Fifth Annual Report of European SME Observatory
The fifth Annual Report of the European SME Observatory was presented to the public at a meeting in Brussels on 25 November 1997. The report gives an overview of the situation and prospects of SMEs in the European Economic Area and Switzerland, and concludes that economic growth is most likely to come from micro-enterprises with ten employees, or fewer. Mr. Christos Papoutsis, Commissioner responsible for enterprise policy, welcomed the report and acknowledged its importance at a time when the Community and Member States are "intensifying their efforts for the implementation of an integrated and coherent strategy in favour of employment". He stressed that: "All of us realize that SMEs and the development of a new business culture can play a vital role in tackling the problem of unemployment. I am determined to strengthen the policies which will help us create this new business mentality and a new business environment so that our SMEs become more competitive and create the new jobs we need in Europe." The report was prepared by the European Network for SME Research, and underlines the fact that new enterprises - which are mostly SMEs - are an important source for the creation of new jobs. Some one million new enterprises are started each year in the EU, while the average EU company provides employment for six people. Unfortunately, employment created by new enterprises trends to be unstable, with high failure rates. Only half of new enterprises survive for five years. However, employment appears to grow in those that do survive. Survival rates of new enterprises could be improved by reducing administrative burdens, improving conditions for the transfer of business from one generation to the next, and reducing the problem of late payment. The report finds that micro-enterprises, those with up to 10 employees, are less bankruptcy prone than larger companies. The report also contains two thematic studies covering environmental issues and tourism, which outline the opportunities which they offer for SMEs.