Competing in the Single Market - SMEs and ... - Erhvervsstyrelsen

Overall, there are thus fewer economically active SMEs in the B4 than in Europe, and a proportionallylarger number of smaller/micro enterprises in the B4. For policymakers, this poses two primaryconcerns: (i) how to encourage the establishment of more SMEs in order to increase entrepreneurialexperience and skills (primarily a concern for the Baltic countries, with fewer SMEs per 1000inhabitants), and (ii) how to support micro enterprises in their efforts to compete (this is primarily aconcern for Poland, with a lower average company size). Of particular concern in the case of Poland isthe proportionately large number of traditional, ‘low-tech’ or ‘non-innovative’, micro enterprises (wewill return to this question in the following section).Although SMEs represent a large majority of active enterprises and sources of employment, they donot account for a proportional amount of GDP. This phenomenon is not specific to the B4 countries.Throughout the EU, SMEs represent a disproportionately lower amount of GDP than employment(see Table 11). Given this common phenomenon, productivity per employee is a key issue.Figure 7: Apparent Labour Productivity in Manufacturing, EU Countries(in thousands of EUR per person employed, 2000)1251007550250B DK D E F IRL I L A P FIN S UK NOMicro (1-9) All (1+)(1) D, E, I, A, P, RN and S, 2000; IRL and NO, 1999; B and DK, 1998; UK, 1997; L, 1995;EL and NL, not available; activity coverage is NACE Section D.Source: Structural Business Statistics (theme 4/SBS/sizclass), EurostatSource: Eurostat (2002b)Figure 7, which compares labour productivity in manufacturing between small companies and totalcompanies in the EU-15, indicates that productivity per employee is lower in smaller companiescompared to larger companies. Figure 8, in turn, shows that productivity per employee is lower inthe Candidate Countries than in the EU-15. Although, as Figure 8 shows, all of the B4 countrieshave been able to increase productivity per employee over the last ten years, they still rank amongthe least productive of both EU and Accession Countries (ranking above only Bulgaria, Romaniaand Turkey). Among the B4, Poland has the highest productivity per employee, followed by Estonia,Lithuania and Latvia. Lithuania has experienced the highest growth in productivity per employee.Although such comparisons should be approached with caution, and although it is difficult to saywhy Poland’s productivity (with the lowest average company size) is highest among the B4 countries,one can conclude overall that all B4 still have a way to go before they reach comparative productivitylevels of the other EU countries. Given the lower productivity for their countries as a whole, and giventhat small enterprises generally tend to have lower productivity than larger ones, SMEs in the B4 cancount on a particularly tough race to “catch up” to European levels of productivity.40