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The culture of entrepreneurship needs to become more familiar to Europeans of all ages.
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 espite the actions taken since the Lisbon European Council in March 2000, the EU-US productivity gap is widening. A more conservative attitude to business prevails in the EU: a Eurobarometer survey in October 2003 showed that 4% of Europeans had started a business in the last three years compared with 11% in the US. Furthermore, 44% of Europeans gave fear of failure as a reason not to start a business, compared to 29% in the US. Further, the ageing of the EU population is reducing the size of the 25-34 age group – those most likely to set up businesses.
The Green Paper on Entrepreneurship(1) launched a consultation with national, regional and local authorities, entrepreneurs, business organisations, support services, universities and think-tanks. The Commission’s new Entrepreneurship Action Plan(2) takes into account the many responses received, and complements the multiannual programme for enterprise and entrepreneurship(3).
Nine key actions...
Of the plan’s 14 key actions, nine will be implemented in 2004-05 and the remainder in 2006. ”Some of the first group will benefit from activities already accomplished or under way,” says Jorge Costa-David of the Commission’s Enterprise DG, “so it made sense to start with them.” The key actions respond to the questions posed by the Green Paper – how to produce more entrepreneurs and how to encourage more firms to grow. “We are mapping exactly how each action will be carried out”, he continues, “including its links to existing activities, which stakeholders will take part and what they will be asked to do, the objectives, expected results and impact.”
Fostering an entrepreneurial mindset among young people is the first key action, where work has already begun. A benchmarking exercise aims to develop best practices for students learning how to run businesses. Also, by examining warning signs of financial failure and barriers to starting again, the Commission hopes to encourage more people to become entrepreneurs.
Transfers of existing businesses could be made easier – these have a better chance of survival than start-up companies. Social security schemes will be evaluated to help the self-employed who often lose health insurance, guaranteed income in the case of inability to work, pension rights, and rights acquired in their previous career.
The Commission will work with national and regional authorities and others to improve conditions for women entrepreneurs or those from an ethnic minority, by identifying good practices and encouraging networking. It will support events bringing together clusters of mutually supportive stakeholders with a common interest, mainly to benefit SMEs. ‘Listening to SMEs’ is another key action aimed at ensuring that more account is taken of the opinions of SMEs in drafting policies that will affect them. Identifying successful methods in use at the national level should also help.
Other actions will stimulate the supply of finance to young companies, re-examine the role of state aid in market failures, and analyse taxation of retained earnings and informal investors. A pilot scheme will aim to allow SMEs to opt for home-state taxation, and Member States will recognise the different national methods of calculating taxable profits. A proposal is planned to allow companies registered in more than one Member State to meet all their VAT obligations in their home country.
...and five more
In 2006, the second group of key actions will come into play, although they still need more detailed planning. One will encourage a more positive attitude towards entrepreneurship in the general population. The factors contributing to rapid growth will be analysed by studying ‘gazelles’ – the most successful, fast-growing companies – evaluating what makes a gazelle, or blocks a company from becoming one. A largely new area for the operation of young companies could be providing social and environmental services, so the Commission will look into improving the relevant regulatory conditions, and in a related action will work towards improving SMEs’ access to public procurement. The current employment regulatory framework is also often thought to be a constraint for micro-enterprises, so work will continue on comparing national laws and finding ways to simplify the hiring of the first employee.
Too many?
The progress of the action plan will probably be reported with the European Charter for Small Enterprises(4), giving quantitative results where possible. More discussions are needed to define the most meaningful indicators. Costa-David says: “Some critics have suggested that focusing the action plan on four or five actions would have been better, avoiding the dilution of resources. But the plan is a necessary compromise. The actions chosen are all important to different stakeholders and we cannot afford to leave any out if we are to promote entrepreneurship successfully.”
(1) See ‘Moving the mindset’, edition 3/03.
(2) Action plan: The European agenda for entrepreneurship, COM(2004) 70 of 11 February 2004, see http://europa.eu.int/comm/enterprise/entrepreneurship/ action_plan.htm
(3) See http://europa.eu.int/comm/enterprise/enterprise_policy/
mult_entr_programme/programme_2001_2005.htm
(4) Charter for Small Enterprises, adopted in June 2000 by the Council of the EU, see http://europa.eu.int/comm/enterprise/enterprise_policy/charter/index.htm
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