Dynamic diversity opens up opportunities - Deutsche Bank Research

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Country Small enterprise Belgium Denmark Germany (Institut für Mittelstandsforschung, Bonn) France UK Ireland Italy Netherlands Portugal Sw eden US U.S. Small Business Administration (SBA) SME: EU definition Micro enterprise Small enterprise Current Issues virtual autonomy of the companies is also an important factor: firms that belong to large groups are not classified as SMEs. 2 On account of the availability of data and for the sake of better comparability we shall use the quantitative, headcount-based EU definition of SMEs. (1) Up to 9 employees (1) (2) Annual turnover of up to EUR 1 m (2) (1) Annual turnover of max. GBP 2.5 m (1) (2) Balance sheet total: max. GBP 1.4 m (2) (3) Maximum of 50 employees (3) Maximum of 250 employees Up to 50 employees 50 to 249 employees Up to 499 employees Up to 9 employees 10 to 100 employees Mediumsizedenterprise Headcount
An international assessment of SMEs Enterprise size classes differ internationally % CEE-12 EU-27 DE US 30 22 48 65 80 110 260 319 380 680 1,430 1,714 9,510 9,180 8,270 7,902 >250 50 to 249 10 to 49 1 to 9 100 80 60 40 20 0 Sources: Eurostat, SBA 2005 Employment share by enterprise size US DE FR EU-27 PL IT 0% 20% 40% 60% >250 50 to 249 10 to 49 1 to 9 Sources: Eurostat 2005, SBA 2005 5 4 3.1 Company size structure – almost identical, but different after all One look at the enterprise size classes and the country-specific differences become apparent. The dominant size class across all national boundaries is that of the micro firms, which make up over 80% of companies. One major structural difference between Germany and other countries is revealed by looking at the medium-sized firms. In Germany there is a relatively large share of ―large Mittelstand companies‖ (with 250 to 500 employees), which are not SMEs according to the narrow definition, but are nevertheless referred to as belonging to the Mittelstand. Furthermore, in Germany and the US the share of SMEs with 10 to 250 employees is much higher than the European average (DE: 17%; US: 20%; EU-27: 8%). Numerous European countries, by contrast, have very large proportions of micro enterprises (EU-27: 92%; DE: 83%). 4 This picture is confirmed by the SME density statistics. Nationally, the density of SMEs per 1,000 inhabitants ranges from less than 25 to more than 75. The higher the SME density, the larger the number of small firms in the country concerned. SME density in Germany is comparatively low by international standards, which is due to the relatively large proportion of medium-sized firms. However, SME density provides little information about whether a country has achieved ―SME saturation‖ since it is impossible to determine an ―optimum‖ number of SMEs. 3.2 Employment structure – dispute about whether SMEs are “the engine of job creation” SMEs are frequently hailed as being the engine of job creation in an economy. In so doing, however, a distinction must be made between the relative share of the workforce employed by SMEs, the rises and falls in employment over the business cycle and the individual size classes. A sweeping judgement on whether SMEs are the engine of job creation would thus be too simplistic. Despite the substantial number of SMEs they are much less significant in terms of the number of people they employ. In all the European countries surveyed SMEs employed at least 50% of all people in work. In the US, by contrast, the share was around 42%. In Germany the share of the workforce employed by SMEs comes to around 61%, which is roughly on a par with the international average. 5 In southern European countries such as Italy, Greece, Portugal and Spain the corresponding figures are particularly high, with roughly 70-80% of all people in work being employed by SMEs. SMEs in the countries of Central and Eastern Europe (CEE) also provide employment to some 70% of the workforce. This means that taken together SMEs are the biggest employers. However, the corollary of this is that the few large firms that constitute just 0.5% of 4 Regional differences in Central and Eastern Europe (CEE): Baltic states: micro enterprise share of 77-82%; Poland, Czech Republic, Slovakia, Hungary and Slovenia: micro enterprise share of more than 90%. 5 Eurostat calculates that SMEs provide jobs for 61% of the workforce in Germany, whereas the Institut für Mittelstandsforschung in Bonn arrives at a figure of 55% using the same definition. This clearly illustrates the problems associated with data collection on SMEs not only in Germany, but also across Europe as a whole and in the US. According to the German definition (up to 500 employees) the share of employment would however be 70.6%. We can therefore conclude that companies with 250 to 500 employees provide jobs for roughly 15% of the workforce. April 15, 2009 5
Page 1 and 2: International topics Current Issues
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Dynamic diversity opens up opportunities - Deutsche Bank Research

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