SPEECH/07/811
Günter Verheugen
Vice-President of the European Commission responsible for Enterprise and Industry SMEs and entrepreneurship – successful local strategies
Porto Conference Porto 7th December 2007
Dear Minister,
dear Mr Elkington,
dear European Enterprise Award winners,
dear Ladies and Gentlemen,
Today is a special day. Certainly for you - the award winners. You should be proud to have won the “Oscars for the promotion of enterpreneurship”.
But today is also a special date. exactly 2.050 years ago, on a 7 December, one of Rome’s greatest thinkers died. A Roman statesman, lawyer, political theorist and great philosopher: Cicero. It is a good occasion to seek inspiration from his thoughts. All the more so, since we are here in a beautiful city that first gained importance as a commercial port for the Roman Empire some 2000 years ago.
Ladies and Gentleman,
After years of gloomy reports we now see higher economic growth and lower unemployment in Europe. According to our latest economic forecast, EU growth will have approached 3% this year and economic performance should remain good also in the next two years. Labour productivity has grown quicker than in any recent years. Perhaps more importantly, latest reports paint an even brighter picture of the labour market. It is expected that 8 million new jobs will be created between 2007 and 2009.
SMEs play a crucial role in this recovery. Out of the 6 million new jobs between 1998 and 2004, 5 million were created in SMEs. And rest assured that this trend will continue. Yes, big business will remain important and with further productivity improvements also competitive. But in a globalized world new growth and new jobs will increasingly rely on the talents and the initiative of entrepreneurs.
Let me clear – I am not of those who see globalisation as a threat against which we should build barriers. After all, the liberalisation of world-wide flows of goods, capital and people is a European invention. We however need to recognise and embrace a new reality – we are no more the only drivers in this process.
Our challenge for today is to remain co-pilots. We can only achieve this by building on what has always been the traditional strength of our people – their willingness to go forward, their preparedness to do new things differently and better.
I am convinced that Europe's potential in the globalized world remains untapped. We have not yet built the flexible, innovative, knowledge-based and environment friendly economy which will guarantee the long-term sustainability of our way of life.
We have not yet explored all the opportunities of the Single Market either. Just think – a recent survey showed us that only 8% of our SMEs export their products. Out of these two thirds export to another EU country. And that is not the whole story – even for the exporting companies, average revenues from exports only represent between 5 and 15% of their turnover, depending on the size of the company. The calculation is not difficult – for our SMEs, the single market counts for less than 1% of revenues. Even more worrying – this figure is only slightly higher when it comes to manufactured goods - a sector where efforts to ease trade conditions in the single market have been strongest. The lesson I draw from these figures is that establishing the rules is necessary but not sufficient. Our enterpreneurs must be aware of the opportunities and willing to take them. They must also be helped. This is exactly what we aim at with the establishment of the new business support network to start running in 2008.
Ladies and Gentlemen,
The improved economic outlook is for us a window of opportunity to speed up and push ahead with the reform agenda. There is no excuse to sit back and relax. There is no room for complacency. We have to continue with our efforts to keep up with the pace of change. Cicero comes to my mind: “Whatever you do, do it with all your might”.
This is what we will propose next week for the next cycle of the Growth and Jobs Strategy. Our proposal for the priorities of the 2008-2011 cycle next week will confirm the direction of our reform efforts. We will make even clearer than now that the future success of our economies will rely on our capacity to establish conditions in which the creativity and entrepreneurial spirit of our people can be fully unlocked.
The legal and regulatory environment plays a crucial role. That is why we have made the “Better Regulation” agenda a centrepiece of the “Partnership for Growth and Jobs”.
Our efforts have already led to the withdrawal, reduction or simplification of many pieces of legislation. But laws and regulations are still too complicated and too costly to comply with. Businesses still face too many statistical and reporting requirements. If rules are not clear, if they are contradictory, if it is too expensive to comply with them, or if they are just too many our enterprises have a problem. This is particularly true for SMEs. The burden falls much more heavily on them.
Cicero said: “The more laws, the less justice.” Here I would like to add a “but”: Fewer laws, does not necessarily mean better justice. It is the quality of the regulation that counts.
Our main focus is on three areas.
Firstly, we are challenging from the start the very reflex to regulate. Compulsory impact assessments must now consider all the possible means of reaching our policy destination, not only the regulatory road. Our new Impact Assessment Board is already showing its teeth whenever it believes that proposals are based on inadequate or selective evidence and analysis. We need evidence-based policy making; not policy-based evidence making.
Secondly, we are reviewing existing regulation in the most ambitious process of simplification ever. This rolling programme started with 100 initiatives and more than a third of these have already been completed. This work doesn’t make the headlines, but it makes a difference. It makes everyday life simpler for European businesses.
Thirdly, we want to cut the administrative burden. I am particularly proud of the Commission’s commitment to cut the administrative burdens to business from EU legislation by 25% by 2012. Even more important was the commitment we extracted from the Member States in March 2007 to similarly ambitious reduction levels. The great majority of administrative burdens originate at national level. And these are not empty words and promises.
We have not wasted time in tackling the problem. We have already launched 10 “fast track actions” to cut costs by approximately €1.3 billion. Within 6 months, half of these have already been enacted. For example we have proposed removing outdated documentation obligations on tariffs for transport companies, simplifying statistical obligations and company law requirements, and exempting small businesses such as local butchers and bakers from certain food hygiene requirements [still pending in the Council].
To guide us, a high level group of independent stakeholders on administrative burdens has already started under the chairmanship of the former Bavarian Prime Minister, Edmund Stoiber – a man with a reputation for energy and dedication to regulatory improvements.
All this is very encouraging, even if it leaves still room for improvement. Let me assure you that in 2008 we will press on with our efforts on “Better Regulation”.
We will also continue to recognise the specific role and the specific situation of small businesses. In 2005 we have launched a coherent, inclusive and proactive Modern SME policy. We have put SMEs high on the Lisbon agenda and we have increased the commitment of stakeholders to commonly agreed goals. Indeed, it is no exaggeration to say that in two years Europe’s 23 million SMEs have become the centre of interest not only at the EU level but also in the Member States.
A few examples: the EU State aid system, the community programmes, the internal market rules, the mentionned new business support network have become or are becoming more SME friendly. And I am not expanding on the large number of support actions that we launched to help SMEs make their case – to promote entrepreneurship in schools, to help entrepreneurs benefit from exchange programmes or as we witnessed yesterday to reward best practices of public authorities.
Perhaps most importantly, our efforts have spurred new action at Member State level. Following commonly agreed targets the time needed to start a business has been shortened, the cost lowered and bureaucratic procedures reduced.
But we are not complacent. We know that more can and needs to be done as illustrated by the few figures I have presented here. That is why, following the Mid-term review of our SME policy, we have taken a new commitment.
We have promised to look at ALL remaining opportunities that we have to help SMEs. We have called this commitment a “Small Business Act” for Europe. The fact that the name is similar to the US law for small business does not aim to suggest we will copy and paste. We chose it to underline the degree of our ambition, not the details of the content.
The Small Business Act is a priority action of the Commission’s work for 2008. New ideas are coming to us every day, but the building blocks are clear: once for all make the “Think Small First” the guiding principle for our action. At EU level this also includes a change of regulatory paradigm – regulating everyday life of an SMEs at EU level should become the exemption not the rule. We will have a systematic look at SME-relevant elements present in various policies and laws and propose new ones wherever we can. We will use the opportunity to come forward with proposals to simplify life of SMEs in the Internal Market, including through a European company statute. We will also look at ways to improve SMEs access to public procurement markets.
This Small Business Act is scheduled for adoption by the European Commission in June 2008 and it will be discussed during the French Presidency in the second half of 2008. There is no time to lose. A vibrant SME sector is crucial for the economic health of Europe. Now is the time to act.
It goes without saying that your ideas and input for this new initiative are very welcome. I plan to invite representatives from business organisations, Member States and European institutions to a hearing which will take place in Brussels on 6 February next year. We will also open a consultation on-line. We know that we can count on you to take an active part to this process and I take this opportunity to tell you that we really much appreciate that.
Ladies and Gentlemen,
Let me come to the last point I wanted to make here today. President Barroso stated at the launch of the renewed “Lisbon Strategy for Growth and Jobs” in 2005: “Our goal is to combine economic dynamism with sustainable growth”. The past three years have not only confirmed that this is possible, they confirmed that it is the only way to go. My message to you is clear – do not wait until this evidence hits you but try to embrace the opportunities that it presents.
SMEs not only have a special role to play but also require special attention. The Environmental Compliance Assistance Programme adopted on 4 October aims to alert Europe’s 23 million SMEs not only to the negative impact that their daily business can have on the environment, but also to the business opportunity that a change in behaviour can present. This program has a simple, motivating message for SMEs: “Go Green, Go Rich”.
We aim at creating conditions to make this possible.
As regards energy and climate policy, the course has already been set. At the beginning of this year, the Commission presented its energy package with ambitious objectives to slash greenhouse-gas emissions, boost renewable energies and increase energy efficiency by 2020.
Europe's heads of state and governments broadly endorsed the Commission's proposals at a landmark summit in March 2007.
Now, the political vision has to be translated into concrete measures – a very important and difficult task. The Commission will present the second set of legislative proposals for meeting Europe's climate change targets in January 2008.
In addition to these energy and climate change measures, we need a fundamental reorientation of our industrial policy – a paradigm shift for our products and services as well as for the production process. I will contribute to this political momentum by presenting early 2008, together with my colleague Stavros Dimas, an Action Plan that will pave the way for a Sustainable Industrial Policy.
The cornerstone will be to extend the approach of the eco-design directive to all relevant products of the internal market. The idea is to develop in addition to the obligatory minimum requirements more ambitious, voluntary 'lead' standards. These lead standards will drive the performance of participating companies upwards and give them “first-mover” advantages in global competition. Moreover, companies that are willing to fulfil more ambitious requirements might benefit from fiscal benefits.
Let me also stress that providing Europe-wide lead-standards will help to exploit the full potential of the internal market and foster innovation.
Ladies and Gentlemen,
I am confident that our policies will deliver tangible benefits to European SMEs and citizens in the years ahead and ensure SMEs’ sustainable growth in the future. This Commission seeks to be a purveyor of solutions for its SMEs and for its citizens. Both will judge us on results. We expect nothing less. I will close with a final quote from Cicero: “Advice is judged by results, not by intentions.”
