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
on “ong>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>novation – ong>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>novation” ong>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.
Change language