SME

development which are summarized hereafter.

Challenges ong>inong> the context of the current economic situation

ong>SMEsong> are affected by the current economic recession both directly as well as

ong>inong>directly: As part of local busong>inong>ess communities they are affected by downturns ong>inong>

domestic demong>andong>s ong>andong> slumps ong>inong> export markets. At the same time they are

affected as suppliers, sub-contractors ong>andong> service providers of large enterprises

strugglong>inong>g with economic problems.

A screenong>inong>g of the various ong>inong>struments ong>andong> packages ong>inong>troduced by national

government ong>inong> order to tackle the recession, reveals that the SME dimension is a

“blank spot”. Taken ong>inong>to account the large dependency on larger companies it

becomes clear that ong>SMEsong> are directly affected by cyclical ong>andong> structural economic

upheavals without havong>inong>g access to suitable toolboxes of crisis care ong>andong> prevention.

In this context it should also be noted, that there are some ong>inong>terestong>inong>g examples of

adjustong>inong>g labour market ong>andong> other schemes ong>inong> the field of dealong>inong>g with restructurong>inong>g

ong>andong> improvong>inong>g “Flexicurity” to the needs of ong>SMEsong> ong>andong> makong>inong>g the national toolboxes

more suitable for micro, small ong>andong> medium sized enterprises (e.g. Belgium,

Netherlong>andong>s, Italy, Portugal). These experiences should be analyses ong>inong> more detail

at the ong>Europeong>an level.

Agaong>inong>st this background it is quite astonishong>inong>g that ong>SMEsong> with regard to employment

prospects ong>andong> expectations of employees becomong>inong>g redundant ong>inong> the current

situation are showong>inong>g a remarkable resilience.

Regional ong>andong> local development ong>andong> its impact on support for ong>SMEsong>

ong>SMEsong> play a crucial role ong>inong> particular ong>inong> rural areas ong>andong> structural disadvantaged

regions throughout ong>Europeong> – ong>inong> many localities they are not only the most important

but the sole employer.

As many examples ong>inong> the context of regional development show, the regional

dimension seems to be crucial for ong>inong>novation, managong>inong>g change, ong>andong> creatong>inong>g

employment ong>andong> wealth throughout ong>Europeong>. Research ong>andong> many cases of good

practice also show that those ong>SMEsong> which actively are ong>inong>volved ong>inong> local ong>andong> regional

networks are doong>inong>g better than others.

Examples of good practice ong>inong> regional development throughout ong>Europeong> illustrate a

clear added value of social dialogue, active ong>tradeong> union ong>inong>volvement ong>andong> even local

bargaong>inong>ong>inong>g for improvong>inong>g regional economic conditions ong>andong> employment

development. At the same time - ong>inong> particular with regard to small companies not

meetong>inong>g the thresholds of ong>inong>stitutionalised ong>andong> formal employee representation,

ong>inong>formation ong>andong> consultation – social dialogue ong>andong> employee participation ong>inong> ong>SMEsong> is

different from larger companies.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 45

The management of demographic challenges ong>andong> the role of traong>inong>ong>inong>g ong>inong> ong>SMEsong>

Though the “greyong>inong>g of the workforce” is not a uniform challenge ong>inong> all ong>Europeong>an

member states (some are more affected by the challenge of ageong>inong>g than others) it

is important to stress, that demographic challenges pose important questions not

only for ong>SMEsong> but also for economic ong>andong> social policy today. As for example, ageong>inong>g

is resultong>inong>g ong>inong> particular ong>inong> rural areas throughout ong>Europeong> ong>inong> ong>inong>creasong>inong>g problems for

labour recruitment. On the other hong>andong>, ong>SMEsong> should be regarded as the most

important factor of keepong>inong>g younger people ong>inong> rural areas.

ong>SMEsong> are more affected by negative demographic trends. Agaong>inong>st the background of

various aspects (workong>inong>g conditions, image, workloads etc.) ong>SMEsong> are ong>inong> a

significant weaker position than large companies. Resultong>inong>g from this, there not only

is a need to work on the issue of ownership transfer due to age, to improve the

image of the craft sector or small companies – much more has to be done to make

ong>SMEsong> “fit for the future”.

As good practice examples throughout ong>Europeong> illustrate, the development of

concepts ong>inong> order to improve the situation of older workers at the workplace, keep

them longer ong>inong> workong>inong>g-life ong>andong> enable them to pass their experience to younger

workers is a particularly strong common ong>inong>terest of both employers organisations

ong>andong> ong>tradeong> ong>unionsong>.

The role of traong>inong>ong>inong>g (ong>inong>itial ong>andong> contong>inong>uous vocational education as well as lifelong

learnong>inong>g) is becomong>inong>g more ong>andong> more vital for the capacity of an enterprise to

survive ong>andong> grow ong>inong> a sustaong>inong>able way.

With regard to traong>inong>ong>inong>g, skills ong>andong> competence development ong>SMEsong> feature some

peculiarities both with regard to the existong>inong>g skills base (ong>inong> particular ong>inong> micro

enterprises non-formal qualifications ong>andong> occupational experience is a crucial factor)

as well as with regard to HR development ong>andong> further traong>inong>ong>inong>g activities where ong>SMEsong>

usually don’t have the capacities to act as larger companies (lack of fong>inong>ancial ong>andong>

personnel resources etc.). These specificities have to be respected by policy makers

ong>inong> the field of traong>inong>ong>inong>g ong>andong> labour market development.

Traong>inong>ong>inong>g, skills ong>andong> competence development ong>andong> lifelong learnong>inong>g is a core topic of

social dialogue at ong>Europeong>an as well as national ong>andong> regional levels. In this context,

social partners play a crucial role: Employers organisations are able to work on the

improvement of the national legal framework of traong>inong>ong>inong>g, competence development

ong>andong> the overall image of ong>SMEsong>.

Agaong>inong>st the background of the large ong>inong>ternal variety of ong>SMEsong> with regard to size,

sector ong>andong> qualifications, micro, small ong>andong> medium sized companies are much more

ong>inong> need of tailor-made solutions ong>inong> the field of traong>inong>ong>inong>g ong>andong> competence development

as larger companies are. And also ong>inong> order to identify, plan ong>andong> implement the most

suitable form of traong>inong>ong>inong>g, social partners are the most important actors.

Innovation ong>inong> ong>SMEsong> ong>andong> the role of social partners

The large variety of ong>SMEsong> with regard to sector, size ong>andong> busong>inong>ess orientation is also

mirrored with regard to ong>inong>novation: The SME population is representong>inong>g a broad

universe of busong>inong>ess comprisong>inong>g tradition craft activities as well as high-tech startups.

Agaong>inong>st this, the common notion of ‘ong>inong>novation’ focussong>inong>g on technological

processes, organisational excellence etc. is very much based on the experience of

large companies ong>andong> suitable for ong>SMEsong> only to a limited scale. Therefore, other

forms of ong>inong>novation (for ong>inong>stance “ong>inong>cremental ong>inong>novation”) are often more

important for ong>SMEsong>.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 46

There is a need to better implement the “Thong>inong>k Small” prong>inong>ciple ong>inong> EU fundong>inong>g: As

SME representatives ong>inong> several EU member states report, there seems to be a need

to improve the underlyong>inong>g notion of ong>inong>novation ong>inong> ong>Europeong>an fundong>inong>g programmes ong>inong>

order to better cover ong>andong> ong>inong>clude the SME dimension ong>andong> make it easier for ong>SMEsong> to

become eligible for fong>inong>ancial support ong>inong> the context of ong>Europeong>an ong>inong>novation policy.

Given the ong>inong>crease of competition ong>inong> the context of the ong>Europeong>an ong>inong>ternal market,

accelerated globalisation ong>andong> ong>inong>ternationalisation ong>andong> the fact that competong>inong>g on

prices is becomong>inong>g more ong>andong> more difficult, quality ong>andong> ong>inong>novation are crucial factors

of economic success for ong>SMEsong> of all size groups.

Surveys on ong>SMEsong> with regard to ong>inong>novation (both process ong>andong> product ong>inong>novation)

reveal a somewhat contradictious picture: On the one hong>andong> there seems to be a

“iron law” accordong>inong>g to which the larger an enterprise, the more likely it is to

capitalize on ong>inong>novation resultong>inong>g ong>inong> a clear lack of ong>inong>novation activities ong>inong> ong>SMEsong>. On

the other hong>andong> research results are ong>inong>dicatong>inong>g that ong>inong> particular medium sized ong>SMEsong>

often are functionong>inong>g as “hidden” drivers of change ong>andong> ong>inong>novation.

As good practice throughout ong>Europeong> illustrates, ong>inong>novation very often is achieved by

networkong>inong>g, cooperation with Universities ong>andong> the workong>inong>g together of different

actors – often ong>inong>cludong>inong>g the social partners. On the other hong>andong>, the isolation of ong>SMEsong>

with regard to networkong>inong>g ong>andong> cooperation might be regarded as a major barrier for

ong>inong>novation.

With regard to social dialogue ong>andong> social partnership there is a clear gap ong>betweenong>

the ong>Europeong>an, national, sectoral or regional/local level on the one hong>andong>, where ong>tradeong>

ong>unionsong>, employers organisations ong>andong> other actors very effectively cooperate, consult

ong>andong> joong>inong>tly develop on ong>inong>novation, quality improvement etc. ong>andong> on the other hong>andong>

the enterprise sector where social dialogue, employee ong>andong>/or ong>tradeong> union

ong>inong>volvement is hardly takong>inong>g place at all ong>inong> ong>SMEsong>.

Undeclared work as a factor of unfair competition for ong>SMEsong> ong>andong> the role of the social

partners

There are very different types ong>andong> facets of undeclared work ong>andong> also significant

varieties of the problem withong>inong> the ong>Europeong>an Union. Also, undeclared work is not

evenly spread through all economic sectors (e.g. agriculture, construction,

household services) ong>andong> there are significant differences with regard to certaong>inong>

forms of undeclared work ong>betweenong> economic sectors.

While undeclared work from the perspective of the enterprises is regarded as a

source of unfair competition, it is a form of “multiple exploitation” from the

perspective of employees: they lack any forms of social security, have to work ong>inong>

precarious workong>inong>g conditions ong>andong> are totally unprotected agaong>inong>st employers’

disposals. Therefore, effectively tacklong>inong>g unemployment is a strong common ong>inong>terest

of both employers ong>andong> employee organisations ong>inong> ong>Europeong>.

A reason for undeclared work beong>inong>g a significant problem ong>inong> certaong>inong> ong>inong>dustries ong>andong>

service sectors also is resultong>inong>g from the weakness of coverage by social partner

organisations ong>andong> collective bargaong>inong>ong>inong>g.

In this context, ong>inong>itiatives ong>andong> activities of both employers’ organisations as well as

ong>tradeong> ong>unionsong> to foster collective organisation ong>inong> the micro-company sector ong>andong>

amongst self-employed persons are important attempts to respond to changes ong>inong>

national labour markets.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 47

REFERENCES

Bundesmong>inong>isterium für Wirtschaft und Technologie: Der Mittelstong>andong> ong>inong> der Bundesrepublik

Deutschlong>andong>. Eong>inong>e volkswirtschaftliche Bestong>andong>saufnahme, Berlong>inong>, 2007, p. 39

CEDEFOP: Future skill needs ong>inong> ong>Europeong>. Focus on 2020, Thessalonica 2008.

EESC: Opong>inong>ion of the ong>Europeong>an Economic ong>andong> Social Committee on the Value ong>andong> supply

chaong>inong> development ong>inong> a ong>Europeong>an ong>andong> global context (Own-ong>inong>itiative opong>inong>ion), CCMI/037

Value ong>andong> supply chaong>inong> development, Brussels, 25 April 2007.

ETUC, Busong>inong>essong>Europeong>, UEAPMA ong>andong> CEEP:“Joong>inong>t recommendations on the support to

economic recovery by the ong>Europeong>an Social Fund”, ETUC, Busong>inong>essong>Europeong>, UEAPMA ong>andong>

CEEP, Brussels, 7 May 2009

ETUC/ UNICE/UEAPME ong>andong> CEEP: “Framework of actions for the lifelong development of

competencies ong>andong> qualifications, Evaluation report 2006, Brussels.

ETUC: “Trade ong>unionsong> ong>andong> ong>SMEsong>. A report of ETUC activities to improve workong>inong>g conditions ong>inong>

small ong>andong> medium-size enterprises, Brussels 2001.

ong>Europeong>an Commission: “An updated strategic framework for EU cooperation ong>inong> education ong>andong>

traong>inong>ong>inong>g” with new targets COM (2008) 865 fong>inong>al from 16/12/08.

ong>Europeong>an Commission: “Global ong>Europeong> – Competong>inong>g ong>inong> the World: A Contribution to the EUs

Growth ong>andong> Job Strategy”, COM (2006)567.

ong>Europeong>an Commission: “How dynamic regions face restructurong>inong>g - The role of the ong>Europeong>an

Social Fund ong>andong> of the other Structural Funds”, Background Paper, RESTRUCTURING

FORUM , Brussels, 4/5 December 2006.

ong>Europeong>an Commission: „Structural change, company restructurong>inong>g ong>andong> anticipation of

change ong>inong> the ong>Europeong>an small ong>andong> medium-sized enterprise sector“, DG Emplyoment,

Social Affairs ong>andong> Equal Opportunities, Background document, “Adaptation of ong>SMEsong> to

Change”, Brussels, 26-27 November 2007.

ong>Europeong>an Commission: Communication from the Commission to the Council, the ong>Europeong>an

Parliament, the ong>Europeong>an Economic ong>andong> Social Committee ong>andong> the Committee of the

Regions: Steppong>inong>g up the fight agaong>inong>st undeclared work, Brussels, 24.10.2007,

COM(2007) 628 fong>inong>al.

ong>Europeong>an Commission: Communication of the EU Commission on “The demographic future of

ong>Europeong> – from challenge to opportunity”, 12 October 2006, COM(2006)571.

ong>Europeong>an Commission: Communication of the EU Commission: “Implementong>inong>g the Lisbon

Community Programme for Growth ong>andong> Jobs: Transfer of Busong>inong>esses – Contong>inong>uity through

a new begong>inong>nong>inong>g” , COM(2006) 117 fong>inong>al, p.3.

ong>Europeong>an Commission: Communication of the EU Commission: New Skills for New Jobs

Anticipatong>inong>g ong>andong> matchong>inong>g labour market ong>andong> skills needs, Brussels, COM(2008) 868/3.

ong>Europeong>an Commission: EC Recovery Plan – COM (2008) 800.

ong>Europeong>an Commission: Guide for Traong>inong>ong>inong>g ong>inong> ong>SMEsong>, DG Employment, Social Affairs ong>andong> Equal

Opportunities, Brussels 2009 (forthcomong>inong>g)

ong>Europeong>an Commission: Innovation Clusters ong>inong> ong>Europeong>. A statistical analysis ong>andong> overview of

current policy upport, ong>Europeong> Innova / PRO INNO ong>Europeong> paper N° 5, DG Enterprise ong>andong>

Industry, Brussels 2007.

ong>Europeong>an Commission: New Skills for New Jobs Anticipatong>inong>g ong>andong> matchong>inong>g labour market

ong>andong> skills needs, Brussels, COM(2008) 868/3.

ong>Europeong>an Commission: Observatory of ong>Europeong>an ong>SMEsong>, Analytical report, Flash

Eurobarometer B Series No. 196, Conducted by Gallup Organization Hungary, 2007.

ong>Europeong>an Commission: Observatory of ong>Europeong>an ong>SMEsong>, Analytical report, Flash

Eurobarometer B Series No. 196, Conducted by Gallup Organization Hungary, 2007.

ong>Europeong>an Commission: The new SME defong>inong>ition, DG Enterprise ong>andong> Industry, Brussels.

ong>Europeong>an Commission: Undeclared work ong>inong> an enlarged Union. An analysis of undeclared

work: An ong>inong>-depth study of specific items, Brussels, Employment ong>andong> Social Affairs DG,

2004.


ETUC – UE APME: ong>Cooperationong> betw een ong>SMEsong> ong>andong> Trade Unio ns ong>inong> ong>Europeong> 48

ong>Europeong>an Commission: Undeclared Work ong>inong> the ong>Europeong>an Union, Special Eurobarometer

Report 2007.

ong>Europeong>an Council: Council Conclusions on a strategic framework for ong>Europeong>an ong>Cooperationong> ong>inong>

education ong>andong> traong>inong>ong>inong>g” ("ET 2020"), Brussels, 12 May 2009.

ong>Europeong>an Foundation for the Improvement of Livong>inong>g ong>andong> Workong>inong>g Conditions: Measures to

combat undeclared work ong>inong> 27 ong>Europeong>an Union Member States ong>andong> Norway: Overview

Report, Dublong>inong>, March 2009.

Eurostat: Enterprise by size class – overview of ong>SMEsong> ong>inong> the EU, Statistics ong>inong> Focus 31/2008.

Eurostat: SME ong>andong> Entrepreneurship ong>inong> the EU, Statistics ong>inong> Focus, 24/2006.

Galgoczi, B. et. al. 2009: Plant level responses to the economic crisis ong>inong> ong>Europeong>, ETUI

Brussels, Workong>inong>g Paper 2009.01.

Institut für Mittelstong>andong>sforschung: ong>SMEsong> ong>inong> Germany. Facts ong>andong> Figures 2004, Bonn 2004.

Observatory of ong>Europeong>an ong>SMEsong>: “Competence development ong>inong> ong>SMEsong>”, Brussels 2003.

Observatory of ong>Europeong>an ong>SMEsong>: ”Internationalisation of ong>SMEsong>“, 2003, Brussles 2003..

Observatory of ong>Europeong>an ong>SMEsong>: “ong>SMEsong> ong>inong> ong>Europeong> 2003”, Observatory of ong>Europeong>an ong>SMEsong>,

Brussels 2003.

OECD: SME ong>andong> entrepreneurship outlook, OECD 2005, p. 80. See also the Report of the

Observatory of ong>Europeong>an ong>SMEsong>: “Competence development ong>inong> ong>SMEsong>”, Brussels 2003.

UEAPME: “UEAPME Position on the Communication from the Commission Restructurong>inong>g ong>andong>

employment”, Brussels, 6 July 2005, p. 2.

UEAPME: National Recovery plans from an SME perspective. Brussels, 13 February 2009.

More magazines by this user
Similar magazines